The following are the primary factors considered when acting on a request for waiver:
- Level of Cooperation with Auditors - If a taxpayer has imposed needless time delays in providing the necessary records to conduct an audit, uses abusive language, subjects auditors to unnecessarily uncomfortable working conditions, or has provided incomplete records, he is less likely to receive favorable consideration.
- Previous Audits - A taxpayer is more likely to receive a penalty waiver on an initial audit than on subsequent audits. Additionally, if the tax issues in question have previously been the subject of an audit with the taxpayer requesting a waiver, the taxpayer is less likely to receive favorable consideration.
- Level of Taxpayer Effort - If a taxpayer is attempting to collect or accrue taxes properly and the errors made do not appear to be intentional, then the taxpayer is more likely to receive favorable consideration.
- Taxpayer Payment History - If a taxpayer has been paying taxes timely in prior periods, his chances of receiving favorable consideration are enhanced.
- Taxpayer Registration - A taxpayer that has not registered for sales and use taxes with Revenue is less likely to receive favorable consideration than one who has been properly registered.
- Taxes Collected but Not Remitted - If a taxpayer has collected, but not remitted taxes, he is not in a good position for obtaining favorable consideration.
- Complexity of Tax Issue. If the tax issue in question is a complex one where the applicability of tax to the transaction is not clear, the taxpayer is in a better position to obtain favorable consideration.
- Special or Unusual Conditions Relative to Audit Findings - If the tax in question resulted from apparent inadvertent coding errors, the taxpayer is in a better position for obtaining favorable consideration than under other circumstances.
- Prompt Payment - If a taxpayer pays the tax and interest in a timely manner after being billed following their audit, he is in a better position to obtain favorable consideration.
- Correction Action - Willingness of a taxpayer to take corrective action to prevent a recurrence of tax underpayment is an important consideration. If a taxpayer is willing to change his method of accounting and procedures in order to reduce the likelihood of the same error occurring again, he is more likely to obtain favorable consideration.
Requests for waivers of penalties may be granted or denied in whole or part. In all cases, the goal of the Finance Department is to maintain a consistent and effective policy while treating all taxpayers fairly. The factors listed above are also utilized, to the extent applicable, in making decisions relative to penalty waivers in non-audit situations.