BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX
:
Petitioner, )
:
v. ) INFORMAL DECISION
:
COLLECTION
DIVISION OF THE )
STATE TAX
COMMISSION : Appeal No. 86 0164
OF UTAH, ) Acct. No. XXXXX
:
Respondent. )
_____________________________________
STATEMENT OF CASE
An
Informal Hearing was held on June 24, XXXXX.
James E. Harward, Hearing Officer, heard the matter for the Tax
Commission. The Petitioner represented
himself.
The
Petitioner testified that he purchased two motorcycles from XXXXX in XXXXX,
Utah. During the negotiation for their
purchase, XXXXX told him that if he owned any property, he would be eligible
for a tax deferment. The Petitioner
said that he owned ten acres of land, and the sales person gave him a Certificate
of Exemption, which he signed. After
the Petitioner purchased the motorcycles, the Auditing Division of the Utah
State Tax Commission assessed a 100 percent penalty because the Petitioner is
not a farmer, nor does he farm the 10 acres he said he owned. The Petitioner paid the $$$$$ tax in XXXXX,
and requested a waiver of penalty and interest.
Petitioner received a form letter dated
XXXXX, from the Collection Division of the Utah State Tax Commission responding
to his request for waiver of penalty and interest. The item marked as applicable to the Petitioner stated:
4. Your request for waiver of penalties and or
interest has been reviewed by the Commission.
The waiver has been disapproved.
Charges assessed have been paid.
There is no balance due.
(Emphasis added).
However,
in XXXXX, Petitioner was notified that he owed $$$$$. Petitioner filed a
"Claim for Reduction or Waiver of Penalty and Interest" on
XXXXX. Prior to the Informal Hearing
being scheduled, the Collection Division sent Petitioner a Notice of Warrant
dated XXXXX, indicating that a warrant had been issued against his real and
personal property. Subsequently, an
Informal Hearing was scheduled.
FINDINGS
1. Utah Code Ann. § 59-10-22(3) (1953) provides that any person required to pay
Utah sales, use, or withholding taxes who willfully fails to collect the taxes,
fails to truthfully account for or pay the taxes, or willfully attempts to
evade or defeat the taxes will be liable for a penalty.
2. Utah Code Ann. § 59-10-22(5) (1953) provides that the Tax Commission shall assess
a penalty when it determines that a person is liable for a penalty in
accordance with Subsection (3).
3. Utah Code Ann. § 59-10-22(7) (1953) allows a person against whom a penalty has
been assessed to petition the State Tax Commission for a hearing. Subsection
(9) provides that in any hearing, the Tax Commission "shall consider any
inference and evidence that a person has willfully failed to collect,
truthfully account for or pay over any sales, use, or withholding tax imposed
by Utah law."
4. The Utah Sales Tax Act, Utah Code Ann. § 59-15-8 (Supp. 1986) provides:
If any part of the
[sales tax] deficiency is due to negligence or intentional disregard of
authorized rules and regulations with knowledge thereof, but without intent to
defraud, there shall be added the greater of $50 or 10 per cent of the total
amount of the deficiency and interest at the rate prescribed in Section
59-11-16 to the amount of deficiency from the time the return was due.
5. The Commission finds that the Petitioner
relied on XXXXX's representation that if the Petitioner owned property, he
would be eligible for a tax deferment.
Although Petitioner's reliance was not justified, the Commission finds
that the Petitioner did not willfully fail to pay the Sales Tax nor did he willfully
attempt to defraud the State. Because
Petitioner's reliance on XXXXX's sales pitch was foolish, a penalty is
appropriate; however, a 100 percent penalty is exorbitant absent an affirmative
showing of fraud by the Collection Division.
6. The Commission finds that Petitioner relied
on the representation in the XXXXX, letter from the Tax Commission that there
was no balance due; otherwise, Petitioner would have promptly and vigorously
protested the penalty as he had before and after he received the letter. Therefore, interest on the principal tax
liability should be assessed only through XXXXX.
DECISION AND ORDER
Based
on the facts, the written documentation provided, and the evidence presented at
the hearing, it is the Decision of the Utah State Tax Commission that:
1. The penalty be reduced to $$$$$, and the
interest associated with the penalty be reduced accordingly.
2. The interest on the principal tax liability
be assessed only through XXXXX, the date of the letter the Utah State Tax Commission
sent to Petitioner indicating that there was no balance due and owing.
DATED
this 7 day of August, 1986.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco
Commissioner