BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX
:
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
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 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.
ABSENT
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner