88-0645 - Income





            Petitioner,                                                         :

v.                                                                                 :           FINDINGS OF FACT,

                                                                                    :           CONCLUSIONS OF LAW, &

                                                                                    :           FINAL DECISION

COLLECTION DIVISION OF THE                          :           Appeal No. 88-0645

STATE TAX COMMISSION OF UTAH,                  )           Acct. No. XXXXX

            Respondent.                                                     :



            A prehearing conference was held on XXXXX in the offices of the Utah State Tax Commission.  David J. Angerhofer, Presiding Officer, heard the matter for the Tax Commission.  XXXXX represented the Petitioner.  During the course of the prehearing conference the presiding officer converted the proceeding to a formal hearing.

            Petitioner stated that an extension request was timely filed on individual income tax account No. XXXXX for the tax year XXXXX.  Petitioner stated that he underestimated the tax due on the application for extension and acknowledged a one percent penalty, but requested an abatement of the remainder of the penalty.


            Petitioner prepared an extension request, form TC-546, on XXXXX.  On this form the Petitioner estimated that no tax would be due for the tax year XXXXX and calculated that nothing need be paid at the time the extension request was filed.  Petitioner filed a subsequent extension request on XXXXX, which request extended the due date until XXXXX.  On XXXXX the Petitioner filed a Utah resident long form individual income tax return, form TC-40.  The actual tax due for the tax year XXXXX amounted to $$$$$. $$$$$ had been previously credited to Petitioner's account for the tax year XXXXX pursuant to W-2 withholding leaving a balance due of $$$$$.

            Petitioner submitted a check in the amount of $$$$$ when the return was filed.  Petitioner did not, however, pay the accrued interest.

            Respondent assessed a 10 percent late filing penalty and a 10 percent late payment penalty pursuant to Utah Code Annotated Section 59-1-401 (1953) and assessed associated interest.


            The preponderance of the evidence indicates that Petitioner did timely file an extension request on individual income tax account No. XXXXX for the tax year XXXXX.  However, the extension request underestimated the amount of tax due.  Since the amount of payment remitted with the extension request (none) was less than 80 percent of the total tax reported when the tax return was filed and was less than the total tax paid on the income tax return for the tax year XXXXX, a penalty was properly due pursuant to Section 59-10-516(c) and Section 59-1-401(2)(b).  The proper penalty is 2 percent per month of the unpaid tax during the extension period.

            Petitioner was required to remit interest along with the tax when Petitioner filed the return on XXXXX pursuant to Section 59-10-537(5).  Since Petitioner failed to remit interest Petitioner underpaid the tax on XXXXX and was subject to a late payment penalty of $$$$$ or 10 percent of the balance due, whichever is greater.


            Based on the foregoing, the Utah State Tax Commission imposes a two percent per month penalty on individual income tax account No. XXXXX during the period of extension for the tax year XXXXX and imposes a $$$$$ late payment penalty for failure to pay interest when the extension period expired.

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

            DATED this 31 day of October, 1988.


R. H. Hansen                                                                Roger O. Tew

Chairman                                                                      Commissioner

Joe B. Pacheco                                                            G. Blaine Davis

Commissioner   Commissioner