BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
In Re: )
XXXXX ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
: AND FINAL
DECISION
: Appeal No.
87-1783
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Alan Hennebold, Presiding
Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner were
XXXXX, Controller, and XXXXX, Vice President-Finance. Based upon the evidence and testimony presented at the hearing,
the Tax Commission hereby makes its:
FINDINGS OF FACT
1.
The tax in question is withholding tax.
2.
The period in question is XXXXX.
3.
Petitioner's XXXXX state and federal withholding tax reports and payments were
due XXXXX. A new employee was
responsible for filing and paying the reports.
Due to inexperience, as well as problems with Petitioner's computer
system, the employee failed to file the reports or pay the taxes when due. Petitioner's system of internal controls
discovered the omissions prior to any contact from state or federal
authorities. Upon discovery, Petitioner
immediately filed the reports and paid the taxes. The Commission received Petitioner's XXXXX report and payment on
XXXXX.
4.
As a result of the delayed filing and payment of its state withholding tax, a
10% late filing penalty in the amount of $$$$$ was assessed against Petitioner,
plus associated interest.
5.
Following the incident in question, Petitioner implemented additional controls
to discover such problems prior to the applicable filing deadline. Apart from the period in question, the
Petitioner has filed every withholding tax report on time and paid its tax
liability in full.
6.
The Internal Revenue Service has waived penalty on Petitioner's federal
withholding tax liability for the period in question.
CONCLUSIONS OF LAW
The
Tax Commission is granted the authority to waive, reduce, or compromise
penalties and interest upon a showing of reasonable cause. (Utah Code Ann. §59-1-401(8).)
DECISION AND ORDER
Petitioner
admits its failure to timely file and pay its withholding tax liability for the
period in question. It explains the
error as arising from the inexperience of a new employee and problems with its
computer system.
While
an employee's error is generally not sufficient to justify waiver of penalty,
other mitigating circumstances are present in this case. Except for the period
in question, Petitioner has an unblemished record of timely filing and full
payment of withholding tax. Petitioner,
itself, discovered the error for the period in question and corrected that
error without intervention by the Commission.
Finally, the Petitioner has implemented additional controls to prevent
the same error in the future.
Based
upon the foregoing, the Tax Commission concludes that reasonable cause has been
established to justify waiver of the penalty assessed against Petitioner in
connection with its withholding tax liability for XXXXX. Interest is not waived. It is so ordered.
DATED
this 6 day of February, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner