BEFORE THE STATE TAX COMMISSION OF UTAH
v. ) INFORMAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 86 0389
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 Individual Income Tax Account No. XXXXX for the tax year XXXXX. XXXXX (Petitioner) appeared for the Petitioners with their attorney. James E. Harward, Hearing Officer, heard the matter for the Tax Commission.
Petitioner's Individual Income Tax Return for the tax year XXXXX was required to be filed with the Utah State Tax Commission by XXXXX. Petitioner did not file the return until XXXXX. Respondent assessed a penalty of $$$$$ and interest of $$$$$ on the delinquent tax of XXXXX.
Petitioner stated that he obtained an IRS extension for the tax year XXXXX but did not file for a Utah extension since Petitioner supposed that Utah recognized the Federal extension as did Arkansas, where Petitioner lived for part of the year. Petitioner requests a waiver of penalty and interest since there was no intent to defraud the Tax Commission.
Respondent properly assessed a penalty of $$$$$ on the account. A $$$$$ civil penalty is properly imposed on "every person who, without fraudulent intent, fails to make, render, sign, or verify any return, or to supply any information within the time required by or under the provision of this [Individual Income Tax] chapter." Utah Code Ann. § 59-14A-92(a) (1953). A penalty of 5 percent for each month or any fraction thereof that the return is late, to a maximum of 25 percent, is properly assessed on the tax required to be shown on the return. Section 59-14A-89(a). A penalty of 20 percent was properly assessed since Petitioner paid the tax approximately 3 and 1/2 months late. The tax required to be shown on the return was $$$$$. $$$$$ was prepaid through W-2 withholding so the balance against which the penalty was to be applied was $$$$$. Twenty percent of $$$$$ is $$$$$.
A payment which is made to the Tax Commission is applied first to penalty then to interest and then to the tax involved. When Petitioner paid the $$$$$ on XXXXX, (including the $$$$$ withholding) this was applied first to the penalty of $$$$$ then to interest of $$$$$ and finally to the tax, leaving a balance due of $$$$$. On XXXXX, an additional 5 percent penalty was applied against this $$$$$ (reaching the maximum penalty of 25 percent) for a penalty of $$$$$. Thus the total penalty consists of a civil penalty of $$$$$, a 20 percent penalty of $$$$$ (assessed against $$$$$), and a 5 percent penalty of $$$$$ (assessed against $$$$$) for a total of $$$$$.
A total interest of $$$$$ as of XXXXX, was properly assessed against Petitioner. Petitioner has had use of the money since XXXXX, the date the Petitioner was required to remit this money to the Tax Commission.
DECISION AND ORDER
It is the Decision and Order of the Utah State Tax Commission that the Petition for waiver of penalty and interest on individual income tax Account No. XXXXX for the tax year XXXXX be denied.
The assessment of penalty and interest by the Collection Division of the Utah State Tax Commission is hereby affirmed.
DATED this 15 day of October, 1986.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis *