BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX, )
:
Petitioner, )
:
v. ) ORDER DENYING PETITION
: FOR
REHEARING
)
COLLECTION
DIVISION OF THE : Appeal No. 86 0348
STATE TAX
COMMISSION OF UTAH, ) Acct. No. XXXXX
:
Respondent. )
_____________________________________
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
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner