BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, : ORDER
COLLECTION DIVISION OF THE : Appeal No. 89-2471
UTAH STATE TAX COMMISSION, : Account No. XXXXX
STATEMENT OF CASE
This matter came before the Utah State Tax Commission upon a Petition for Reconsideration, dated XXXXX, filed by the Petitioner as a result of the Commission's final decision, dated XXXXX.
The Petition for Reconsideration states the following additional facts not before the Commission at the time the final decision was made:
...the former controller left the Company at the end of XXXXX. It was not until a month later that we discovered the embezzlement and I confronted him, in the presence of the Company's attorney, and he admitted to a number of instances of embezzlement.
Before he departed, the former controller assured his replacement that all payroll and sales taxes were paid. It was not until later that we received notices on both XXXXX and XXXXX. In fact, in our first correspondence on this matter on XXXXX, to XXXXX, I made reference to the prepayment for XXXXX. At that time, we were still unaware that the XXXXX payment was delinquent, and erroneously stated that the prior payments had been made on a timely basis.
As stated in our original petition, the controller, who had been a long time employee of XXXXX, was responsible for the filing of all sales tax returns. He was employed by the company through the second quarter of XXXXX. All correspondence relating to delinquent filings had been retained by the controller so that no other officer of the company was aware of the problem. It was in response to your notice regarding the XXXXX delinquencies that the company became aware that the XXXXX payment had not been made.
Upon being notified that the delinquencies related to more than one period the company contacted our office [Petitioner's accountant, XXXXX] for assistance. Company policies have been implemented to assure that these prepayments are made on a timely basis in the future.
Since the Company became aware of the XXXXX delinquency almost simultaneously with notification of the XXXXX delinquency, we feel that the facts which allowed a waiver of penalties for XXXXX should constitute reasonable cause for a waiver of the penalties relating to XXXXX as well.
1. Utah Administrative Rule R861-1A-5(P) provides that a Petition for Reconsideration "will allege as grounds for reconsideration either a mistake in law or fact, or the discovery of new evidence." Under this rule the Commission may exercise its discretion in granting or denying a Petition for Reconsideration.
2. The Tax Commission finds that the Petition for Reconsideration should be denied. Although Petitioner may not have had actual knowledge of the difficulties with the second quarter of XXXXX, Petitioner should have had such knowledge.
The two periods in question were a year apart. Petitioner's lack of management oversight and control over the controller left Petitioner ignorant of the difficulties during that time, and Petitioner would have become aware of the difficulties with better control.
DECISION AND ORDER
Based upon the foregoing, it is the decision and order of the Utah State Tax Commission that the petition for Reconsideration is denied.
DATED this 5th day of October, 1990.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis