BEFORE THE STATE TAX COMMISSION OF UTAH
v. ) INFORMAL DECISION
COLLECTION DIVISION OF THE ) Appeal No. 87-0215
STATE TAX COMMISSION OF UTAH, ) Account 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 a penalty against Petitioner as an individual, in the amount of the total of the sales taxes assessed against 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, attorney at law, and XXXXX represented the Petitioner. XXXXX, Tax Agent, and XXXXX, represented the Respondent. Petitioner stated that all sales tax returns were either filed timely or at least by XXXXX. The statute of limitations has run and Respondent may not assess a penalty against the Petitioner in the amount of the sales tax owed by XXXXX. Respondent had three years in which to assess the penalty but failed to do so. Petitioner also stated that the definition of person in Utah Code Ann. §59-10-22(5) (1953) was changed and renumbered to subsection (4) effective XXXXX. Petitioner did not qualify as a person subject to the personal penalty assessment prior to May 10, 1983. Petitioner also stated that he was not a "responsible person" nor was there a "willful" violation of a known duty to insure that the taxes were paid.
Respondent stated that all final decisions were made by Petitioner, and that Petitioner was a responsible party. Petitioner did know that taxes had not been paid, and if he did not know, then he exhibited willful disregard of the matter. Respondent stated that §59-10-22 does not have a statute of limitations and that Respondent has proceeded in a timely manner.
In the event the sales tax deficiency where a return has been filed and there is no fraud, "the amount of taxes imposed by this [sales tax] chapter shall be assessed within Appeal No. 87-0215 three years after the return was filed and if not so assessed no proceeding for the collection of the taxes shall be begun after the expiration of the period." Utah Code Ann. §59-15-8 (1953). Section 59-10-22(3) does not specify a statute of limitations for the assessment of a penalty in the amount of the tax delinquency. Therefore, the three year statute of limitations has set forth in Section 59-15-8 shall apply since the personal penalty assessment is based on the sales tax delinquency. The imposition of the same three year statute of limitations on Respondent in which to assess a deficiency against any taxpayer pursuant to Section 59-15-8, and to assess a personal penalty against a person required to collect, truthfully account for and pay over the sales tax does not leave Respondent a great deal of time in which to accomplish both duties, and a need for prompt action on the part of Respondent is recognized in Section 59-10-22(5): The penalty provided for in Subsection (3), is assessed as follows: a. If the tax commission determines in accordance with Subsection (3), that a person is liable for the penalty, the tax commission shall immediately assess the penalty and make immediate notice and demand for payment. (Emphasis added.) The tax periods in question are XXXXX, and XXXXX. Tax for the XXXXX was required to be filed by XXXXX. Petitioner indicated that Respondent did not dispute Appeal No. 87-0215 that the return was filed by XXXXX. Since the return was not filed by the statutory due date, the date on which the return was actually filed (XXXXX) starts the running of the statute of limitations. The statute of limitations had run by XXXXX. The penalty assessment against Petitioner was dated XXXXX. This was beyond the statute of limitations.
DECISION AND ORDER
Based on the foregoing, it is the Decision and Order of the Utah State Tax Commission that Petitioner is not liable for a penalty in the amount of the total of the sales taxes assessed against XXXXX. The Collection Division of the Utah State Tax Commission is hereby ordered to adjust its records in accordance with this decision.
DATED this 29 day of December, 1987.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis