90-1416 - Sales








Appeal No. 90-1416 )

: Account No. XXXXX



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. The Collection Division of the Utah State Tax Commission was represented by XXXXX.

Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:


1. The tax in question is sales and use tax.

2. The periods in question are the second and third quarters of XXXXX, the fourth quarter of XXXXX, the third quarter of XXXXX, the second quarter of XXXXX, and the second quarter of XXXXX.

3. An individual named XXXXX filed a Chapter 11 bankruptcy in Utah on XXXXX, case number XXXXX. Upon receipt of the notice of bankruptcy, the Collection Division of the Utah State Tax Commission ran a cross-reference in its records for business accounts and the name XXXXX was attributed to Petitioner. The Tax Commission thereafter filed a claim with the bankruptcy court for delinquent sales tax and the attorney representing this XXXXX did not object to the Tax Commission's claim. Petitioner's sales tax account was coded by the Collection Division as "BK," signifying bankruptcy. XXXXX of the Collection Division represented that once an account is so coded, all notices from the Tax Commission to the taxpayer cease.

4. It has since been discovered that the XXXXX that filed bankruptcy has a social security number which is different from that of the XXXXX who is a principal of Petitioner. The cross reference in the Tax Commission's records which should normally be performed on social security numbers apparently never was performed. Neither Petitioner nor its principals are currently in bankruptcy, nor have they ever been in bankruptcy. Because of these difficulties, for the six year period between XXXXX through XXXXX no sales tax notices were sent to Petitioner.

5. When Petitioner began business operations in XXXXX, Petitioner obtained from the Tax Commission a sales tax account number. Petitioner was told it would receive quarterly returns in the mail from the Tax Commission which would instruct it in the filing and payment of the sales tax.

6. In the following months, Petitioner did not receive any of the tax returns or instructions which it was under the impression it would receive from the Tax Commission. Consequently, in XXXXX, Petitioner contacted the Tax Commission for instructions. Petitioner began receiving the tax return forms by XXXXX but, apparently, the receipt of the returns since that time has been inconsistent. For the fourth quarter of XXXXX, Petitioner did not receive the tax returns in the mail. Petitioner contacted Tax Commission offices and was told that it could pay the tax for that quarter with its next quarter's taxes.

7. Petitioner incorporated in XXXXX and contacted Tax Commission offices for instructions. Petitioner was told that the tax account number did not need to be changed and that Petitioner could continue to file as in the past.

8. Petitioner admits that the sales taxes for some quarters, e.g., the second quarter of XXXXX, with a XXXXX postmark date on the envelope of the return, and the third quarter of XXXXX, with a check dated XXXXX may have been paid late by Petitioner by mistake. However, Petitioner was never informed of any difficulties with its account, apparently due to the bankruptcy, until XXXXX. Petitioner states that it would have paid all tax and other charges if it had received timely notification of the delinquencies.

9. Based upon the foregoing, Petitioner requests that both penalties and interest be waived since the difficulties in this case appear to have been caused by the Tax Commission and not by Petitioner.


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).)


Based upon the foregoing, the Tax Commission finds that sufficient cause has been shown which would justify a waiver of the penalty and interest associated with the second and third quarters of XXXXX, the fourth quarter of XXXXX, the third quarter of XXXXX, the second quarter of XXXXX, and the second quarter of XXXXX. It is so ordered.

DATED this 6 day of February, 1991.



R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner