BEFORE THE UTAH STATE TAX COMMISSION
Petitioner : FINDINGS OF FACT,
: CONCLUSIONS OF LAW
: AND FINAL DECISION
: Appeal No. 89-1621
COLLECTION DIVISION OF THE :
UTAH STATE TAX COMMISSION :
: Account No. XXXXX
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 and XXXXX. No one representing Respondent appeared.
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 sales and use tax.
2. The periods in question are the third and fourth quarter of XXXXX and the first quarter of XXXXX. XXXXX was president of XXXXX (Petitioner) from XXXXX to XXXXX. During this time he was in partnership with XXXXX who managed the office while XXXXX managed the auto mechanics shop. Although Mr. XXXXX was designated as president, he managed only the automotive portion of the business and did nothing that had to do with the paperwork or business dealings of the Petitioner. Because of this, Mr. XXXXX was not aware that Mr. XXXXX had not been paying taxes.
3. When it became apparent, however, that Mr. XXXXX was not competently performing his part of the business, the partnership was terminated in XXXXX. At that time, Mr. XXXXX agreed to take all responsibility for the business including past due taxes and current taxes as they came due. Mr. XXXXX intended to continue the business as sole proprietor. Mr. XXXXX was under the impression that Mr. XXXXX had taken care of the taxes until other legal actions against the business apprised him of the difficulties that Mr. XXXXX was having. The business folded and Mr. XXXXX left town. Mr. and Mrs. XXXXX do not know where Mr. XXXXX is at the present time.
4. Mr. XXXXX had not had any dealings with the business papers of the Petitioner. He had been unable to locate those papers because Mr. XXXXX either took them or destroyed them. Consequently, Mr. XXXXX was under the necessity of obtaining tax forms from the Tax Commission. After some searching he was also able to locate the accountant Mr. XXXXX had used for the business and was able to obtain from that accountant copies of some of the business papers. As soon as Mr. XXXXX was able to put these things together, he paid the taxes for the periods in question in full. The penalties and interest that were assessed because of the late payment of the taxes are still outstanding.
5. Petitioners, Mr. and Mrs. XXXXX now request that the penalties and interest be waived.
CONCLUSIONS OF LAW
1. Utah Code Ann. §59-1-401 and59-1-402 provide that penalties and interest shall be assessed for the late filing of sales taxes.
2. Utah Code Ann. 59-1-401(8) provides that the Commission may, upon reasonable cause shown, waive or reduce the penalties assessed under the above statutes.
3. Such reasonable cause has been shown for waiver of the penalties in this case. The loss of the business records and the gross negligence on the part of Mr. XXXXX indicate that such a waiver is proper. Mr. XXXXX should not be liable for Mr. XXXXX's negligence. Interest amounts, however, should not be waived since the State was deprived of the use of the tax funds in question until they were paid, and the State should be compensated for the loss of the use of the money.
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 penalties be granted. Petitioner's request for waiver of interest is denied, but it is ordered that interest amounts be recalculated to adjust for the waiver of the penalty.
DATED this 17 day of May, 1990. BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis