01-1485
Income Tax
Signed 12/30/02
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
PETITIONER, ) FINDINGS
OF FACT,
) CONCLUSIONS OF LAW,
Petitioner, ) AND FINAL DECISION
)
v. ) Appeal No. 01-1485
) Account No. #####
AUDITING DIVISION )
OF THE UTAH STATE TAX ) Tax Type:
Income Tax
COMMISSION, ) Tax Year: 1995
)
Respondent. ) Judge: Davis
_____________________________________
Presiding:
B. Blaine Davis,
Administrative Law Judge
Appearances:
For Petitioner: PETITIONER
For Respondent: Mr. Tim Bodily, Assistant Attorney General
Mr. Ben Rasmussen, from the Auditing
Division
Ms. Becky McKenzie, from the Auditing
Division
Mr. Brent Taylor, from the Auditing
Division
Ms. Dorothy Akins
Ms. Jean Ballard
STATEMENT OF
THE CASE
This matter came before the Utah State Tax
Commission for a Formal Hearing on December 3, 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 income tax.
2. The
year in question is 1995.
3.
Petitioner did not file an individual income tax return for the calendar
year 1995.
4.
Respondent received information from the Internal Revenue Service
indicating that Petitioner should have filed a tax return for 1995. Based upon that information, Respondent
performed an audit on Petitioner. As a
portion of that audit, Respondent audited three separate bank accounts which
were in the name of Petitioner or businesses or entities owned or controlled by
Petitioner.
5. Based
upon that audit, it was determined that Petitioner had deposited a total amount
of $$$$$ in those three bank accounts.
Respondent deducted $$$$$ of those deposits which did not represent
income. The balance of $$$$$ was
received from sources which constituted adjustable gross income to
Petitioner. Respondent allowed Petitioner
an amount of $$$$$ as a standard deduction, and $$$$$ for personal exemptions,
leaving taxable income of $$$$$.
6. Based
upon that income, Respondent imposed tax upon Petitioner for 1995 of $$$$$,
together with a 100% penalty for fraud with intent to evade the tax pursuant to
the provisions of Utah Code Ann. §59-1-401(5)(a)(iv), together with a 10% late
filing penalty and 10% late payment penalty pursuant to Utah Code Ann.
§59-1-401(1) and (2).
7. On or
about September 7, 2001, Petitioner was found guilty of a third-degree felony
of tax evasion in the Third Judicial District Court in and for Salt Lake
County, State of Utah, for evading taxes for the calendar year of 1995 which is
the year at issue in this proceeding.
As a part of the sentence thereon, Petitioner was to pay to the Tax
Commission an amount of $$$$$ as restitution for the costs and expenses to the
Commission for pursuing the criminal matter.
8. At
the formal hearing, Petitioner was given numerous opportunities to present
factual evidence, testimony, or legal arguments why the audit assessment made
by Respondent should not be sustained.
Petitioner did not present any factual testimony which disputed the
facts testified to by Respondent's witnesses, nor did he present any persuasive
legal arguments that the audit assessment was not correct. Instead, Petitioner continually made
statements such as, "I conditionally accept the court's offer to have me
present evidence upon proof of claim that there is a controversy before the
court." Petitioner made other
similar conditional acceptances of matters.
9. At
12:19 a.m., approximately eight hours and 41 minutes before the hearing was
scheduled to commence, Petitioner faxed to the Appeals Unit of the Tax
Commission a document entitled Judicial Notice of Stipulations. Based upon representations of Respondent and
its legal counsel, there were no stipulations and Respondent had not agreed to
stipulate to any statements, representations, or requests contained in the said
Judicial Notice of Stipulations, or any other documents attached thereto. It is therefore determined that the
documents filed by Petitioner had no legal force or effect and are irrelevant
to a determination of this matter.
APPLICABLE
LAW
The state of Utah
imposes income tax on individuals who are residents of the state in Utah Code
Ann. §59-10-104 as follows:
". . . a tax is
imposed on the state taxable income, as
defined in Section 59-10-112, of every resident individual . . ."
State taxable income is defined in Utah Code Ann. §59-10-112
as follows:
"State taxable
income in the case of a resident individual means his federal taxable income
(as defined by Section 59-10-111) with the modifications, subtractions, and
adjustments provided in Section 59-10-114. . . ."
Federal taxable income is defined in Utah Code Ann.
§59-10-111 as follows:
"Federal taxable
income" means taxable income as currently defined in Section 63, Internal
Revenue Code of 1986.
Taxable income is defined in the Internal Revenue Code at
23 USC 63 as:
"Except as provided
in subsection (b), for purposes of this subtitle, the term "taxable
income" means gross income minus the deductions allowed by this chapter
(other than the standard deduction)."
Gross income is defined in the Internal Revenue Code at 23
USC 61(a) as:
"Except as
otherwise provided in this subtitle, gross income means all income from
whatever source derived, including (but not limited to) the following items:
(1) Compensation for
services, including fees, commissions, fringe benefits, and similar items; . .
."
The requirement to file a federal income tax return is
established by IRC.§6012.
Utah Code Ann. §59-10-502, provides in relevant part:
"An income tax
return with respect to the tax imposed by this chapter shall be filed by:
(1) Every resident
individual, estate, or trust required to file a federal income tax return for
the taxable year; . . . ."
The Utah Legislature has specifically
provided that the taxpayer bear the burden of proof in proceedings before the
Tax Commission. Utah Code Ann.
§59-10-543 provides the following:
Utah Code Ann. §59-1-401
provides in relevant part as follows:
(1)(a) The penalty for failure to file a tax return within the time prescribed by law including extensions is the greater of $20 or 10% of the unpaid tax due on the return.
(2) The penalty for failure to pay tax due shall be the greater of $20 or 10% of the unpaid tax for:
(a) failure to pay any tax, as reported on a timely filed
return;
(b) failure to pay any
tax within 90 days of the due date of the return, if there was a late filed
return subject to the penalty provided under Subsection (1)(a);
(c ) failure to pay ant
tax within 30 days of the date of mailing any notice of deficiency of tax
unless a petition for redetermination or a request for agency action is filed
within 30 days of the date of mailing the notice of deficiency;
(d) failure to pay any
tax within 30 days after the date the commission’s order constituting final
agency action resulting from a timely filed petition for redetermination or
request for agency action is issued or is considered to have been denied under
Subsection 63-46b-13(3)(b); and
(e) failure to pay any
tax within 30 days after the date of a final decision resulting from a timely
filed petition for judicial review.
. . . .
(5)(a)
.
. . .
(iv) If the underpayment is due to fraud with intent to evade the tax, the penalty is the greater of $500 per period or 100% of the underpayment.
DISCUSSION
In this matter, Petitioner has not presented any
factual evidence to refute that he is a resident of the State of Utah, that he
had income within the State of Utah during 1995, that he did not file an income
tax return, that the tax amount imposed by Respondent is erroneous, or that the
penalties imposed by Respondent should not have been imposed.
It is also determined that Respondent has met
its burden of proof to establish that the 100% fraud with intent to evade
penalty imposed by Utah Code Ann. §59-1-401(5)(a)(iv) should be imposed.
DECISION
AND ORDER
Based upon the foregoing, it is determined that
the audit assessment made by Respondent is appropriate and it is hereby
sustained, together with the 10% penalty for failure to file a tax return
within the time prescribed by law, the 10% penalty for failure to pay a tax
due, and the 100% penalty for fraud with intent to evade the tax is hereby
sustained. The Petition for
Redetermination is hereby denied. It is
so ordered.
DATED this 30th day of December
, 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 30th day of December
, 2002.
Pam Hendrickson R.
Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc
B. Johnson
Commissioner Commissioner