BEFORE THE STATE TAX COMMISSION OF UTAH
v. : INFORMAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 88-0614
UTAH STATE TAX COMMISSION, : 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 waiver of penalty and interest assessments on Petitioners' XXXXX income tax return. Pursuant to Utah Code Ann. §63-46b-5(1)(b), no hearing was held. A review of Petitioners' file served as the evidentiary basis for this decision.
Petitioners filed their XXXXX income tax return with the Commission on XXXXX, but failed to remit the interest which had accrued on the tax due. Petitioners were assessed a late filing penalty and interest. Petitioners assert that they contacted the Commission in XXXXX and received a XXXXX month extension over the phone. However, Petitioners were unable to complete their return within the extended time period and so requested, and were granted by phone, another XXXXX month extension. There was no written confirmation of the extensions, nor are the Petitioners able to supply names of Commission contacts who granted the extensions.
The Petitioners' were assessed a 25 percent penalty for late filing under Utah Code Ann. §59-14A-89(a) (renumbered effective XXXXX by §59-10-539). Because it appears the Petitioners received erroneous information upon which they relied, the penalty was not correctly assessed.
However, Utah Code Ann. §59-14A-62 (amended and renumbered effective February 6, 1987 by §59-10-516), which authorizes the Commission, upon application, to grant an extension of time, requires that payment or withholding equaling 80 percent of the total tax due accompany the request for extension. If the amount is less than 80 percent, a penalty of one percent per month from the normal filing date, not to exceed six percent, is assessed. Petitioners' withholding in the amount of $$$$$ was less than 80 percent of the $$$$$ total. Therefore, an underpayment penalty of $$$$$ should have been assessed.
Utah Code Ann. §59-14A-87(b) (renumbered effective February 6, 1987 by §59-10-537) provides that interest of one percent per month shall accrue "whether or not any extension of time for payment was granted." Following administrative procedure, tax remittances are applied first to penalty, then to interest, then to the tax. Because Petitioners did not include payment for penalty and interest assessments with their tax remittance, the amount received by the Commission was applied to those assessments, leaving a balance of tax due. Interest at one percent per month has rightfully accrued on that balance to date. See Utah Code Ann. §59-14A-87 (Supp. 1986 (amended and renumbered to59-1-401)).
DECISION AND ORDER
Based on the foregoing facts, it is the decision and order of the Commission that the request for waiver of penalty and interest assessments be denied. However, the penalty assessment is to be adjusted, in accordance with the information given in this decision, to $$$$$.
DATED this 27 day of September, 1988.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
FOR THE COMMISSION
G. Blaine Davis