BEFORE THE STATE TAX COMMISSION OF UTAH
v. ) ORDER DENYING PETITION
: FOR REHEARING
COLLECTION DIVISION OF THE : Appeal No. 86 0348
STATE TAX COMMISSION OF UTAH, ) Acct. No. XXXXX
STATEMENT OF CASE
An Informal Decision dated XXXXX, denied Petitioner's request for waiver of penalties applied to deficiencies in Petitioner's Motor Fuel Tax for the XXXXX, and XXXXX, liability periods. Petitioner subsequently petitioned for rehearing on the basis that the informal decision was based on a mistake of law. Petitioner claimed that the Commission used the disjunctive in the two part test set forth in Utah Code Ann. § 41-11-13 (Supp. 1986) which provides in part: "If not paid before that date the Tax Commission shall revoke his license and impose a penalty of ten per cent of the amount of the tax if the Tax Commission determines that the failure to pay said tax was due to willful neglect and was not due to reasonable cause. Petitioner claims that before the Commission can impose a penalty for failure to pay the tax it must find both that failure to pay was due to willful neglect and that it was not due to reasonable cause. The Commission hereby rejects Petitioner's petition for rehearing for the following reasons:
1. The Commission recognized, in the Informal Decision at page three, that the two part test set forth in Utah Code Ann. § 41-11-13 required the use of the conjunctive rather than the use of the disjunctive: "Utah Code Ann. § 41-11-13 (1953) imposes a penalty if the failure to pay tax 'was due to willful neglect and was not due to reasonable cause' (emphasis added)."
2. Once the Tax Commission determined that the failure to pay the tax was due to willful neglect and was not due to reasonable cause, Petitioner had the burden to demonstrate that its failure to pay the tax was not due to willful neglect and that there was a reasonable cause. In other words, in order to successfully appeal the penalty assessment, Petitioner had the burden of proving both prongs of the test contained in 41-11-13.
3. Not withstanding whether the two part test of 41-11-13 was properly applied, Petitioner's penalty assessment is more properly sustainable under 41-11-16 which provides in part: "To a deficiency there shall be added a penalty of ten per cent of the tax if any part is due to negligence or intentional disregard of the act or of authorized rules and regulations . . . ." The problems with Petitioner's XXXXX, and XXXXX, returns were that Petitioner did not pay enough tax, that is, there was a deficiency in the amount of tax paid. The penalties in this case were ten per cent of the deficiency and not ten per cent of the entire tax, which would be appropriate if the Petitioner did not pay the tax on time. The penalty was properly assessed under Utah Code Ann. § 41-11-16.
DECISION AND ORDER
Based on the foregoing facts and findings, it is the decision and order of the Utah State Tax Commission that Petitioner's Petition for Rehearing be denied.
DATED this 21 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