BEFORE THE STATE TAX COMMISSION
OF UTAH
_____________________________________
XXXXX
Petitioner, :
v. : INFORMAL DECISION
COLLECTION
DIVISION OF THE : Appeal No. 87-0883
UTAH STATE TAX COMMISSION, : Acct.
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 penalty and
interest on individual income tax account No. XXXXX for the tax year 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 represented the
Petitioner. At the hearing Petitioner
also requested that the tax years XXXXX be considered at this time. Petitioner stated that the return was filed
late but that reasonable cause existed for the late filing. The taxpayer had relied on a representation
made by an attorney holding himself out to be a tax attorney. Petitioner was
under the impression that no return needed to be filed for the tax year
XXXXX. Petitioner requests a waiver of
the penalty and interest.
FINDINGS
The
Petitioner has not received a denial of a request for waiver of penalty and
interest from Respondent for the tax years XXXXX. Therefore, these years will
not be addressed by the Tax Commission at this time. Petitioner was an elderly lady with real estate holdings in
XXXXX. XXXXX, Petitioner deeded all of
her real estate to XXXXX and XXXXX, her daughter and son. The XXXXX tax notice shows Petitioner as the
owner and the XXXXX tax notice shows XXXXX and XXXXX as tenants in common of
the real estate. A portion of the real
estate was sold on XXXXX to the Utah Department of Transportation. A letter to the Utah Department of
Transportation dated XXXXX named XXXXX as the present property owners. Proceeds of the sale were distributed to
XXXXX. A warranty deed to the Utah Department
of Transportation, dated XXXXX was signed by XXXXX. For the tax year XXXXX, the taxes due as a result of the sale of
the portion of the real estate were reported, filed and paid by Petitioner's
two children, XXXXX. Petitioner's accountant did not prepare an income tax
return for Petitioner for the tax year XXXXX because Petitioner had no
requirement to file according to the understanding of the Petitioner,
Petitioner's two children, and Petitioner's accountant. Petitioner died on XXXXX. When Petitioner's accountant asked the tax
attorney about the probate plans, the attorney told the accountant that the
children had held the real estate only as trustees. The attorney produced a document which was found to be a living
trust. Therefore, a probate was not
needed. On XXXXX, the attorney wrote a
letter to the bank changing the ownership of the deposited funds to XXXXX as
trustees. XXXXX returns for XXXXX were
then amended to get a refund of the tax paid on the sale of the real estate and
the tax paid on the interest income.
The accountant then filed a return for the Petitioner. The surfacing of the trust document created
an obligation for a return to be filed on behalf of the Petitioner, which
return reported the income from the sale of the real estate. Based on the foregoing, the Utah State Tax
Commission hereby waives the penalty on individual income tax account No. XXXXX
for the tax year XXXXX. The Tax Commission also waives the interest in this
matter since the Tax Commission was not denied the use of the money. The children had previously reported, filed
and paid the taxes on the sale of the real estate. Subsequent to the hearing, XXXXX provided a receipt for payment
of inheritance tax as evidence that the liability has been paid in full. The matter under appeal in the present
hearing concerns income tax. The
receipt does not apply.
DECISION AND ORDER
Based
on the foregoing, it is the Decision and Order of the Utah State Tax Commission
that penalty and interest on individual income tax account No. XXXXX for the
tax year XXXXX be waived. The tax years
XXXXX will not be considered at this time.
The Collection Division of the Utah State Tax Commission is hereby
ordered to adjust its records in accordance with this decision.
DATED
this 10 day of March, 1988.
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