BEFORE THE STATE TAX COMMISSION OF UTAH
v. ) INFORMAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 86 0503
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 interest on individual income tax account No. XXXXX for the tax years XXXXX and 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.
In XXXXX, Petitioner elected to carry back a federal investment tax credit (ITC). Federal taxes were decreased for the tax years XXXXX, XXXXX, and XXXXX. Petitioner's Utah individual income taxes correspondingly increased by $$$$$ for XXXXX, $$$$$ for XXXXX, and $$$$$ for XXXXX. Petitioner filed amended state income tax returns for the three years on XXXXX, the same day that Petitioner filed federal form 1045 (application for tentative refund) in which Petitioner carried back the ITC. Petitioner paid the additional taxes for XXXXX and XXXXX when the amended returns were filed.
On XXXXX, Respondent assessed interest of $$$$$ for the tax year XXXXX, and $$$$$ for the tax year XXXXX. Petitioner stated that the amended return was filed timely since it was not due until he made the election to carry back the ITC.
Petitioner's amended return was filed timely since a correct original return had been filed. There was no duty to file an amended return until Petitioner elected to carry back the ITC. Petitioner promptly filed the amended tax return as soon as the election was made. Therefore, no interest is due on this account.
Interest is properly assessed if "any amount of income tax is not paid on or before the last date prescribed in this [Individual Income Tax] act for payment." Utah Code Ann. ' 59‑14A‑87(a) (1953). On XXXXX, and XXXXX, Petitioner had fully paid all income tax due and owing at that time for the tax years XXXXX and XXXXX. Therefore, there was no amount remaining on which interest could be assessed.
The instructions for filing form TC‑40X (Utah Amended Individual Income Tax Return) state that for line 19 (Interest on additional tax):
The interest on tax due is 1 percent per month or fraction thereof from the due date of the return until paid.
The purpose of line 19 is to assess interest pursuant to Section 59‑14A‑87 on income tax due and owing as of the statutory due date because a correct original return including payment was not filed.
Interest would normally be assessed when an amended return is filed and additional tax is due because, for whatever reason, a correct original return was not filed. However, in the case of an ITC carryback, a correct original return was filed. When a taxpayer later elects to amend the return, not to correct it, but to adjust for the ITC carryback, interest is properly assessed from the due date of the amended return if the taxpayer does not include full payment with the amended return. If full payment is made, no interest is assessed.
If the intent of the instructions for line 19 were to always assess interest from the due date of the original return, then the words "original return" would have been used instead of just the word "return." The use of the word "return" allows for flexibility in the case of ITC carrybacks.
DECISION AND ORDER
It is the Decision and Order of the Utah State Tax Commission that Petitioner's request for waiver of interest on individual income tax account No. XXXXX for the tax years XXXXX and XXXXX be granted.
Interest is always assessed from the due date of the original return if an incorrect original return was filed. In the case of ITC carrybacks, where a correct original return has been filed, interest is assessed from the filing date of the amended return.
The Collection Division of the Utah State Tax Commission is hereby ordered to adjust its records in accordance with this decision.
DATED this 15 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
NOTICE: You have 30 days after the date on the Mailing Certificate to request a Formal Hearing.