BEFORE THE UTAH STATE TAX COMMISSION
: DECISION OF
v. ) INFORMAL HEARING
COLLECTION DIVISION OF THE )
STATE TAX COMMISSION OF UTAH, : Appeal No. 86-0122
) Account No. XXXXX
STATEMENT OF CASE
An Informal Hearing was scheduled for August 21, 1986. Petitioner notified the Appeals Section of the Utah State Tax Commission that it desired a waiver of its right to an oral hearing in the above matter, and that it would prefer a decision based on the written materials in the file.
Due to clerical oversight, Petitioner's sales, use, and resort community tax prepayment return was not filed until XXXXX, although it was due on XXXXX. Respondent assessed a 10% penalty of $$$$$. Petitioner disputed the assessment of the penalty because a change in personnel resulted in clerical oversight of the prepayment return being filed, and because Petitioner had never before filed untimely.
Respondent concedes that Petitioner has an excellent filing history. Petitioner has not paid the penalty, but requests that the interest charges be abated as of XXXXX, based on a conversation Petitioner's representative had with XXXXX, in which XXXXX purportedly indicated to the Petitioner that interest would be abated as of that date. Petitioner subsequently paid $$$$$ to the Tax Commission representing interest up to XXXXX.
1. Utah Code Ann. § 59-15-5.1(3) (1953) provides for a penalty of 10% of the total amount of the prepayment due if the taxpayer fails to timely file a prepayment return.
2. When a taxpayer makes a late payment, the amount of the payment is applied first to penalty, then to interest, and last to principal. If the taxpayer does not pay an amount representing the amount of the penalty assessment, interest will continue to accrue until that amount is paid because that amount actually represents part or all of the principal tax liability. In order to abate the accrual of interest, the taxpayer must pay the amount representing the amount of the penalty assessment, and then petition for a waiver of the penalty if appropriate.
3. The Commission finds that while Petitioner did not intend to evade its sales and use tax liability, it was negligent in failing to pay its sales, use, and resort community tax liability on time. Therefore, the penalty was properly assessed.
DECISION AND ORDER
Based on the foregoing facts and the written evidence, it is the Decision and Order of the Utah State Tax Commission that the penalty assessment be sustained. Interest is ordered to accrue until the penalty is paid.
DATED this 7 day of October, 1986.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis *