(1) If a distributor fails to timely file and pay any motor fuel taxes and does not have just or reasonable cause, the following penalty provisions will apply:

(a) A first time offense within a three-year period of timely filings will result in a 1% penalty assessment with the remaining 9% suspended;

(b) A second time offense within the same time period will result in a 3% penalty assessment, plus the assessment of the 9% penalty previously suspended;

(c) A third time late offense within the same time period will result in a 6% penalty assessment, plus the assessment of the 7% penalty previously suspended.

(2) A penalty will not be suspended if a distributor files late four or more times in a three-year period. The penalty assessment will include the 10% penalty, plus the assessment of the 4% previously suspended.

(3) Tax returns received that the department determines are underpaid do not qualify for a suspension of the late file and pay penalty.