STATEMENT OF THE CASE

Petitioner appealed a denial of his request for a waiver of penalty and interest. This matter came before the Commission in an Initial Hearing on July 18, 2002.

Petitioner has had a history of filing returns or payments late. As a result, late filing and late payment penalties have accrued on his account as far back as 1995, his first year filing in Utah. He has entered payment agreements with the Taxpayer Services Division in an attempt to resolve all amounts due for various years.

In December of 2000, Petitioner contacted the Tax Commission for pay off information for tax years 1997 and 1998. He then went to Wells Fargo Bank for a loan in the amount of $$$$$, the amount that he had been told would satisfy the balances due for 1997 and 1998. The bank agreed to make payment on his account from funds escrowed in his name. Through the error of a bank employee, the checks were sent to COUNTY in error. COUNTY held the funds until June or July of 2001. Having no balance against which to credit the payments, COUNTY returned the checks to the bank. The bank credited that amount back to Petitioner’s account. Although that credit appeared on Petitioner’s bank statements, he did not notice it, and he continued to make payments on the loan without inquiring into the credit.

In the meantime, Petitioner was making payments under his payment agreement. He assumed that his 1997 and 1998 balances were paid off and that the payments were being applied to his 1999 balance due. Instead, his payments were being applied to his prior year balances and interest continued to accrue on his account for 1997, 1998 and 1999. He eventually received a lien notice that alerted him to a problem. At that time, he inquired with the bank and learned that the amount of $$$$$ had never been paid over to the Tax Commission.

Petitioner redirected a payment in the amount of $$$$$ to the Tax Commission for tax years 1997 and 1998. However, additional interest had accrued for those years leaving a balance due of about $$$$$. Petitioner contacted the Ogden office for pay off information for the 1999 and 2000 years, then instructed that his 2001 refund be applied toward his 1999 and 2000 balances in accordance with the instructions he received.

Petitioner requested a waiver of penalty and interest accruing after December of 2000, which is the time that the bank should have made payment on his account. The Waivers Unit denied his request to waive penalties because he had prior penalties associated with the 1995 and 1996 tax years as well as penalties associated with subsequent years. The Unit denied waiver of interest because there was no indication of Tax Commission error. In the denial letter, the Taxpayer Services Division notified him of the remaining balance due, which relates back to the bank error on the 1997 and 1998 pay off. Petitioner asks for a waiver on the theory that the error involved was bank error.

The late filing and late payment penalties were imposed because Petitioner failed to timely file his returns and / or make payment of tax due within the time frames specified by law. The penalties are attributable to Petitioner’s failure to diligently file and remit his returns and payments when due. Respondent states that no additional penalties attached as a result of the bank error. Although the Tax Commission has a lenient waiver policy for penalties arising from first time error, the penalties assessed for 1997, 1998, 1999 and or 2000 were not first time errors. Therefore, the Commission upholds the Division’s denial of the penalty waiver.

With regard to interest, the Tax Commission’s policy is quite strict. There must be a showing of Tax Commission error. There was no indication of Tax Commission error in this case. Petitioner’s request for waiver is denied.

DECISION AND ORDER

Petitioner’s request is denied.

BY ORDER OF THE COMMISSION:

DATED this 26^th day of July , 2002.

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Administrative Law Judge

The undersigned Commissioners have reviewed this matter and concur in this decision.

Pam Hendrickson R. Bruce Johnson

Commission Chair Commissioner

Palmer DePaulis Marc B. Johnson

Commissioner Commissioner