02-1757

Penalty and Interest

Signed 2/25/03

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

PETITIONER, )

) ORDER

Petitioner, )

) Appeal No. 02-1757

v. )

) Account No. #####

TAXPAYER SERVICES DIVISION, )

UTAH STATE TAX COMMISSION, ) Tax Type: Penalty & Interest

)

Respondent. ) Judge: Phan

_____________________________________

Presiding:

Jane Phan, Administrative Law Judge

Appearances:

For Petitioner: PETITIONER REP 1, CPA

PETITIONER REP 2

For Respondent: Janet Sanchez, Supervisor, Waiver Unit

STATEMENT OF THE CASE

This matter came before the Commission for an Initial Hearing on February 13, 2003.

APPLICABLE LAW

The Tax Commission is granted the authority to waive, reduce, or compromise penalties and interest upon a showing of reasonable cause. Utah Code Ann. '59-1-401(10).

DISCUSSION

Petitioner is appealing late filing and payment penalties assessed for the monthly filing periods from January through August 2001. Petitioner's representatives explained that there were really two reasons for the late filing and payment. The first was they did not know that Petitioner should have been filing withholding on a monthly basis. They thought Petitioner was a quarterly filer. Petitioner had been converted to a monthly filer in December 2000 and although notices would have been mailed, Petitioner's representative maintain they never did receive them. It was much later, in May of 2002, that Petitioner's learned of the filing status change. Petitioner's representatives also indicated that there was a second reason for the late payment and filings They stated they were not receiving payment timely from their contractors. They would issue the billing timely but it was 90 to 120 days before they would get paid.

Respondent's representative points out that Petitioner had a history of noncompliance so this was not a first time error. Also she explained that Petitioner's cash flow or financial problems were not basis for waiver of penalties or interest.

DECISION AND ORDER

In this matter it appears that the reason for Petitioner's late payment and filing was not that Petitioner was attempting to file on a quarterly basis, but instead a cash flow problem. Financial hardship is not basis for waiver of late filing and late payment penalties and interest in the administrative hearing process, although current ability to pay unpaid penalties or interest may be given consideration if Petitioner were to make an "Offer in Compromise" to the Taxpayer Services Division. Petitioner can make an "Offer in Compromise" regardless of the decision in this matter, but must contact Taxpayer Services Division (801) 297-6300 to do so.

Based upon the foregoing, the Commission finds that sufficient cause has not been shown to justify a waiver or reduction of the penalties and interest assessed for Petitioner's late filing and late payment of withholding tax for the periods from January 2001 through August 2001. It is so ordered.

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

Appeals Division

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 25^th day of February , 2003.

____________________________________

Jane Phan

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 25^th day of February , 2003.

Pam Hendrickson R. Bruce Johnson

Commission Chair Commissioner

Palmer DePaulis Marc B. Johnson

Commissioner Commissioner