BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX, )
:
Petitioner, )
:
v. ) INFORMAL DECISION
:
)
COLLECTION
DIVISION OF THE : Appeal No. 86 0287
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 penalty and
interest on individual income tax account No. XXXXX for the first two quarters
of XXXXX. An Informal Hearing was held
on XXXXX, in the offices of the Utah State Tax Commission. David J. Angerhofer, Hearing Officer, heard
the matter for the Commission. XXXXX
represented the Petitioner.
XXXXX
was acquired by XXXXX in XXXXX.
Petitioner stated that, at the time of the acquisition, XXXXX was
insolvent and had a deficit net worth of $$$$$, based on an audit report from a
local accounting firm which Petitioner had hired to investigate the
company. Once the Petitioner acquired
XXXXX, Petitioner invested an initial $$$$$ to settle all liabilities,
including taxes.
Subsequent
to the acquisition, Petitioner found that the payroll and tax records of XXXXX
were in error. Petitioner had to redo
almost every tax report. The incorrect
tax returns had resulted in penalties.
Petitioner paid the Utah taxes on XXXXX, but erroneously overpaid when
it declared all state taxes (including California, Colorado and Idaho) to Utah.
Petitioner asserts that this should be a mitigating factor.
Petitioner
presented evidence that the Internal Revenue Service had rendered relief from
the penalties which it imposed for the same circumstances and requests that the
Tax Commission also waive the penalty and interest. Petitioner notes that, had
it not assumed XXXXX, back taxes would not have been paid and twenty Utah
employees would have lost their jobs since XXXXX would have gone bankrupt.
FINDINGS
The
tax due for the first quarter of XXXXX was $$$$$. Respondent assessed a penalty of $$$$$ and interest of $$$$$ as
of XXXXX. The tax due for the second quarter of XXXXX was $$$$$. Respondent assessed a penalty of $$$$$ and
interest of $$$$$ as of XXXXX.
By
acquiring XXXXX, XXXXX became liable for all debts including taxes, penalty and
interest. Petitioner properly employed
a local accounting firm to audit the books of XXXXX, in order that Petitioner
might have a true understanding of the financial condition of XXXXX. Petitioner chose the accounting firm and is
responsible for the consequences of their audit report. If the Petitioner feels that the audit
report was deficient and that Petitioner did not receive a true and accurate
report of XXXXX's financial condition including the status of its taxes, then
this is a matter which is best resolved between Petitioner and the accounting
firm. The Tax Commission is not in a
position to protect Petitioner from the consequences of its business decisions.
DECISION AND ORDER
It
is the Decision and Order of the Utah State Tax Commission that Petitioner's
request for waiver of penalty and interest on individual income tax account No.
XXXXX for the first and second quarters of XXXXX be denied.
The
assessment of penalty and interest by the Collection Division of the Utah State
Tax Commission is hereby affirmed.
DATED
this 1 day of December, 1986.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner