BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, ) Appeal No. 00-1620
v. ) Account No. #####
TAXPAYER SERVICES DIVISION ) Tax Type: Sales Tax
OF THE UTAH STATE TAX ) Tax Period:
Respondent. ) Judge: Davis
G. Blaine Davis, Administrative Law Judge
For Petitioner: PETITIONER REP, Attorney at Law
For Respondent: Mr. Gale Francis, Assistant Attorney General
Mr. Stan Allen, from the Taxpayer Services Division
Ms. Karen McFerson, from the Taxpayer Services Division
STATEMENT OF THE CASE
This matter came before the Utah State Tax Commission for an Initial Hearing pursuant to the provisions of Utah Code Ann. '59-1-502.5 on September 18, 2001.
Respondent imposed a personal penalty assessment against Petitioner, pursuant to Utah Code Ann. §59-1-302, for failing to collect, truthfully account for, and pay over the sales and use taxes for COMPANY A.
The periods in question are the fourth quarter of 1999, first quarter and second quarter of 2000.
Petitioner is an accountant, and was a director, secretary, and the registered agent for COMPANY A. Petitioner also represented he was a part owner of the business through the third quarter of 1999. Then, because of financial difficulties of the business, and differences of opinion with the other owner of the business, Mr. NAME, Petitioner sold his interest in the business, and received a total payment of $$$$$ for his share of the business. The amounts received by him were received in the year 2000.
The sales tax returns are filed and paid through the third quarter, 1999.
Petitioner signed a resolution with the bank removing his name from the bank account and making the signatories on the bank account Mr. NAME and Mrs. NAME. That resolution is not dated, but Petitioner represented it was signed in October, 1999.
Petitioner represented he does not have any records of the business and has not been involved with the business since September 1999.
The business, COMPANY A, has not filed sales and use tax returns for the fourth quarter 1999 or for the first and second quarters of 2000. The assessment of taxes is an estimate made by Respondent based upon prior filings of the business.
When Petitioner terminated his relationship with the business, he did not go to the Utah Department of Commerce and have his name removed from the records of the business. Therefore, he was still listed with the Utah Department of Commerce as the registered agent, a director and secretary of the business.
The relevant portions of Utah Code Ann. §59-1-302 provide as follows:
(1) The provisions of this section apply to the following taxes in this title:
(a) state and local sales and use tax under Chapter 12, Parts 1 and 2;
. . . .
(d) public transit tax under Chapter 12, Part 5;
(e) tourism, recreation, cultural, and convention facilities tax under Chapter 12, Part 6;
. . . .
(2) Any person required to collection, truthfully account for, and pay over any tax listed in Subsection (1) who willfully fails to collect the tax, fails to truthfully account for and pay over the tax, or attempts in any manner to evade or defeat any tax or the payment of the tax, shall be liable for a penalty equal to the total amount of the tax evaded, not collected, not accounted for, or not paid over. This penalty is in addition to other penalties provided by law.
. . . .
(7)(a) In any hearing before the commission and in any judicial review of the hearing, the commission and the court shall consider any inference and evidence that a person has willfully failed to collect, truthfully account for, or pay over any tax listed in Subsection (1).
(b) It is prima facie evidence that a person has willfully failed to collect, truthfully account for, or pay over any of the taxes listed in Subsection (1) if the commission or a court finds that the person charged with the responsibility of collecting, accounting for, or paying over the taxes:
(i) made a voluntary, conscious, and intentional decision to prefer other creditors over the state government or utilize the tax money for personal purposes;
(ii) recklessly disregarded obvious or known risks, which resulted in the failure to collect, account for, or pay over the tax; or
(iii) failed to investigate or to correct mismanagement, having notice that the tax was not or is not being collected, accounted for, or paid over as provided by law.
(c) The commission or court need not find a bad motive or specific intent to defraud the government or deprive it of revenue to establish willfulness under this section.
In this matter, it appears the sales and use tax returns through the third quarter 1999 have been filed and paid. The testimony was that Petitioner was involved with this company only through the third quarter 1999, and was not involved for the fourth quarter 1999 or the first or second quarters of 2000. It is also clear that Petitioner no longer has any real relationship with the business, and for the periods at issue did not have the legal ability or right to collect, truthfully account for or pay over the taxes, not even by paying the taxes to other creditors.
Petitioner did fail to remove his name from the records of the Utah Department of Commerce, so he did not give notice to creditors that he was no longer involved with the business. Nevertheless, it is determined that he did not meet the statutory terms of failing to collect, truthfully account for or pay over any taxes as provided by that section.
DECISION AND ORDER
Based upon the foregoing, the Commission hereby determines that Petitioner was not a responsible party for the periods at issue, and was not required to collect, truthfully account for, or pay over the taxes for which the penalty has been assessed. Therefore, the personal penalty assessment is hereby set aside, and Petitioner is relieved from that penalty.
This decision does not limit a party's right to a Formal Hearing. However, this Decision and Order will become the Final Decision and Order of the Commission unless any party to this case files a written request within thirty (30) days of the date of this decision to proceed to a Formal Hearing. Such a request shall be mailed to the address listed below and must include the Petitioner's name, address, and appeal number:
Utah State Tax Commission
210 North 1950 West
Salt Lake City, Utah 84134
Failure to request a Formal Hearing will preclude any further appeal rights in this matter.
DATED this 6th day of May , 2002.
G. Blaine Davis
Administrative Law Judge
BY ORDER OF THE UTAH STATE TAX COMMISSION.
The Commission has reviewed this case and the undersigned concur in this decision.
DATED this 6th day of May , 2002.
Pam Hendrickson R. Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc B. Johnson