BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 90-0987
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. XXXXX was present and was represented by XXXXX, Certified Public Accountant.
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 individual income tax.
2. The periods in question are the tax years XXXXX.
3. Petitioner was assessed additional tax on a non-filing audit completed by the Tax Commission for the year XXXXX. Petitioner paid the tax, penalty and interest pursuant to this audit on XXXXX.
4. An amended audit, based on a federal audit for the periods in question, was completed on XXXXX, by the Tax Commission which also increased the Petitioner's tax liability. This additional tax was not paid within the required time period nor was an amended return filed to report the additional income that was assessed on the federal audit.
5. On XXXXX, a refund on Petitioner's XXXXX taxes was applied to pay off the balance due on the XXXXX account.
6. On XXXXX, Petitioner requested an extension for the tax year XXXXX but at that time did not remit any payment which was required for filing a request for extension. A notice subsequently went to Petitioner from the Tax Commission indicating that such a payment could not be verified. On XXXXX, Petitioner made a payment of $$$$$, of which $$$$$ was applied to a XXXXX balance due, leaving a remaining balance for the XXXXX tax year of $$$$$. Subsequently, a refund in the amount of $$$$$ was applied to this amount. On XXXXX, Petitioner filed his XXXXX return which showed a tax liability of $$$$$, a penalty of $$$$$, and interest of $$$$$, along with a payment of $$$$$ which left a balance due of $$$$$.
7. Petitioner testified that the errors on the original tax returns for the periods in question were caused by the accountants which Petitioner employed during these time periods. Petitioner was very emphatic that these were accountant's errors upon which he relied in good faith and were not his own.
8. Based upon these facts, Petitioner requests a waiver of the penalty and interest assessed for the periods in question.
CONCLUSIONS OF LAW
1. 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).)
2. Such reasonable cause has been shown for a partial waiver of the penalty in this case. Since the errors which gave rise to the penalty assessment on the XXXXX return were committed by professional accountants upon whose expertise Petitioner relied, waiver of the penalty is appropriate. Penalty for the tax year XXXXX is not waived, however, because Petitioner has provided insufficient evidence of reasonable cause for waiver. Waiver of the interest amounts is not justified because the state has been deprived of the use of the 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 Petitioner's request for waiver of the penalties for the XXXXX tax year only is granted and Petitioner's request for waiver of the XXXXX penalty and all interest is denied. Interest amounts shall be recalculated to account for the waiver of the penalty. It is so ordered.
DATED this 23 day of August, 1990.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis