BEFORE THE STATE TAX COMMISSION OF UTAH
v. ) INFORMAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 86 0316
STATE TAX COMMISSION OF UTAH, ) Acct. No. XXXXX
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 withholding royalties oil and gas account No. XXXXX for the third quarter of XXXXX. An Informal Hearing was held on XXXXX, in the offices of the Utah State Tax Commission. XXXXX, Tax Appeals Supervisor, and David J. Angerhofer, Hearing Officer, heard the matter for the Commission. XXXXX represented the Petitioner. XXXXX and XXXXX represented the Respondent.
Petitioner owed a tax of $$$$$ for the third quarter of XXXXX. Petitioner testified that a check was prepared on XXXXX, for this amount and delivered to XXXXX. Petitioner submitted evidence which consisted of documentation from XXXXX showing that XXXXX of the Tax Commission mailroom signed for materials from Petitioner on 11:30 a.m., XXXXX.
On XXXXX, Petitioner received notice that the third quarter payment for XXXXX had not been received. Petitioner cancelled the XXXXX check and sent a new check to the Tax Commission on XXXXX. Respondent's records indicate that the tax was paid on XXXXX.
Respondent assessed a penalty in the aggregate of 25% on the tax. The penalty amounted to $$$$$, but was subsequently reduced by the Commission to $$$$$. Respondent also assessed interest of $$$$$. Petitioner requests a waiver of the $$$$$ penalty and a waiver of the full amount of the interest.
The purpose of the penalty is to insure compliance with the law, i.e., that a taxpayer timely files his taxes. Petitioner has met the burden of proof to establish that the check in the amount of taxes for the third quarter of XXXXX was timely filed with the Tax Commission.
Petitioner's duty to pay quarterly taxes extends to the duty to insure that the check for the taxes properly clears his bank. When thirty-days had passed and the check had not cleared Petitioner's bank, Petitioner should have taken note that a problem may have existed with this check. When sixty days had passed and the check still had not cleared the bank, Petitioner should have known that a problem definitely existed and should have contacted the Tax Commission to resolve the matter. Petitioner did nothing. Over six months later, on XXXXX, the Tax Commission contacted the Petitioner concerning the payment for the third quarter of XXXXX. Petitioner then sent a new check.
In this case, since Petitioner established that the check was received by the Tax Commission, the Petitioner is allowed a sixty day grace period without interest to allow for the fact that Petitioner conceivably may not have known for sixty days that a problem existed with the check. However, interest is properly assessed starting on the sixty-first day since Petitioner had use of the money during this time. Thus, the interest is properly assessed beginning on XXXXX.
DECISION AND ORDER
It is the Decision and Order of the Utah State Tax Commission that penalty is reduced to $$$$$ on Account No. XXXXX.
Interest is properly assessed on this account beginning on XXXXX.
The Collection Division of the Utah State Tax Commission is ordered to adjust its records in accordance with this decision.
DATED this 12 day of November of 1986.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis