BEFORE THE UTAH STATE TAX COMMISSION
In Re: ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
XXXXX ) AND FINAL DECISION
: Appeal No. 90-1389
: 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 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 sales and use tax.
2. The period in question is the third quarter of XXXXX.
3. Petitioner timely mailed its tax return and payment for the period in question to the Tax Commission. Upon the presentation of the check to Petitioner's bank, however, the check was not honored due to insufficient funds.
This was a mistake on the part of the bank employee involved since Petitioner has a revolving line of credit with its bank which enables Petitioner to draw on that line of credit when checks are presented in excess of the amount of funds actually in Petitioner's account. Therefore, in this case the bank employee should have drawn on Petitioner's line of credit to cover the check to the Tax Commission pursuant to established procedures between Petitioner and the bank.
The employee did not do so and when Petitioner was notified by the Tax Commission in XXXXX that the tax was due, Petitioner immediately paid the tax amount. The Tax Commission apparently did not attempt to redeposit the original check after its initial rejection by the bank.
4. A few months before the period in question when Petitioner mailed in its payment and check for the second quarter of XXXXX, the same difficulty occurred except that the Tax Commission did redeposit the check after its initial rejection by the bank and that check was then honored by the bank. Petitioner feels that the same procedures should have been applied for the period in question, although Petitioner states that it was informed by the Tax Commission that the policy of redepositing dishonored checks has been changed by the Tax Commission so that the Tax Commission no longer redeposits dishonored checks.
5. Petitioner has presented a bank statement and evidence of the existence of the line of credit which indicates that if the proper procedure had been followed by the bank employee, the initial check would have been honored.
6. Based upon the foregoing, the Petitioner requests that the penalties and interest be waived in this case.
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 difficulties present in this case were caused by factors and people out of the control of Petitioner and Petitioner should, therefore, not be liable for the penalties assessed. Interest, however, should not be waived since the state was deprived of the use of the tax funds in question for a period of time through no fault of its own and should be compensated for that loss of use.
Based upon the foregoing, the Tax Commission finds that sufficient cause has been shown which would justify a waiver of the penalty associated with the third quarter of XXXXX. Interest shall be adjusted to account for the waiver of the penalty. It is so ordered.
DATED this 8 day of February, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis