BEFORE THE STATE TAX COMMISSION OF UTAH
Petitioner, : INFORMAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 87-0133
STATE TAX COMMISSION OF UTAH, ) Account No. XXXXX
STATEMENT OF CASE
This is an appeal to the Utah State Tax Commission from a decision from the Collection Division of the Utah State Tax Commission (Respondent) to assess a penalty against Petitioner in the amount of the total of the withholding taxes assessed against XXXXX for the XXXXX and for 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 Tax Commission. XXXXX represent himself. XXXXX represented the Respondent. Petitioner stated that there was no dispute as to the amount owed by XXXXX. Petitioner stated that the company was started in XXXXX and that it finished in XXXXX. Petitioner operated a haul route but incurred additional cost when XXXXX imposed new ordinances. Petitioner attempted to hire help to solve the problem. XXXXX took over control of the company in XXXXX and supplied funds for the creditors. Petitioner stated that XXXXX had full control of every aspect of the company. XXXXX advanced money to Petitioner so Petitioner could pay the bills. Petitioner is currently in litigation with XXXXX and the state of Utah. Respondent stated that Petitioner supervised employees, signed returns and checks, and was the president of the company. Petitioner made decisions as to who would get paid. Respondent stated that XXXXX did not tie up all the money and that Petitioner preferred other creditors over the Tax Commission.
The Tax Commission finds that Petitioner was a "responsible person" for the periods in question pursuant to Utah Code Ann.59-2-1321 (XXXXX) (formerly 59-10-22). As president of the company and as one who signed the returns and checks, Petitioner was a person "required to collect, truthfully account for and pay over the sales, use, or withholding tax imposed by law . . . ." Section 59-2-1321(3). Although XXXXX may have exercised some control over XXXXX insufficient evidence has been presented which would establish that Petitioner was relieved of all control by XXXXX. The Tax Commission finds that the Petitioner preferred other creditors over the state government. Regardless of the amount of control exercised by XXXXX, Petitioner had an independent source of income from a job in XXXXX, Utah (XXXXX job) and used this money to pay bills. Petitioner admitted that he paid other creditors to keep the business open. A finding that a taxpayer preferred other creditors over state government is sufficient to satisfy the second requirement of Section 59-2-1321, i.e., that a taxpayer has willfully failed to collect, truthfully account for and pay over the sales, use, or withholding tax imposed by law. Since Petitioner is "a responsible person" and since he willfully failed to collect, truthfully account for and pay over the withholding tax imposed by law, the Tax Commission finds Petitioner liable for a penalty as an individual in the amount of the total of the withholding taxes assessed against XXXXX.
DECISION AND ORDER
Based upon the foregoing, the Utah State Tax Commission hereby denies Petitioner's request for waiver of the penalty. The assessment of a penalty against the Petitioner as an individual in the amount of the total of the withholding tax assessed XXXXX by the Collection Division of the Utah State Tax Commission is hereby affirmed.
DATED this 2 day of February, 1988.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco Blaine Davis