01-1379

Miscellaneous Tax

Signed 3/27/02

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

PETITIONER, ) FINDINGS OF FACT,

) CONCLUSIONS OF LAW,

Petitioner, ) AND FINAL DECISION

)

v. ) Appeal No. 01-1379

) Account No.

AUDITING DIVISION OF )

THE UTAH STATE TAX ) Tax Type: Miscellaneous Tax

COMMISSION, )

) Judge: Davis

Respondent. )

_____________________________________

Presiding:

G. Blaine Davis, Administrative Law Judge

Appearances:

For Petitioner: PETITIONER REP

For Respondent: Ms. Julie Jones, from the Auditing Division

STATEMENT OF THE CASE

This matter came before the Utah State Tax Commission for a Formal Hearing on March 7, 2002. Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:

FINDINGS OF FACT

1. The tax in question is cigarette stamp tax.

2. The period in question is .

3. Petitioner, PETITIONER had in its inventory certain coffee cups which also had two cigarettes in each cup. The cups bore an appropriate cigarette stamp for the two cigarettes in each cup.

4. While the store manager was out of town on vacation, he had told one of the employees to display the cups and try to get them sold. Without authorization from any management individual, the store employee removed the cellophane wrapper and the tax stamp from the cup and the cigarettes, and placed all of the cigarettes in a bowl for individual sale. The employee did not understand that the cigarette stamps had to remain with the cigarettes in that cup.

5. Respondent, after visiting the store, confiscated ##### single cigarettes and imposed a fine of $$$$$ per cigarette, or a total of $$$$$.

6. The parties have agreed that an unintentional mistake was made, and that the cigarette stamp had been previously placed on the products and improperly removed by the employee. Accordingly, there was no intention to avoid the cigarette stamp tax laws of the State of Utah.

7. Petitioners have a very clean record, with only two cigarette penalties imposed on all of the PETITIONER stores in the State of Utah over several years, and they have a very good training program to attempt to train their employees how to deal with products for which a person must be a minimum age to purchase them.

8. Each of the parties agreed that a fine was appropriate, but that the fine which had been imposed seemed disproportionate in respect to the improper conduct. Accordingly, the Administrative Law Judge permitted the parties to discuss the matter separately, and the parties both stipulated that it would be appropriate for the fine to be reduced from $$$$$ to $$$$$, which would constitute a regular $$$$$ fine for the quantity of cigarettes if they were in a package, plus $$$$$ for the effort of going through the inspection and processing the matter.

APPLICABLE LAW

Utah Code Ann. §59-14-202(7) provides that a licensee may not barter, sell, exchange, or offer for sale cigarettes in individual packages or containers that contain less than 20 cigarettes.

DECISION AND ORDER

Based upon the foregoing, the Tax Commission hereby sustains a fine of $$$$$ for the offense. It is so ordered.

DATED this 27^th day of March , 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 27^th day of March , 2002.

Pam Hendrickson R. Bruce Johnson

Commission Chair Commissioner

Palmer DePaulis Marc B. Johnson

Commissioner Commissioner