87-0298 - Income

BEFORE THE STATE TAX COMMISSION OF UTAH

_____________________________________

XXXXX

            Petitioner,                                                         :           INFORMAL DECISION

v.                                                                                 :

COLLECTION DIVISION OF THE                          :

STATE TAX COMMISSION OF UTAH,                  )

            Respondent.                                                     :           Appeal No. 87-0298

                                                                                    :           Acct. No. XXXXX

_____________________________________

STATEMENT OF CASE

            An Informal Hearing was held on XXXXX.  XXXXX represented himself.  James E. Harward, Hearing Officer, heard the matter for the Utah State Tax Commission.  Petitioner requests a waiver of the penalty and interest assessed against a deficiency in tax paid for the tax year XXXXX. Petitioner testified that in XXXXX he was going through a divorce and that he and his wife were still filing joint returns that year.  Petitioner said that his wife paid the federal tax obligation for XXXXX and that he thought she paid the state tax obligation.  Petitioner owed a total of $$$$$ in XXXXX, and $$$$$ had been withheld during the year.  Petitioner consequently owed a balance of $$$$$ which apparently was never paid.  Petitioner testified that he first learned of the deficiency for the XXXXX tax year in XXXXX.  He said that he received a notice on XXXXX, and that he paid the balance due on XXXXX.  Petitioner believes that it is extremely unfair for the Tax Commission not to have notified him that there was an additional tax owing for just under five years while continuing to accrue interest.  Petitioner asserted that he files and pays his tax obligations promptly.  This statement is borne out by Respondent's filing records which indicate that after XXXXX, Petitioner has never filed nor paid his state tax obligation late.  Petitioner feels that the penalty and interest on his XXXXX tax obligation exist because of Tax Commission inaction and not as a result of his inaction.  Respondent's filing records show that on XXXXX, a notice of deficiency was sent to Petitioner.  The records do not show whether the notice was sent to Petitioner or Petitioner's wife.  The records also show that on XXXXX, a warrant letter was sent and on XXXXX, a warrant was issued.  On XXXXX, the Tax Commission received a docket return on the warrant.  A $$$$$ refund for the tax year XXXXX was applied to the XXXXX deficiency.  Following the XXXXX refund application, no action was taken on the XXXXX deficiency until XXXXX, when the Tax Commission sent Petitioner another notice that there was a deficiency amount owing for XXXXX.  As Petitioner indicated, Petitioner immediately paid the balance of the amount of the tax still owing ($$$$$).  Utah Code Ann.  59-14A-86 (Supp. 1986) (new Section 59-10-536) entitled Limitations on Assessment and Collection, states that the amount of tax imposed by the individual income tax act of XXXXX shall be assessed within three years after the date the return was filed.  The return was filed on XXXXX and the notice of deficiency was issued on XXXXX.  Respondent timely made the assessment.  Respondent had three years after the assessment in which to file a warrant.  The assessment was made on XXXXX.  The warrant was filed on XXXXX.  Respondent timely filed the warrant. Section 59-14A-79(e) (New Section 59-10-528(5)) provides that when a warrant has been filed with the county clerk, the Tax Commission shall be deemed to have obtained judgment against the taxpayer for the tax or other amounts.  Utah Code Ann.  78-12-22 provides for an eight year statute of limitation for an action upon a judgment of any state within the United States.  Under tax law, the filing of the warrant for taxes with the county clerk is deemed to be a judgment against the taxpayer by the State.  The Tax Commission did not exceed its statutes of limitation for collecting the tax.  First, the Tax Commission, within one year from the time the return was filed, filed a warrant with the county clerk which has the effect of obtaining a judgment against Petitioner. Then, within eight years of the time judgment was obtained against Petitioner, the Tax Commission has attempted to collect on the judgment.  The Commission declines to waive the penalty or interest assessed against Petitioner.  However, interest is ordered to be abated as of XXXXX, the date Petitioner paid the balance of the tax owing to the State of Utah.

DECISION AND ORDER

            Based on the foregoing, it is the Decision and Order of the Utah State Tax Commission to deny Petitioner's Request.  However, Respondent is ordered to abate the interest accruing against Petitioner as of XXXXX. Petitioner's filing history indicates that the amount of interest which had accrued through XXXXX, would be $$$$$.

            DATED this 1 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