BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX
:
Petitioner, : FINDINGS OF FACT,
v. : CONCLUSIONS OF LAW
: AND FINAL
DECISION
AUDITING
DIVISION OF THE :
UTAH STATE TAX COMMISSION : Appeal
No. 88-0694
Respondent. :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Paul F. Iwasaki, Presiding
Officer, heard the matter for and in behalf of the Commission. Present and representing the Petitioner was
XXXXX, Attorney at Law. Present also
were XXXXX. Present and representing the Respondent were XXXXX.
Based
upon the evidence and testimony presented at the hearing, the Tax Commission
hereby makes its:
FINDINGS OF FACT
1. The tax in question is withholding tax.
2. The period in question is XXXXX through
XXXXX.
3. XXXXX is a XXXXX corporation. In XXXXX and XXXXX the corporation obtained
some XXXXX properties in Utah and began operations there.
4. When the Utah operations were started up,
XXXXX requested information from the Tax Commission as to how the necessary
withholding taxes were to be handled.
5. XXXXX received a booklet from the Tax
Commission entitled "Utah Mineral Production Tax Guidelines" to aid
them in the handling of withholding tax.
6. The constant referral to
"royalties" within that booklet as well as the reference to
"royalties" on the return filed by XXXXX led XXXXX to believe that
withholding taxes need only be paid on royalties.
7. Based upon the belief that withholding need
only be made on royalty payments, XXXXX did not withhold taxes on payments made
to working interest owners. The
Petitioners were not aware of the requirement to withhold such taxes until
XXXXX and thereafter began to withhold the necessary taxes.
8. An audit conducted by the Auditing Division
for the period XXXXX through XXXXX established a deficiency for the failure to
withhold the taxes in question as well as established a penalty for the failure
to do so.
9. Negotiations between XXXXX and the Auditing
Division led to an agreement whereby further proceedings on the matter were
stayed until XXXXX had an opportunity to contact those persons to whom
non-mineral production payments had been made and no withholding taken
out. Once contacted those individuals
were allowed time to file amended income tax returns to state such income.
10. All but three of the individuals so affected
filed the amended return or had already included the income in their income tax
returns.
11. The entire tax deficiency had been paid by
the individual taxpayers. The
individual taxpayers who had not included the income in their original returns
were assessed a penalty.
CONCLUSIONS OF LAW
The
Tax Commission is granted the authority to waive, reduce or compromise
penalties and interest upon a reasonable showing of reasonable cause. (Utah
Code Ann. 59-1-401(8).)
DECISION AND ORDER
Based
upon the facts that the Petitioner may have been confused as to the appropriate
withholding taxes necessary to be withheld because of the communications and
the information provided by the Tax Commission and based upon the fact that the
taxes have been satisfied , the Tax Commission finds that sufficient cause
exists to waive the penalty and interest for the audit period XXXXX through
XXXXX.
DATED
this 20 day of April, 1990
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Chairman Commissioner
Joe B. Pacheco G.
Blaine Davis
Commissioner Commissioner