BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX
Petitioner :
v. : INFORMAL DECISION
AUDITING
DIVISION OF THE : Appeal No. 87-0873
STATE TAX
COMMISSION OF UTAH, )
Respondent. :
_____________________________________
STATEMENT OF CASE
This
is an appeal to the Utah State Tax Commission from a decision of the Auditing
Division of the Utah State Tax Commission (Respondent) to assess penalty and
interest on sales and use tax account No. XXXXX for the period XXXXX. A telephone conference 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. Petitioner
stated during the course of the hearing that it was in agreement with the
interest assessed but that it requested a waiver of penalty on the basis that
it was not negligent and that it did not intentionally disregard rules and
regulations. Petitioner experienced
tremendous growth during the audit period in question and did not have a system
in place to analyze the taxability of transactions involving the movement of
equipment and supplies from its various warehouses to hundreds of locations
across the country and to accrue and pay use tax in a timely manner to the
various taxing jurisdictions.
Petitioner has subsequently installed an automated system which will
analyze payments, purchases, and taxability.
Petitioner stated that it has made every effort to comply with the law
and that it is not negligent.
Petitioner noted that 20-25% of purchases in a Nebraska audit included
items where tax had already been paid. Petitioner has not prepared a study in
Utah to determine how much of the audit includes items where tax has already
been paid but suggested a parallel to the XXXXX audit. Petitioner did not object to the tax per se
but presented this argument as support for its contention that the penalty
should be reduced. Respondent noted
that Petitioner had been audited previously in Utah and that it was informed
then of its tax responsibilities.
Petitioner knew of the upcoming merger and was told of the tax
consequences. Respondent asserted that
Petitioner had knowledge of the rules and regulations, and that growth was not
excuse for ignoring taxes.
FINDINGS
Petitioner
had the burden of proof to establish that Respondent assessed penalty and
interest in error. Petitioner failed to
meet this burden of proof. The Tax
Commission finds no basis on which to reduce the amount of tax, penalty, or
interest as determined by Respondent.
Lack of an effective system to keep track of taxes, and rapid growth in
the company is not sufficient justification for waiver of penalty.
DECISION AND ORDER
It
is the Decision and Order of the Utah State Tax Commission that Petitioner's
request for waiver of penalty on sales and use tax account No. XXXXX for the
audit period from XXXXX be denied. The
assessment of tax penalty and interest by the Auditing Division of the Utah
State Tax Commission is hereby affirmed.
DATED
this 15 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