BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 89-2603
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. Joseph G. Linford, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX, Certified Public Accountant. No one appeared representing the Respondent.
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 use tax.
2. The period in question is XXXXX.
3. In XXXXX, Petitioner assumed the lease on a XXXXX Mazda RX7 automobile from a previous lessee. This lease agreement was prepared by XXXXX for XXXXX. On XXXXX, Petitioner exercised the option to purchase the car, and to do so paid the residual value of $$$$$. Petitioner alleges that at that time there was no mention among any of the parties to the lease of any sales tax being due on the residual value of the car. Petitioner states that he had no idea that tax was due beyond what he paid for the residual value of the car, and that he thought that amount included taxes for the vehicle.
4. Petitioner obtained the car for the use of his son who was suffering from mental illness and who was unemployed. At one point in time while the car was still being leased, Petitioner sent it to Germany with the consent of the lien holder for his son to use while his son was staying there for an extended period of time. However, the car apparently did not arrive in Germany, and Petitioner spent approximately four or five months trying to get it back. Petitioner's son left Germany in the meantime, and went to live with a relative in Oregon for a short period of time and then came back to Salt Lake City. However, before the son came back to Salt Lake City, the automobile was sent to Oregon at the insistence of Petitioner after he had located it, and Petitioner registered it there because Petitioner's son told him that he wanted to work in Oregon. This occurred approximately in XXXXX. Two years after licensing the automobile in Oregon, Petitioner licensed it there again in XXXXX because his son said he wanted to go there to find employment. During this period of time, Petitioner was in Turkey on a special military assignment, and so it was difficult and inconvenient for Petitioner to make any proper arrangements regarding the car. Petitioner had never leased an automobile before and was not aware of the sales tax that comes due when an option to buy is exercised.
5. Based upon these facts, Petitioner requests that the 100% fraud penalty and the interest already assessed in this case be waived.
CONCLUSIONS OF LAW
1. Utah Code Ann. §§59-1-401 and59-1-402 provide that penalty and interest shall be assessed for the late payment and filing of taxes.
2. 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).)
3. Such reasonable cause has been shown for waiver of a portion of the penalty assessed. It appears under the circumstances that there was no fraudulent intent on the part of Petitioner to try to deprive the state of Utah of taxes due. The Respondent in this case has not met any burden of proof in establishing that there was such a fraudulent intent. Accordingly, the 100% fraud penalty should be reduced to a 10% negligence penalty. Interest should be reduced accordingly, but should not be fully waived because the State has been deprived of the use of the tax funds in question for a period of time and should be compensated for that loss of use.
DECISION AND ORDER
Based upon the foregoing, it is the decision and order of the Utah State Tax Commission that the 100% penalty be reduced to a 10% penalty and the interest amounts be adjusted accordingly. It is so ordered.
DATED this 20th day of August, 1990.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis