87-1141 - Income

BEFORE THE STATE TAX COMMISSION OF UTAH

_____________________________________

XXXXX

: INFORMAL DECISION

v. :

COLLECTION DIVISION OF THE : Appeal No. 87-1141

STATE TAX COMMISSION OF UTAH, ) 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 years 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, CPA, represented the Petitioner. Petitioner stated that for the tax years in question he was a 49% shareholder of a subchapter S corporation. Petitioner received no cash distributions with respect to the income which was distributed, entered into litigation with the 51% shareholder and received a settlement. Petitioner stated that the returns were filed on time but that problems with the subchapter S corporation prevented timely payment of the tax. Petitioner has paid the tax and interest and requests waiver of the penalty.

FINDINGS

Petitioner had the burden of proof to establish that the penalty was assessed in error. Petitioner failed to meet this burden of proof. The taxes were not timely paid for the periods in question. Petitioner had ten days from the date of the hearing (until XXXXX) in which to file a copy of the complaint and settlement. Nothing had been filed by the expiration of the tenth day. These materials were filed by XXXXX but contained nothing that would relieve the Petitioner from the obligation to pay the tax. Because Petitioner was a stockholder of a subchapter S corporation, he had an obligation to pay the tax even though he received no cash distributions with respect to the income which was distributed.

DECISION AND ORDER

Based on the foregoing, it is the Decision and Order of the Utah State Tax Commission that Petitioner's request for waiver of penalty on individual income tax account No. XXXXX for the tax years XXXXX be denied. The assessment of penalty and interest by the Collection Division of the Utah State Tax Commission is hereby affirmed.

DATED this 10 day of February, 1988.

BY ORDER OF THE STATE TAX COMMISSION OF UTAH.

R. H. Hansen Roger O. Tew

Chairman