89-0122 & 89-2681 - Transient Room and Sales Tax

BEFORE THE UTAH STATE TAX COMMISSION

_____________________________________

XXXXX )

:

Petitioner )

: FINDINGS OF FACT,

v. ) CONCLUSIONS OF LAW

: AND FINAL DECISION

)

COLLECTION DIVISION OF THE : Appeal Nos. 89-0122

UTAH STATE TAX COMMISSION ) and 89-2681

Respondent : Account No. XXXXX

_____________________________________

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.

Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:

FINDINGS OF FACT

1. The taxes in question are transient room tax and sales tax.

2. The audit period in question is XXXXX through XXXXX.

3. The Petitioner is a limited partnership which is the owner of the XXXXX located in Salt Lake City, Utah.

4. An audit conducted during the periods XXXXX through XXXXX revealed a deficiency of room tax in the amount of $$$$$. The same audit also revealed a deficiency in sales tax in the amount of $$$$$.

5. The hotel was built in XXXXX. In XXXXX, management of the hotel was performed by XXXXX of XXXXX. That firm was responsible for preparation of financial statements, and the collection and remittance of sales and room tax returns.

6. In XXXXX, management of the hotel was taken over by XXXXX Hotel. That firm was responsible for the same management functions as conducted by its predecessor, XXXXX of XXXXX.

7. During the first part of XXXXX and through May of that year, an audit of the hotel was conducted by the Tax Commission and the above deficiencies were found.

8. On XXXXX the findings of that audit and the audit report were sent to XXXXX of XXXXX.

9. From XXXXX through XXXXX, XXXXX and the Tax Commission attempted settlement negotiations regarding the audit report.

10. Neither XXXXX hotel management nor XXXXX hotel associates knew of the audit deficiencies inasmuch as notice of the deficiency was sent to XXXXX.

11. The Petitioner did not become aware of the audit deficiencies until XXXXX, when warrants for the payment of taxes were served on the hotel.

12. Immediately upon learning of the deficiencies, the Petitioner paid the outstanding taxes as well as the penalty and accrued interest.

CONCLUSIONS OF LAW

The Tax Commission is granted the authority to waive, reduce, or compromise penalties and interest upon a showing of reasonable cause. (Utah Code Ann. 59-1-401(8).)

DECISION AND ORDER

In the present case, the Petitioner's representative was unable to explain why the notice of the tax deficiency was sent to the managing firm which was no longer performing such duties for the hotel. Absent a showing that the Commission had knowledge of the change of management and erroneously sent notice to the wrong party, it can only be assumed that the Commission was not put on notice as to the change of management and sent all its communications to the last representative designated to receive such by the hotel. It should be noted that at the very least, the hotel itself was put on constructive notice of the audit by way of the fact that the auditor's performed the audit at the hotel itself and went through the records of the hotel. Therefore, the hotel should have been alerted to the pending outcome of that audit and made inquiry into the findings when none was forthcoming.

Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify a waiver of the penalties or interest for the deficiency assessed on the sales and transient room liabilities for the audit period XXXXX through XXXXX. It is so ordered.

DATED this 4th 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