: Decision on Request for Waiver
: Appeal No. 02-1251
Auditing Division of the Utah State :
This matter is before the Commission for consideration of Petitionerís request for waiver of the interest assessment imposed by Respondent. Petitioner does not deny liability for the taxes assessed but believes that the circumstances of this case may warrant relief from the interest assessment. There is no penalty assessment and there are no other issues under dispute in this matter.
Petitioners timely filed their return for tax year 2000. However, the W-2s that were not attached to the return did not match the amount claimed on the return. The Processing Division recalculated Petitionerís withholding to match the W-2 information submitted, adjusted the refund, and notified Petitionerís of the change.
Subsequent to this change, a second copy of Petitionerís original return was delivered to the Tax Commission. Respondent stated that it appears that this copy of Petitionerís state return was forwarded to the Tax Commission by the IRS. Petitioners state that they did not file any amended return, but it appears that upon receipt of the return, a Tax Commission employee marked the return as an amended return and then posted the return over the return that had already been corrected by the Processing Division. This return, being a copy of the original return, claimed a higher refund than had already been paid out, so an additional refund check was mailed to Petitioners.
When Petitioners received the second refund check, they assumed that the Tax Commission had discovered it had made an error and refunded the additional amount. Later, the Auditing Division discovered a discrepancy between this second posted return and the federal return and issued an assessment for the overpayment of the refund plus interest.
The adjustments that were made to Petitionerís return were correct and the amount refunded at that time was the correct amount of refund due. The second refund check arose out of a Tax Commission error of posting a copy of the original return over those adjustments. Petitioners do not dispute their liability to return any overpayment of the refund, but they ask for a waiver of the accumulated interest.
The Tax Commission has discretion to waive interest upon a showing of reasonable cause, but it will do so only on a showing that Tax Commission erred or that the taxpayer relied on erroneous advice from a Tax Commission employee. The facts of this situation suggest that the posting of the second copy of the return was Tax Commission error.