BEFORE THE STATE TAX COMMISSION OF UTAH
v. : INFORMAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 88-0049
STATE TAX COMMISSION OF UTAH, ) Acct. No. XXXXX
STATEMENT OF CASE
This is an appeal to the Utah State Tax Commission for reconsideration of a Commission decision denying a request for a complete waiver of penalty and interest assessments on Petitioner's third quarter XXXXX sales tax return. Pursuant to Utah Code Ann. §63-46b-5(1)(b), no hearing was held. A review of Petitioner's file served as the evidentiary basis for this decision.
Petitioner, XXXXX, failed to file a timely third quarter XXXXX sales tax return and was assessed late filing penalty and interest charges. XXXXX, representative for the Petitioner, asserts that the failure to timely file was caused by difficult market conditions and lack of funds. Petitioner contacted the Commission regarding the situation before the due date when it was realized that the tax payment could not be made. A previous Commission decision reduced the penalty amount from $$$$$ to $$$$$. Petitioner requests a further reduction asserting that Petitioner's exceptional filing record should be cause enough for waiver of the penalty. Petitioner has been in business for the past XXXXX years and has consistently filed timely returns.
Utah Administrative Rule 865-02S-1 states the following: "A. The sales and use taxes r transaction taxes . . . . B. . . . the purchaser is the actual taxpayer. The vendor is charged with the duty of collecting the tax from the purchaser and of paying the tax to the state." Utah Administrative Rule 865-04S-1 states that the vendor is required to remit to the Tax Commission all tax funds in his possession and is a guarantor of all amounts required to be collected." These two rules imply that the vendor acts as a fiduciary for the state and that any tax collected belongs to the state from the time of collection, therefore, failure to remit the tax due to insufficient funds indicates a breech of that fiduciary relationship has occurred. Utah Code Ann. §59-1-401(1)(b) stipulates a penalty of the greater of $$$$$ or 10 percent of the tax due shall be assessed for failure to file a timely return, and Utah code Ann. §59-1-402 authorizes the Commission to charge interest at the rate of 1 percent per month on all delinquent taxes thus, both the penalty and interest assessed Petitioner's account are valid. However, Utah Code Ann. §59-1-401(7) authorizes the Commission to waive or reduce penalty assessments upon a showing of reasonable cause. Although the penalty has subsequently been reduced to $$$$$ further consideration is now given to Petitioner's request for complete abatement of the penalty assessment.
Petitioner has been in business for XXXXX years and has consistently filed timely returns with the Commission. This is the Petitioner's first late filing in its history of dealing with the Tax Commission. Because Petitioner has such an excellent record with the Commission, and because the Petitioner contacted the Commission before the tax due date to notify the Commission of the pending delinquency, a waiver of the penalty is granted. However, because the state of Utah was denied the use of the tax money during the delinquent period no interest will be waived.
DECISION AND ORDER
Based on the foregoing facts, it is the decision and order of the Commission that the request for a waiver of penalty be granted. The request for a waiver of interest is denied.
DATED this 5 day of October, 1988.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis