86-0112 - Corporate Franchise

BEFORE THE STATE TAX COMMISSION OF UTAH

_____________________________________

XXXXX,

:

Petitioner, )

:

v. ) INFORMAL DECISION

:

)

COLLECTION DIVISION OF THE : Appeal No. 86 0112

STATE TAX COMMISSION OF UTAH, ) Acct. No. XXXXX

:

Respondent. )

_____________________________________

STATEMENT OF CASE

This is an appeal to the Utah State Tax Commission from a decision of the Collection Division of the Utah State Tax Commission (Respondent) to assess a penalty on Corporate Franchise Tax Account No. XXXXX for the tax year XXXXX. An Informal Hearing was held on August 20, 1986, in the offices of the Utah State Tax Commission. James E. Harward, Hearing Officer, heard the matter for the Tax Commission. XXXXX represented the Petitioner.

During XXXXX Petitioner changed accountants, effective January XXXXX. Prior to XXXXX the books and records of Petitioner's corporate income tax account were maintained in house by the office staff of the Petitioner. Petitioner's new accountant thought this procedure would continue and expected a trial balance of the books for XXXXX. Because of a misunderstanding, no books and records of the corporate income tax account were posted to the ledgers for XXXXX by the office staff of Petitioner. Once the misunderstanding was resolved, Petitioner's accountant posted the records for XXXXX and compiled the data required for the XXXXX tax return.

Respondent assessed a 15% late filing penalty of $$$$$, a civil penalty of $$$$$, and interest of $$$$$. Petitioner agrees to pay interest but requests an abatement of the late filing penalty and civil penalty.

FINDINGS

A 5% per month penalty is properly assessed if a return is not timely filed unless it is shown that the failure to file the return was "due to reasonable cause and not due to willful neglect." Utah Code Ann. 59-13-27 (1953). Petitioner did not meet the burden of proof to show that the failure to file a corporate franchise tax return for the calendar year XXXXX was reasonable. Therefore, the late filing penalty is applicable. Since Petition was three months late, a 15% penalty applies.

A civil penalty of $$$$$ is properly assessed against any person who "without fraudulent intent, fails to make, render, sign or verify any return, or to supply any information within the time required by or under the provisions of this [Franchise or Privilege Taxes] chapter." Utah Code Ann. 59-13-56(1) (1953). Petitioner failed to timely file the return for the tax year XXXXX. Therefore, Petitioner is subject to the civil penalty of $$$$$.

DECISION AND ORDER

It is the Decision and Order of the Utah State Tax Commission that the request for waiver of penalty on account No. XXXXX for the tax year XXXXX be denied.

The assessment of penalty and interest by the Collection Division of the Utah State Tax Commission is sustained.

DATED this 7 day of October of 1986.

BY ORDER OF THE STATE TAX COMMISSION OF UTAH.

R. H. Hansen Roger O. Tew

Chairman Commissioner

ABSENT

Joe B. Pacheco G. Blaine Davis *

Commissioner Commissioner

* 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.