BEFORE THE STATE TAX COMMISSION OF UTAH
v. ) INFORMAL DECISION
AUDITING DIVISION OF THE )
STATE TAX COMMISSION : Appeal No. 86‑51‑0054
OF UTAH, )
STATEMENT OF CASE
An Informal Hearing was held on this matter, XXXXX. James E. Harward, Hearing Officer, heard the matter for and in behalf of the Utah State Tax Commission. The Petitioner was represented by XXXXX, C.P.A. and XXXXX, Company Treasurer. XXXXX and XXXXX represented the Respondent.
Respondent alleges that the Petitioner was negligent in placing the Utah Use Tax Account No. XXXXX in an inactive status and in failing to recognize its Use Tax liability for the contracts performed in Utah. The Petitioner does not contest the allegations; however, he feels the penalties are overly harsh.
Utah Code Ann. ' 59‑16‑9 states:
If any part of the deficiency for which a determination of an additional amount due is made is due to negligence or intentional disregard of the act or authorized rules and regulations, but without intent to defraud, a penalty of 10% of such amount shall be added, plus interest at the rate prescribed in ' 59‑11‑16 from the time the return was due. If any person not holding a sales tax license under the provisions of ' 59‑15‑3 makes a purchase of tangible personal property for storage, use, or other consumption in this state and fails to file a return or pay the tax due within 170 days from the date the return is due, this person shall pay a 25% penalty plus interest at the rate prescribed in ' 59‑11‑16 and all other penalties and interest as provided by this title.
The Petitioner contends that there was no continuity of personnel doing bookwork for the company, as both bookkeepers had died. Therefore, Petitioner asserts that they did not willfully fail to pay their taxes. However, the statute states that "negligence or intentional disregard of the act or authorized rules" is enough to assess the penalty. Negligence is defined as the failure to exercise that degree of care which a person of ordinary prudence would exercise under the same circumstances. It does not connote malicious will. Therefore, the Commission agrees with the Respondent's assertion that Petitioner was negligent and that the 10% negligence penalty as well as the 25% failure to register penalty, were not erroneously assessed.
DECISION AND ORDER
It is the Decision and Order of the Utah State Tax Commission that the Petitioner was negligent in continuing operations in Utah without a use tax license and in making no effort to accrue and pay the Utah Use Tax due. Therefore, it is the Decision and Order of the Utah State Tax Commission that the 10% negligence penalty and the 25% failure to register penalty assessed by the Audit Division shall be affirmed.
DATED this 3 day of September, 1986.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco
NOTICE: You have 30 days after the date on the Mailing Certificate to request a Formal Hearing.
(Note: There were only 3 commissioner's signatures on this decision)