2023 Indiana Code › Title 6. Taxation › Article 8.1. Department of State Revenue; Tax Administration › Chapter 10. Penalties and Interest › 6-8.1-10-2.1. Liability for Penalty

Sec. 2.1. (a) Except as provided in IC 6-3-4-12(k) and IC 6-3-4-13(l), a person that:
(1) fails to file a return for any of the listed taxes;
(2) fails to pay the full amount of tax shown on the person's return on or before the due date for the return or payment;
(3) incurs, upon examination by the department, a deficiency that is due to negligence;
(4) fails to timely remit any tax held in trust for the state;
(5) fails to file a return in the electronic manner required by the department if such return is required to be filed electronically; or
(6) is required to make a payment by electronic funds transfer (as defined in IC 4-8.1-2-7), overnight courier, personal delivery, or any other electronic means and the payment is not received by the department by the due date in such manner and in funds acceptable to the department;
is subject to a penalty.
(b) Except as provided in subsection (g), the penalty described in subsection (a) is ten percent (10%) of:
(1) the full amount of the tax due if the person failed to file the return or, in the case of a return required to be filed electronically, the return is not filed in the electronic manner required by the department;
(2) the amount of the tax not paid, if the person filed the return but failed to pay the full amount of the tax shown on the return;
(3) the amount of the tax held in trust that is not timely remitted;
(4) the amount of deficiency as finally determined by the department; or
(5) the amount of tax due if a person failed to make payment required to be made by electronic funds transfer, overnight courier, personal delivery, or any other electronic means by the due date in such manner.
(c) For purposes of this section, the filing of a substantially blank or unsigned return does not constitute a return.
(d) If a person subject to the penalty imposed under this section can show that the failure to file a return, pay the full amount of tax shown on the person's return, timely remit tax held in trust, or pay the deficiency determined by the department was due to reasonable cause and not due to willful neglect, the department shall waive the penalty.
(e) A person who wishes to avoid the penalty imposed under this section must make an affirmative showing of all facts alleged as a reasonable cause for the person's failure to file the return, pay the amount of tax shown on the person's return, pay the deficiency, or timely remit tax held in trust, in a written statement containing a declaration that the statement is made under penalty of perjury. The statement must be filed with the return or payment within the time prescribed for protesting departmental assessments. A taxpayer may also avoid the penalty imposed under this section by obtaining a ruling from the department before the end of a particular tax period on the amount of tax due for that tax period.
(f) The department shall adopt rules under IC 4-22-2 to prescribe the circumstances that constitute reasonable cause and negligence for purposes of this section.
(g) A person who fails to file a return for a listed tax that shows no tax liability for a taxable year, other than an information return (as defined in section 6 of this chapter), on or before the due date of the return shall pay a penalty of ten dollars ($10) for each day that the return is past due, up to a maximum of two hundred fifty dollars ($250).
(h) A:
(1) corporation which otherwise qualifies under IC 6-3-2-2.8(2);
(2) partnership; or
(3) trust;
that fails to withhold and pay any amount of tax required to be withheld under IC 6-3-4-12, IC 6-3-4-13, or IC 6-3-4-15 shall pay a penalty equal to twenty percent (20%) of the amount of tax required to be withheld under IC 6-3-4-12, IC 6-3-4-13, or IC 6-3-4-15. This penalty shall be in addition to any penalty imposed by section 6 of this chapter.
(i) Subsections (a) through (c) do not apply to a motor carrier fuel tax return.
(j) If a pass through entity (as defined in IC 6-3-1-35) fails to include all nonresident partners, nonresident shareholders, or nonresident beneficiaries in a composite return as required by IC 6-3-4-12(i), IC 6-3-4-13(j), or IC 6-3-4-15(h), a penalty of five hundred dollars ($500) per pass through entity is imposed on the pass through entity.
(k) If a person subject to the penalty imposed under this section provides the department with documentation showing that the person is or has been subject to incarceration for a period of a least one hundred eighty (180) days, the department shall waive any penalty under this section and interest that accrues during the time the person was incarcerated, but not to an extent greater than the penalty or interest relief to which a person would otherwise have been entitled under the federal Servicemembers Civil Relief Act (50 U.S.C. 3901-4043), if the person was in military service. Nothing in this subsection shall preclude the department from issuing a proposed assessment, demand notice, jeopardy proposed assessment, jeopardy demand notice, or warrant otherwise permitted by law.
As added by P.L.1-1991, SEC.70. Amended by P.L.71-1993, SEC.26; P.L.18-1994, SEC.43; P.L.211-2007, SEC.44; P.L.182-2009(ss), SEC.258; P.L.293-2013(ts), SEC.34; P.L.181-2016, SEC.30; P.L.234-2019, SEC.37; P.L.159-2021, SEC.37; P.L.137-2022, SEC.88.