WPS, Inc


The Taxpayer was assessed for withholding tax penalty for the December filing period in 2022. The Taxpayer, a very large payroll processing company, used software to calculate payroll and taxes due for its clients and send withholding tax returns to the Department. Though the Taxpayer paid the amount of tax due on time, the withholding tax returns for the filing period were not successfully submitted by its software. In March the Department notified the Taxpayer that its returns had not been received for this period. Penalty for filing a tax return late may be abated if the return was late based on a mistake of law made in good faith and on reasonable grounds, but the Taxpayer presented no evidence that this was the case. The Taxpayer argued that it was not negligent because it relied on its software program to file the return and the software said that it had been filed. Regulation states, however, that failure to make a timely filing of a tax return is not excused by a Taxpayer’s reliance on an agent, and in this case the software was acting as an agent for the taxpayer. Because the Taxpayer failed to provide evidence to support that it was not negligent, the Hearing Officer denied the protest.