90-0012 - Motor Fuel

BEFORE THE UTAH STATE TAX COMMISSION

_____________________________________

XXXXX, )

:

Petitioner, ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

v. ) AND FINAL DECISION

:

COLLECTION DIVISION OF THE ) Appeal No. 90-0012

UTAH STATE TAX COMMISSION, :

) Account No. XXXXX

Respondent. :

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a telephone formal hearing on XXXX. Joseph G. Linford, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner were XXXXX and XXXXX.

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 oil and gas severance tax.

2. The period in question is the tax year XXXXX.

3. Petitioner cites a change in the oil and gas severance tax law as the cause of the situation which gave rise to the penalty and interest assessments in this case. Petitioner is a working interest owner in the XXXXX XXXXX located in Utah, and the product from this unit is taken in kind by Petitioner. The operator of the unit is XXXXX. Prior to XXXXX, Petitioner stated that the law provided that unit operators were to obtain price information from working interest owners taking product in kind. Petitioner cites this pre-1983 law as Utah Code Ann. 59-5-67. The new law, however, now located in Utah Code Ann. 59-5-101, et. seq., according to Petitioner, deleted the requirement for the solicitation of price information from working interest owners taking product in kind. Contrary to Petitioner's belief, however, the change was not a change in law, but in Utah State Tax Commission policy.

4. The evidence shows that at least some companies elected to continue reporting under the old requirements for the tax year XXXXX and then to implement the requirements of the new policy beginning in XXXXX. Petitioner communicated their desire to do this to XXXXX and, accordingly, communicated their XXXXX volumes and taxable values to XXXXX for XXXXX to include on its annual return. Petitioner assumed that XXXXX would take care of the filing of this information from this point, but this was apparently not done by XXXXX. A subsequent audit performed by the Tax Commission, therefore, showed that Petitioner did not file on its working interest share for XXXXX.

5. Petitioner requests that the penalty be waived in consideration of XXXXX's failure to include Petitioner's values on XXXXX's annual return, contrary to Petitioner's instructions, and the time constraints involved between the change in policy and its implementation which made it difficult for companies such as Petitioner's to implement the changes in its operations.

CONCLUSIONS OF LAW

1. Utah Code Ann. 59-1-401 and 59-1-402 provide that penalties and interest shall be assessed for the late filing or payment of taxes.

2. Utah Code Ann. 59-1-401(8) provides that upon reasonable cause shown, the Commission may waive or reduce penalties and interest assessed under the above statutes.

3. Such reasonable cause has been shown for a waiver of the penalty assessed under the considerations outlined above.

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 the penalty is granted.

DATED this 29 day of AUGUST, 1990.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner