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