BEFORE THE STATE TAX COMMISSION OF UTAH
v. ) INFORMAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 86 0120
STATE TAX COMMISSION OF UTAH, )
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for an Informal Hearing on October 27, 1986. James E. Harward, Hearing Officer, heard the matter for the Tax Commission. XXXXX and XXXXX represented the Collection Division. XXXXX, Attorney at Law, represented XXXXX, Petitioner, who also appeared at the hearing.
XXXXX, originally began as a sole proprietorship of XXXXX. XXXXX approached XXXXX about forming a corporation under XXXXX. This was done on XXXXX, when the corporation was officially filed with the Secretary of State for the state of Utah. XXXXX was the president, XXXXX was the vice president and XXXXX, the wife of XXXXX was the secretary. A joint checking account was opened in XXXXX of XXXXX, whereby each of those individuals was given signature power up to $$$$$. Checks over $$$$$ required two signatures. No sales tax was collected nor was a sales tax license issued to the corporation. Both XXXXX and XXXXX signed checks on behalf of the corporation. Decisions to pay or not pay bills were made jointly by XXXXX and XXXXX. The sales tax liability was known by XXXXX and XXXXX prior to the audit conducted by the Tax Commission. The liability was ignored. In fact, a conscious decision was made by XXXXX not to pay the taxes. In most instances, XXXXX was handed invoices by XXXXX and told to pay or not to pay that particular invoice.
FINDINGS AND CONCLUSIONS
The Tax Commission finds that XXXXX was a person charged with the responsibility of collecting and accounting for and paying Utah sales tax, and made a conscious, voluntary effort to pay other creditors over the state government.
In making this finding, the Tax Commission determines that XXXXX was not the sole party responsible for the collection payment of the sales tax. From the evidence presented by the Petitioner, it appears that XXXXX also was one who was charged with the responsibility of collecting and paying sales tax. The Commission is not convinced by the argument of the distribution of ownership in the corporation that the liability for the tax, penalty, and interest should also be distributed according to the ownership, i.e., one third by XXXXX, and two thirds by XXXXX. The Commission, in these circumstances, will follow the long established policy of joint and several liability.
By this decision, the Tax Commission is directing the Collection Division of the Utah State Tax Commission to instigate personal jeopardy assessment procedures against XXXXX. The Tax Commission is further affirming the action taken by the Collection Division to this point in making a jeopardy assessment against XXXXX. The Tax Commission declines to abate any portion of that penalty assessment as it relates to ownership of the corporation and directs the Collection to proceed against each of the individuals on the joint and several liability basis until such time as the full amount of the tax, penalty and interest is paid.
DATED this 9 day of January, 1987.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis