1. (a) For a taxable period beginning after December 31, 2020, whenever a taxpayer makes a partial payment on the taxpayer's tax liability, the department shall apply the partial payment in the following order:

   1. (1) To the tax liability of the taxpayer.
   2. (2) To any penalty owed by the taxpayer.
   3. (3) To any interest owed by the taxpayer.

2. (b) For a taxable period beginning before January 1, 2021, whenever a taxpayer makes a partial payment on the taxpayer's tax liability, the department shall apply the partial payment in the following order:

   1. (1) To any penalty owed by the taxpayer.
   2. (2) To any interest owed by the taxpayer.

   3. (3) To the tax liability of the taxpayer.

      In the case of a taxpayer with multiple liabilities, the department may adopt rules under IC 4-22-2 to establish the manner in which payments are applied to the taxpayer's outstanding liabilities.

As added by P.L.26-1985, SEC.15. Amended by P.L.234-2019, SEC.33.