BEFORE THE UTAH STATE TAX COMMISSION
In Re: ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
XXXXX ) AND FINAL DECISION
: Appeal Nos. 90-0983 and
: Account Nos. XXXXX and
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.
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 sales tax.
2. The periods in question are the XXXXX, and the XXXXX.
3. For account number XXXXX (appeal number 90-0984), Petitioner has paid all tax, penalty and interest amounts. This account pertained to another business owned by Petitioner, XXXXX. This business is no longer in operation. Petitioner's representative stated at the hearing that Petitioner does not wish to dispute the penalty and interest assessments under this account and, therefore, desired that appeal number 90-0984 be withdrawn and dismissed. This account pertains to the XXXXX.
4. Account number XXXXX (appeal number 90-0983) is regarding the XXXXX. Petitioner is appealing the penalty and interest assessments on this account for these periods.
5. Petitioner has been in business for approximately XXXXX years and has never before had any difficulty in the timely payment of sales taxes.
6. During the late XXXXX and early XXXXX, Petitioner overexpanded its business and had to substantially reduce its operations when the economy in the XXXXX became depressed. This caused severe difficulties for Petitioner during the time periods in question. Petitioner's representative stated that Petitioner was simply unable to make the sales tax payments for the periods in question.
7. Contributing to these difficulties is the manner in which Petitioner's business is operated and in which it accounts for its revenues. Many of Petitioner's accounts receivable are open accounts wherein Petitioner records its sales in one quarter but may not receive payment for those sales until a subsequent quarter. The statute and rule (§59-12-107(4)(d), andR865-19S-20) require Petitioner to remit sales taxes during the quarter in which the sales are made. It was the Petitioner's election to extend credit for some of those sales, including the sales tax.
8. When the economy became depressed, many of Petitioner's debtors were not able to pay their debts to Petitioner.
Petitioner's representative stated that Petitioner does not have the funds to pay the penalty and interest, and the Commission finds that Petitioner used its sales tax money to pay other creditors and to finance its credit sales.
CONCLUSIONS OF LAW
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).)
DECISION AND ORDER
The untimely manner in which Petitioner made its sales tax payments for the periods in question were not in accordance with the requirements of the law. Petitioner was aware of the law, but did not comply with that law for the periods in question when Petitioner experienced its cash flow problems.
The Tax Commission acknowledges Petitioner's difficulty, but that difficulty does not excuse Petitioner's noncompliance with the law. The taxpayer elected to use, for other pressing demands, monies which the taxpayer held in trust for the state and to which the state was entitled. Penalties are assessed to deter this conduct. Additionally, interest should not be waived because the state was deprived of the use of the funds in question for a period of time, through no fault of its own, and should be compensated for that loss of use. Petitioner may be able to establish a payment schedule with the Collections Division of the Utah State Tax Commission in order to render it easier for Petitioner to pay the amounts due.
Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown to justify a waiver of the penalty and interest for the XXXXX. Appeal number 90-0984 (account number XXXXX) is dismissed per Petitioner's withdrawal of that appeal. It is so ordered.
DATED this 14 day of February, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis