(1) "Reasonable cause" for waiver or abatement of penalty and interest is construed in favor of the collection of the penalty and interest.

(2) "Reasonable cause" exists for waiver or abatement of penalty and interest if the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return and/or pay the tax within the prescribed time. What constitutes the exercise of ordinary business care and prudence must be determined by the facts of a particular case. The existence of "reasonable cause" will be determined on a case by case basis at the discretion of the department.

(3) Except where otherwise provided by statute or these rules, "good cause" and "sufficient cause" shall be considered synonymous with "reasonable cause" as defined by these rules.

(4) Except where otherwise provided by statute or by these rules, "neglect" means the failure to exercise ordinary business care and prudence.

(5) Examples of "reasonable cause" for failure to file a tax return or report or pay a tax on the date required by statute by a taxpayer include:

(a) where it can be substantiated that the return was mailed in time (whether or not the envelope bore sufficient postage) to reach the department of revenue in the normal course of mails, within the legal period, (if the due date is a Saturday, Sunday, or holiday, the following business day is within the legal period) ;

(b) where it can be substantiated that the delay or failure

was due to erroneous information given the taxpayer by an employee of the department of revenue;

(c) where the delay was caused by death or extended serious illness of the taxpayer;

(d) where the delinquency was caused by the destruction by fire or other casualty of the taxpayer's place of business or business records;

(e) where the taxpayer mailed the tax statement or return and/or the tax payment to the Internal Revenue Service or the tax collector of another state on time;

(f) where a taxpayer is unable, for reasons beyond his control, to obtain the records necessary to determine the amount of tax due.

(6) The examples stated in subsection (5) are for illustration only. Other reasonable causes may exist for failure to properly and timely file the tax statement or return and pay the tax. Each request for waiver or abatement will be considered on a case by case basis using the following criteria:

(a) Do the taxpayer's reasons address the penalty and

interest that was assessed?

(b) Does the length of time between the event which was

cited as a reason and the filing or payment date negate the

event's effect?

(c) Could the event that caused the taxpayer's noncompli- ance or increased liability have reasonably been anticipated?

(d) Has the taxpayer provided sufficient detail (dates, relationships) to determine whether he exercised ordinary business care and prudence?

(e) Has the taxpayer documented all pertinent facts?

(f) Could the taxpayer have requested an extension or filed an amended return?

(7) The following are examples which do not constitute reasonable cause for abatement or waiver of penalty and interest and do demonstrate neglect:

(a) forgetfulness or inadvertence on the part of a taxpayer, a taxpayer's employee, a taxpayer's agent, or the taxpayer's professional tax preparer;

(b) failure to file because of advice by a professional tax preparer, attorney, or accountant;

(c) religious, political, or philosophical opposition to the tax;

(d) the advent of new tax laws, regulations, or administrative requirements which create complex problems and significantly delay the taxpayer in preparing returns;

(e) inability of a professional tax preparer to secure

competent help in sufficient time to cope with the workload;

(f) a failure to secure the proper forms;

(g) the taxpayer started to prepare the return in sufficient time but finds that because of complicated issues he was unable to finish the return.

(8) The examples stated in subsection (7) are for illustration only. Other circumstances may exist which do not constitute reasonable cause for waiver or abatement of penalty and interest.

(9) Ignorance of the law does not constitute "reasonable cause".

(10) Inability to pay a tax does not constitute reasonable cause for failure to file a tax return or statement on time.