87-1783 to 87-1784 - Withholding

 

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