87-3249 - Income





            Petitioner,                                                         :

v.                                                                                 :           INFORMAL DECISION

COLLECTION DIVISION OF THE                          :           Appeal No. 87-3249

            UTAH STATE TAX COMMISSION,            :           Acct. No. XXXXX

            Respondent.                                                     :



            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 interest on individual income tax account No. XXXXX for 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.

            Petitioner originally timely filed returns for XXXXX.  Petitioner's XXXXX tax return was audited by the IRS because of a large net operating loss.  This audit was finished on XXXXX.  In XXXXX, Petitioner filed amended returns for XXXXX to reflect the NOL and ITC carry-back.  The XXXXX tax returns were filed late because Petitioner was waiting for results from the XXXXX audit and because many of the original accounting records were requested by the FBI for use in its prosecution of a fraudulent company.

            Petitioner presented a letter dated XXXXX, which letter was from XXXXX, Managing Auditor of income tax.  This letter stated in part that penalty for XXXXX would be waived, that the Petitioner would be billed for tax due for XXXXX, and that refunds from XXXXX would be applied to those taxes due.

            Petitioner stated that the refunds were not properly applied to the tax owing for XXXXX.  Petitioner received the balance of the refund and was given the go ahead to cash it.  Penalty and interest was then assessed against the tax year XXXXX.  Penalty has been waived and Petitioner requests a waiver of interest.


            The Tax Commission had sufficient money with which to pay the tax liability for XXXXX from the time that the amended returns were filed in XXXXX. Petitioner has established that he relied upon Tax Commission authorization to cash the refund check.

            Interest is normally assessed when a taxpayer fails to remit sufficient funds to satisfy a tax liability.  The Tax Commission is denied the use of the money during the period of delinquency.  In the present matter, the Tax Commission has had an opportunity to use the money since XXXXX, the year in which Petitioner filed amended returns.  The fact that the refunds from XXXXX were not applied pursuant to the arrangement set forth by XXXXX in the XXXXX letter is not a factor over which Petitioner had control.


            Based on the foregoing, it is the Decision and Order of the Utah State Tax Commission that interest on individual income tax account No. XXXXX for XXXXX is abated from the date that Petitioner filed the amended returns.

            The Collection Division of the Utah State Tax Commission is hereby ordered to adjust its records in accordance with this decision.

            DATED this 9 day of May, 1988.


R. H. Hansen                                                                Roger O. Tew

Chairman                                                                      Commissioner

Joe B. Pacheco                                                            G. Blaine Davis

Commissioner   Commissioner