89-0615 - Sales

 

BEFORE THE UTAH STATE TAX COMMISSION

_____________________________________

XXXXX. )

;

Petitioner, : FINDINGS OF FACT,

: CONCLUSIONS OF LAW, and

v. : FINAL DECISION

:

: Appeal No. 89-0615

COLLECTION DIVISION OF THE :

STATE TAX COMMISSION OF UTAH ) Acct No. XXXXX

Respondent. :

_____________________________________

STATEMENT OF CASE

This matter comes before the Utah State Tax Commission pursuant to the Utah Rules of Administrative Procedure and the Administrative Procedures Act for formal adjudicative proceedings. The Petitioner, XXXXX, Inc., previously requested a waiver of the penalty and interest associated with this tax liability, received a waiver of the penalty and is now seeking a further waiver of all of the interest due on the account. This matter came on for hearing on XXXXX at 1:30 p.m. before Joseph G. Linford, Tax Appeals Hearing Officer. The Petitioner was represented at that hearing by XXXXX, President of XXXXX, Inc. The Tax Commission was represented by XXXXX.

Based upon the recommendation of the Presiding Officer and upon the facts and evidence in the file and presented at the hearing, the Tax Commission makes its:

FINDINGS OF FACT

1. The tax in question is sales tax.

2. The period in question is XXXXX to XXXXX.

3. Petitioner, XXXXX, Inc., is a Utah corporation specializing in the extraction of methane gas from coal. The Petitioner began extracting such gas in XXXXX and began marketing it in XXXXX.

4. The tax due from Petitioner in this case was primarily the result of a single sale lease-back transaction between Petitioner and its parent company, XXXXX, Inc. Petitioner constructed a natural gas conditioning facility in XXXXX and immediately sold it to XXXXX and then leased the facility from XXXXX so that the Petitioner could use that facility on its coal mine degasification project in XXXXX County, Utah. At that time, neither the Petitioner nor XXXXX were aware that this was a taxable transaction. Subsequent independent financial audits also did not reveal this fact to Petitioner. Also, because the transaction occurred early in the period in question, substantial amounts of interest were accruing without the Petitioner's knowledge.

5. As soon as Petitioner discovered that it did owe taxes on this transaction, it contacted the Collections Division of the Utah State Tax Commission in advance of the actual assessment and has since cooperated fully with the Commission in paying the tax liability.

CONCLUSIONS OF LAW

1. Utah Code Ann. 59-1-401,59-1-402,59-12-107(19) and59-12-111 (1987 Replacement, 1989 Supp.) provide that penalties and interest shall be assessed on the late payment of sales tax and on the late filing of tax returns.

2. Utah Code Ann. 59-1-401(8) (1987 Replacement, 1989 Supp.) provides that the Tax Commission may waive or reduce penalties and interest, imposed under the above statute, upon reasonable cause shown.

3. Such reasonable cause has not been shown in this case. Though Petitioner's mistake was one made in good faith, yet the interest assessment should nevertheless be paid because the state has been deprived of the use of the taxes in question and the statute requires payment of the interest. Petitioner's good faith and the extenuating circumstances of this case have already been taken into account in the Commission's decision to waive the penalty assessment, and such is not sufficient to now waive the interest assessment as well.

DECISION AND ORDER

Based on the foregoing, it is the decision and order of the Utah State Tax Commission that Petitioner's request for waiver of interest be denied. It is so ordered.

DATED this 23rd day of January, 1990.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

ABSENT

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner