BEFORE THE STATE TAX COMMISSION OF UTAH
: Informal Decision
AUDITING DIVISION OF THE :
UTAH STATE TAX COMMISSION, :
Respondent. : Appeal No. 85 0235
: Serial No. XXXXX
STATEMENT OF CASE
This is a Decision from an Informal Hearing in the matter of XXXXX (Petitioner). An Informal Hearing, before the Utah State Tax Commission, was held on XXXXX, at 2:30 p.m. James E. Harward, Hearing Officer, heard the matter for the Utah State Tax Commission. XXXXX, controller for XXXXX, represented the Petitioner. XXXXX represented the Auditing Division (Respondent). The Respondent claimed that a 10% penalty should be assessed against the Petitioner for failure to remit the required sales tax. The Respondent also requested an additional 25% penalty for Petitioner's failure to comply with the licensing requirement as set forth in Utah Code Ann. §59-16-9 (1986). The Respondent argued that Tax Commission Rule A12-02-U6 established Petitioner's liability with respect to the use tax in question. Tax Commission Rule A12-02-U6 states that the purchaser "must account for the tax liability by paying the tax: ...(b) directly to the State Tax Commission if the retailer from whom the property was purchased does not hold a certificate of registration under the use tax act."
In the present case, the retailer (XXXXX) did not have a Utah sales tax license or a Utah use tax registration certificate.
The Petitioner stated that its failure to pay the use tax was neither negligent nor intentional. To support this claim, the Petitioner made reference to a specific clause found in the purchase agreement between XXXXX (Petitioner) and XXXXX. This clause stated that the "above price for cement is plus applicable sales tax." The Petitioner stated that it was their belief that XXXXX would include the sales tax in the bill of sale. The Petitioner also claimed that for transactions of this type, the retailer is the one who collects the sales tax. For this reason the Petitioner did not have a Utah sales and use tax license.
DECISION AND ORDER
Based upon the foregoing facts and the evidence presented at the hearing, it is the Decision of the Commission to sustain the 10% negligence penalty and waive the 25% licensing penalty. This decision is in accord with Utah Code Ann. §59-16-9, and takes into consideration the terms of the contract between the Petitioner and the Petitioner's supplier.
DATED this 7 day of October, 1986.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis *
Since the hearing on this case, Chairman Mark K. Buchi has resigned and R. H.
Hansen has been appointed as the Chairman for the Commission. G. Blaine Davis has been appointed as a
Commissioner and has been duly advised of the facts and circumstances regarding
this case and is qualified to sign this decision.