BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX
:
Petitioner : FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
v. : AND FINAL DECISION
:
: Appeal No.
89-2703
COLLECTION
DIVISION OF THE :
STATE TAX
COMMISSION OF UTAH )
: Acct 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. No one
representing the Respondent appeared.
Based
upon 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 XXXXX through XXXXX, and XXXXX through XXXXX.
3.
During the periods in question, Petitioner purchased materials and equipment in
order to lease such to another corporation owned by the same principals who own
Petitioner, XXXXX. At the time of the
purchase of these materials and equipment, Petitioner paid the sales tax.
4.
Petitioner was notified in XXXXX by the Tax Commission that Petitioner should
have collected sales tax at the lease of the equipment, rather than at the time
of purchase. Under subsequent
instructions from the Tax Commission, Petitioner sent several hundred letters
to the entities from which Petitioner purchased the materials and equipment at
issue. Petitioner states that more than
two thousand hours were spent searching Petitioner's records and sending the
letters.
5.
As the audit proceeded, Petitioner was then instructed by the Tax Commission that
the previous instructions had been in error, and that the Petitioner acted
correctly in paying the tax at the time of purchase and should not have
collected at the time of lease.
Petitioner was also told that it should not have mailed the letters
requesting sales tax refunds.
Petitioner asserts that this error on the part of the Tax Commission
cost Petitioner more than $$$$$ in labor and time. Petitioner states that it later discovered that as far as actual
tax amounts are concerned, the state would realize less money on sales taxes on
the lease of the materials and equipment at issue than it did on the sales tax
paid at the time of purchase.
Petitioner states that it paid tax on the purchase of the equipment and
materials on the advice of Petitioner's accountants.
6.
Based on these facts, Petitioner requests a waiver of penalty and interest
assessed in this case.
7.
Research into Tax Commission files shows that the Auditing Division did give
credit to Petitioner for any reimbursements collected by Petitioner from
vendors to whom Petitioner sent its letters requesting reimbursement of sales
tax collected at the time of purchase.
Also, Tax Commission records indicate that Petitioner did not pay sales
tax on all of the purchases of the materials and equipment at issue, and did
not collect sales tax on that equipment and material when it was leased. This is according to the best determination
of Tax Commission personnel based upon a review by those personnel during the
audit of Petitioner's records. Petitioner's
records were in disarray and Petitioner had been using the sales tax number of
another corporation, XXXXX, owned by the principals of the Petitioner, to which
Petitioner was also making leases of equipment sales. Petitioner had not yet obtained its sales tax number.
CONCLUSIONS OF LAW
1.
Utah Code Ann. §59-1-401 and59-1-402 provide that penalties and interest shall
be assessed for the late payment and filing of taxes, including the prepayment
of sales and use taxes.
2.
Utah Code Ann. §59-1-401(8) provides that upon reasonable cause shown, the Tax
Commission may waive or reduce penalties and interest assessed under the above
statutes.
3.
Such reasonable cause has not been shown in this case. Petitioner alleges that this is a case of
double taxation; however, based upon the facts as outlined above, it clearly is
not. Tax Commission records reveal that
sales tax was not collected on some of the equipment when it was purchased, nor
on that equipment when it was leased.
These amounts are what the penalty and interest is based upon. Failure to collect or remit the tax by
Petitioner for these purchases was due to Petitioner's own negligence, and not
to the error of the Tax Commission.
DECISION AND ORDER
Based
upon the foregoing, it is the Decision and Order of the Utah State Tax
Commission that Petitioners' request for waiver of penalty and interest is
denied.
DATED
this 20th day of August, 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