Penalty & Interest
†††††††††††††††††††††††††††††††††††† BEFORE THE UTAH STATE TAX COMMISSION
)†††† Appeal No.††††† 03-0282 †††
)†††† Account No. †† #####
TAXPAYER SERVICES DIVISION, ††††††††††† )
UTAH STATE TAX COMMISSION,††††††††††† )†††† Tax Type:† Penalty & Interest
Respondent.†††††††††††††††††††††††††††† )†††† Judge:†††††††††††††† Phan††††††††††
Jane Phan, Administrative Law Judge
For Petitioner:†††††††† PETITIONER REP 1, Controller
††††††††††††††††††††††††††††† PETITIONER REP 2, CPA
For Respondent:†††† Jan Sanchez, Supervisor OIC/Waiver Unit
††††††††††††††††††††††††††††† Vickie Hymas, Tax Compliance Agent
††††††††††††††††††††††††††††††††††††††††††††††††††††† STATEMENT OF THE CASE
This matter came before the Commission for an Initial Hearing on April 21, 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).
Petitioner is appealing penalties and interest assessed for the late filing and payment of sales tax for the monthly filing periods of June through November 2001 and January 2002.†
Petitionerís representatives explained that COMPANY had been retained to perform the accounting and tax functions for Petitioner during the periods at issue.† COMPANY performed these functions for a number of other business.† The responsibility for filing the sales and tourism tax returns for Petitioner had been delegated by COMAPNY to an employee who was neither an accountant nor a CPA.† According to Petitionerís representatives, it became apparent after the fact that this employee did not know how or was incapable of performing the job function assigned.† It was Petitionerís representatives statement that after the errors were made by this employee, she actively hid the errors from supervisors and management of COMPANY which resulted in a disbursement to Petitionerís principals of the funds in the bank account that had been deposited to pay the taxes.
Petitionerís representatives state that Petitioner was disabled from timely compliance, ďdue to the malfeasance and misfeasance of the employee responsible for accounting for the tax.Ē†† They state that they could not correct the errors right away because the employee hid correspondences from the State Tax Commission concerning the delinquencies.†† Petitionerís representatives also cites to a federal Tax Court cases concerning reasonable cause for waiver of penalties for federal tax purposes.†
As the State Tax Commissionís reasonable cause guidelines for waiver of penalties do not necessary follow the federal program, the Commission does not find the federal case law controlling.† The Commission also notes that by the time any correspondence for a particular period would have been sent by the Tax Commission, penalties would have been incurred for late filing and payment for that period.†††††††††
Respondentís representatives explained that they had already waived a portion of the penalties at issue.†† Respondent waived penalties and reinstalled the vendor discount for the periods of June, July, September and October 2001.† They had not waived penalties or reinstalled the discount for the periods of August and November 2001, or January 2002.††† They explained that for the August period an amended return had been filed on July 2, 2002 and had not been paid until August 13, 2002, which they felt separated it from the other filings.††
†††††††††††††††††††††††††††††††††††††††††††††††††††††††† DECISION AND ORDER
A business can not merely delegate the responsibility for tax filings to an unqualified employee, not provide appropriate training and fail to provide reasonable supervision and then, when the employee fails to perform the delegated task, claim absolution of any responsibility.††† In this matter substantial penalties have already been waived.† The Commission finds no cause for further waiver.† ††††††††††††††††††††
Based upon the foregoing, the Commission finds that sufficient cause has not been shown to justify a waiver of the penalties associated with Petitionerís late payment and filing of sales tax for the periods of August and November 2001 and January 2002.† 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 ††1st† †day of ††May† , 2003.
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 ††1st† †day of ††May† , 2003.
Pam Hendrickson†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† R. Bruce Johnson
Commission Chair††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Commissioner
Palmer DePaulis†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Marc B. Johnson