89-1051 - Special Fuel

 

BEFORE THE UTAH STATE TAX COMMISSION

_____________________________________

XXXXX

Petitioner :

:

: FINDINGS OF FACT,

: CONCLUSIONS OF LAW

: AND FINAL DECISION

COLLECTION DIVISION OF THE :

UTAH STATE TAX COMMISSION : Appeal No. 89-1051

: Account No. XXXXX

Respondent :

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission pursuant to the Utah Administrative Procedures Act for a formal hearing on XXXXX, before Joseph G. Linford, Presiding Officer. Petitioner was represented by XXXXX. No one representing the Respondent appeared at the hearing.

After reviewing the evidence and arguments of the parties in the record and the recommendation of the presiding officer, the Tax Commission hereby makes its:

FINDINGS OF FACT

1. The tax in question is special fuel tax.

2. The period in question is XXXXX.

3. During the time period in question, one of the employees hired by Petitioner to help run Petitioner's Utah operations was embezzling significant amounts of money from the Petitioner. Some of these monies were apparently tax monies and also included payments that were supposed to be remitted to other creditors of Petitioner. The employee involved in the embezzlement falsified records or concealed records from Petitioner's management, and therefore Petitioner thought that all taxes and other obligations were being kept current when, in fact, much of the money was going into this employee's personal bank account.

4. Early in XXXXX, Petitioner's management began to suspect these difficulties and subsequently investigated the situation. It was then that Petitioner discovered the embezzlement and the falsification or concealment of records. Up until this time the management of Petitioner had essentially let the Utah operation go without substantial control from Petitioner's management which made the embezzlement and concealment possible.

5. Because of these difficulties, Petitioner essentially shut down its operations in Utah.

6. Based on these facts, Petitioner now requests waiver of the penalty and interest assessed due to the late filing and payment of taxes during the period in question.

CONCLUSIONS OF LAW

1. Utah Code Ann. 59-1-401 and59-1-402 provide that penalty and interest shall be charged for the late payment and filing of taxes.

2. Utah Code Ann. 59-1-401(8) provides that the Tax Commission may, upon reasonable cause shown, waive or reduce penalties and interest assessed under the above statutes.

3. Such reasonable cause has been shown for waiver of the penalty in this case. The embezzlement of Petitioner's employee was a direct cause of the tax difficulties encountered by Petitioner during the time periods in question. But for the embezzlement, these difficulties would not have occurred. Interest should not be waived, however, since the State was deprived of the use of the tax funds and should be compensated for that loss.

DECISION AND ORDER

Based upon the foregoing, it is the decision and order of the Utah State Tax Commission that Petitioner's request for waiver of the penalties be granted. Any penalty amounts previously paid by Petitioner are hereby ordered to be refunded. Interest amounts are not waived, but are ordered to be recalculated to adjust for the waiver of the penalty.

DATED this 20th day of June, 1990. BY ORDER OF THE UTAH STATE TAX COMMISSION.

R. H. Hansen Roger O. Tew

Chairman Commissioner

ABSENT

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner