BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX
Petitioner, : FINDINGS OF FACT,
v. : CONCLUSIONS OF LAW
: AND FINAL
DECISION
AUDITING
DIVISION OF THE :
STATE TAX
COMMISSION OF UTAH, : Appeal No. 88-2840
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 Tax Commission. Present by telephone and representing the Petitioner
were XXXXX and XXXXX. Present and
representing the Respondent were XXXXX, Assistant Attorney General and XXXXX of
the Auditing Division.
The
Petitioner appealed the determination of an audit conducted by the Auditing
Division which found the Petitioner liable for a tax deficiency arising out of
the Petitioner's failure to withhold Utah taxes on employees by the Petitioner
who were temporarily in Utah on a job.
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 audit period is XXXXX through XXXXX.
3. The amount of deficiency as assessed by the
Auditing Division was $$$$$ plus penalty of $$$$$ and interest.
4. The Petitioner is a XXXXX company which
specializes in the application of XXXXX and XXXXX.
5. Pursuant to a contract with the XXXXX, the
Petitioner sent XXXXX of its employees to Utah to apply XXXXX to the streets
and highways of XXXXX counties.
6. The XXXXX workers from XXXXX spent
approximately XXXXX days while working in Utah. They began work during the week of XXXXX and completed work on
XXXXX. During that time they returned
to XXXXX for XXXXX days and then returned to Utah.
7. No Utah income taxes were withheld from the
workers wages XXXXX income taxes however, were withheld from their wages.
8. The Petitioner is prequalified to do
business in XXXXX states. In several of
those states, XXXXX has a reciprocal agreement whereby workers from another
state who are temporarily in XXXXX to do a job do not have XXXXX income taxes
withheld and XXXXX workers in those states who are there temporarily do not
have those state income taxes withheld.
The Petitioner assumed that Utah was one of those states.
9. Utah does not have a reciprocity agreement
with XXXXX regarding such matters.
10. The Petitioner withheld and remitted XXXXX
income tax on the approximately $$$$$ in wages paid to the XXXXX employees
while they were in Utah.
11. None of the XXXXX workers filed nonresident
Utah income tax returns for the period in question.
12. By way of an audit report dated XXXXX, the
Auditing Division found the Petitioner liable for $$$$$ in withholding taxes
and assessed a penalty of $$$$$ plus interest.
13. Petitioner filed a Petition for
Redetermination on XXXXX. No further
action was taken by the Commission until the matter was set for a Formal
Hearing on XXXXX.
CONCLUSIONS OF LAW
Each
employer making payment of wages shall deduct and withhold from wages an amount
which will, as closely as possible, pay the income tax imposed by this chapter
(Utah Code Ann §59-10-402(1)).
"Any
employer who is to do business within the state of Utah for a period not to
exceed 60 days in the aggregate during any calendar year may be relieved from
the requirement provided for under this part for such period by furnishing to
the Commission in advance a certificate so certifying. (Utah Code Ann. §59-10-402(2))."
DECISION AND ORDER
Had
the Petitioner applied for a waiver certificate as provided for by
§59-10-402(2), he would have been relieved of the requirements of
§59-10-402(1). Unfortunately, that
provision of the statute requires application in advance of the time such work
is to commence which the Petitioner failed to do.
Under
usual circumstances the Petitioner's failure to comply with the waiver
certificate procedure would result in the imposition of the withholding
requirements. This case, however, is
complicated by the fact that for reasons unknown, no action on the Petitioner's
appeal was taken by the Commission for approximately two years. If the Commission had responded in a timely
manner, sufficient time would have remained in which the Petitioner's employees
could have filed amended income tax returns and eliminate the need for the
Petitioner to pay additional withholding taxes.
Because
the delay by the Commission, in effect, denied the Petitioner the opportunity
to remedy the situation, the Tax Commission finds that imposition of the
withholding tax penalties and interest would be unjust.
Based
upon the foregoing, the Tax Commission grants the Petitioner's request to
rescind the audit deficiency, penalty and interest for the audit period XXXXX
through XXXXX.
It
is so ordered.
DATED
this 14 day of March, 1989.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner