85-0009 - Sales
BEFORE THE UTAH STATE TAX COMMISSION
In the Matter of:
: DECISION FROM SALES TAX
XXXXX ) REVOCATION HEARING
XXXXX, dba :
: Appeal No. 85-54-0009
This is a decision from a hearing regarding the sales tax license revocation of XXXXX and XXXXX, dba XXXXX (hereinafter referred to as Taxpayer"), requested by the Collections Division of the Utah State Tax Commission (hereinafter referred to as "Claimant").
The sales tax license revocation hearing was held on XXXXX, XXXXX, at the hour of 9:00 a.m. in the offices of the Utah State Tax Commission. XXXXX, Administrative Law Judge, heard the matter as and for the Utah State Tax Commission. XXXXX appeared representing the Taxpayer. XXXXX, Compliance Agent, appeared and presented the arguments for the Claimant.
After reviewing the evidence presented and the written documentation submitted, the Commission makes the following determinations:
1. Taxpayer was issued a sales tax license, No. XXXXX, for XXXXX on XXXXX. Such a license is valid until the vendor "ceases to do business, changes his business address, or until [the license is] revoked by the State Tax Commission." Utah Code Ann. § 59-15-3 (1953, as amended).
2. Taxpayer was responsible for the collection of sales taxes on the sale of his goods and services, Utah Code Ann. § 59-15-5(1) (1953, as amended). Taxpayer was required to hold the sales taxes in "escrow" for the Utah State Tax Commission (although a separate account was not required), and was required to remit these taxes to the State Tax Commission. Utah Code Ann. § 59-15-5(4) (1953, as amended). The sales taxes collected were expressly not to be used for profits, operating expenses, or any other use pertaining to the business of Taxpayer. Taxpayer was "deemed to be a person charged with the receipt, safekeeping, and transfer of public moneys. "Utah Code Ann. § 59-15-5(1) (1953, as amended).
Sales taxes are an addition to the price of a good or service over and above the profit margin that a vendor has established. These taxes do not alter the profits. If the Taxpayer had not included the sales tax collected in its profit margin, it would not have had any difficulty remitting the sales tax, regardless of how much or how little was sold during the quarter.
3. The sales tax collected are due and payable to the State Tax Commission quarterly on or before the thirtieth day of the month next succeeding each calendar quarterly period... . (Utah Code Ann. § 59-15-5(4) (1953, as amended).
4. The business was previously operated by XXXXX, which filed a petition in the Unites States Bankruptcy Court in XXXXX, requesting a Chapter 11 reorganization. It has been brought to our attention that due to a substantial tax deficiency owing to the Internal Revenue Service, the I.R.S. is considering submitting a request that the Court convert the Chapter 11 bankruptcy petition to a Chapter 7 bankruptcy. XXXXX, was controlled by XXXXX. XXXXX had failed to remit approximately $$$$$ in sales tax collected to the Commission during the period it operated the business.
5. Since XXXXX, the business has been operated by a partnership, XXXXX, with XXXXX and XXXXX as the partners. The business leases its premises from a partnership controlled by XXXXX and XXXXX. It is understood that due to financial difficulties, the XXXXX partnership is contemplating legal proceedings to void the lease agreement with XXXXX.
6. Taxpayer has failed to remit the sales taxes collected within the statutory limitations for the tax periods since the issuance of Sales Tax License No. XXXXX on XXXXX.
7. The Taxpayer has failed to make full payment of the balance of the deficiency in the sales tax monies collected by Taxpayer to the Commission for the period at issue. The sales tax deficiency for this period is in the amount of $$$$$.
8. There exists from the above facts a situation that substantially impairs the ability of Taxpayer to pay the present deficiency, and thus the Claimant has requested that the sales tax license, No. XXXXX, be revoked.
9. The Utah State Tax Commission is vested with the authority to revoke the license of "any person violating any provision of this [Sales Tax] Act...". Utah Code Ann. § 59-15-3 (1953, as amended). The only requirements are that the taxpayer must be given reasonable notice and a hearing prior to the revocation Id. This has been done. In addition, Claimant has repeatedly mentioned the possibility and imminence of revocation to the Taxpayer if the taxes remained delinquent.
THEREFORE, IT IS HEREBY DECIDED:
1. That Taxpayer was required to collect and remit sales taxes to the Utah State Tax Commission during the period in which Taxpayer remained in business at his present location.
2. That Taxpayer collected, but failed to properly remit the sales taxes for the tax periods since the issuance of the Sales Tax License, No. XXXXX, on XXXXX.
3. That Taxpayer has been given adequate and sufficient notice within which to comply with the Utah Sales Tax Act.
4. That Taxpayer's sales tax license, No. XXXXX, is hereby revoked for failure to comply with the provisions of the Utah Sales Tax Act, Utah Code Ann. § 59-15-3.
5. The revocation of Taxpayer's sales tax license is effective immediately, unless the Taxpayer requests in writing, within 3 working days from receipt of this decision, that the Commission stay the execution of this order for thirty (30) days, provided the Taxpayer is able to prove that the following conditions have been met:
a. A bond has been posted in the amount of the tax, penalty and
interest that is currently delinquent and due.
The bond must be in the form of a cashier's check, certificate of
deposit, surety bond, or cash: and
b. An account has been opened in a local financial institution by the
end of the first banking day following receipt of this decision. The account must name the Taxpayer's company
and the Utah State Tax Commission as co-owners. In addition, the Taxpayer must make weekly deposits into the
account in the amount of the current accruing sales tax liability.
6. That Taxpayer is ordered to close the doors of XXXXX to business and to deliver its sales tax license to the Utah State Tax Commission. Failure to comply with this order may result in criminal prosecution being taken against the Taxpayer.
DATED this 27th day of February, 1985.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
Mark K. Buchi Gay C. Cornia
G. Ellsworth Brunson Marthe F. Dyner