BEFORE THE UTAH STATE TAX COMMISSION
Petitioner : FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
AUDITING DIVISION OF THE : Appeal No. 89-1315
UTAH STATE TAX COMMISSION : 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 on behalf of the Commission. Present and representing the Petitioner was XXXXX. Present and representing the Respondent was XXXXX, Assistant Attorney General
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 sales tax.
2. The period in question is XXXXX.
3. As a result of an audit conducted on the Petitioner's business during the above mentioned period of time, a sales tax deficiency in the amount of $$$$$ was assessed.
4. The bulk of that deficiency arose from the manner in which the Petitioner treated the sale and installation of electrical equipment on one particular contracting job.
5. The Petitioner had purchased materials used in the above mentioned job tax free using its tax exemption number. The Petitioner then did not charge sales tax to its customer on the job in question because the customer had also presented a sales tax exemption certificate to the Petitioner.
6. As a result of the audit conducted by the Auditing Division, the Petitioner was found to be a real property contractor and, therefore, the manner in which it had been treating sales tax on the purchases of equipment and supplies was found to be improper.
7. Although no penalty was assessed for the sales tax deficiency, interest in the amount of $$$$$ was assessed against the Petitioner.
8. After receiving the audit report, the Petitioner then met with its customers and determined that the sales tax deficiency would be paid by both parties in proportion to the amount they felt they were responsible for. It is the Petitioner's position that it should not be responsible for the entire amount of interest, but that its customers should also bear part of the cost.
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 as a real property contractor should pay the sales tax on materials and supplies at the time it purchases them from its vendors rather than purchasing it tax free and then passing the sales tax along to its customers. The Petitioner failed to do this and, therefore, the imposition of interest against the Petitioner is appropriate.
Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify a waiver of the interest associated with the audit period XXXXX. It is so ordered.
DATED this 15th day of January, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis