BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX
Petitioner, )
v. ) INFORMAL DECISION
)
COLLECTION
DIVISION OF THE ) Appeal No. 87-0224
STATE TAX
COMMISSION OF UTAH, ) Account No. XXXXX
Respondent. )
_____________________________________
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 pursuant to Utah Code Ann. §59-10-22(3) (1953) for taxes
owed by 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. XXXXX
represented the Respondent. On XXXXX,
the Tax Commission issued an Informal Decision in the matter of XXXXX. This informal decision affirmed an audit
report prepared by the Auditing Division of the Utah State Tax Commission after
withdrawing a duplicated item on the audit report. XXXXX, was formed to develop and market a three dimensional
viewer, but became inactive after selling one complete viewer, selling the
XXXXX from a second viewer, selling a third XXXXX, and holding a fourth XXXXX
for sale. The issue in XXXXX was
whether those activities constituted research and development or
manufacture. The Tax Commission held
that the activities did not rise to the level of manufacture.
XXXXX
has been inactive since XXXXX and its license was suspended on XXXXX, for
failure to file. Petitioner was the
secretary/treasurer of XXXXX.
Respondent assessed a penalty against Petitioner in the amount of the
total of the sales tax and the withholding tax assessed against XXXXX.
FINDINGS
A
person that is assessed pursuant to Utah Code Ann. §59-10-22(3) (1953) must be
(1) a "responsible" person and (2) must have willfully attempted to
evade the tax or the payment thereof.
The Tax Commission finds that the Petitioner was a responsible person
for the purpose of §59-10-22(3).
Petitioner was the secretary/treasurer of XXXXX, and did accounting for
the corporation.
The
Tax Commission finds that Petitioner did not willfully attempt to evade the
taxes or the payment thereof. At the
time that XXXXX was developing the 3-D Viewer, selling one completed viewer and
selling two other XXXXX, the corporation negligently assumed that the
activities constituted manufacturing and would not be taxable. This was not a situation in which the
corporation and its officers knew that the tax had to be paid, but attempted to
evade or defeat the tax. The willful
intent to evade or defeat the tax is the intent when the taxes are due.
The
Tax Commission finds that Petitioner is not liable for the assessment in the
amount of the outstanding sales taxes and withholding taxes assessment assessed
against XXXXX, and, therefore, does not reach the issue of the amount of tax to
be assessed.
DECISION AND ORDER
It
is the Decision and Order of the Utah State Tax Commission that Petitioner is
not personally liable for a penalty in the amount of the sales taxes and
withholding 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 26 day of October, 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