BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX
Petitioner, :
v. : INFORMAL DECISION
:
COLLECTION
DIVISION OF THE : Appeal No. 88-0614
UTAH STATE TAX COMMISSION, : Acct.
No. XXXXX
Respondent. :
_____________________________________
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.
FINDINGS
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
Commissioner