BEFORE THE UTAH STATE TAX COMMISSION
In Re: )
: INFORMAL DECISION
: Appeal No. 90-1425
: Account No. XXXXX
STATEMENT OF CASE
This matter came before the Utah State Tax Commission pursuant to the Administrative Procedures Act and the rules of the Utah State Tax Commission for informal proceedings. No hearing was requested, therefore, this decision is based upon information contained in the Tax Commission's file.
The Petitioner became subject to withholding tax during XXXXX. Petitioner's owner was unfamiliar with filing requirements for withholding tax. Instead of reporting and paying the tax on a quarterly basis, as required by law, Petitioner segregated the funds into a separate account to be paid to the Commission at the end of the year, when Petitioner's owner believed the tax return was due.
As a result of the foregoing, Petitioner did not file timely returns for the first and second quarters of XXXXX. During the third quarter of XXXXX, Petitioner engaged the services of a certified public accountant who discovered Petitioner's error, filed the necessary returns for the quarters in question, and paid the tax due by virtue of those reports. The Petitioner remained in business for two more quarters and properly filed and paid its withholding tax liability for those quarters.
A XXXXX penalty was assessed for late filing of Petitioner's withholding tax report for the second quarter of XXXXX. An additional XXXXX penalty for late payment of the withholding tax was also assessed. An additional fee of $$$$$ was assessed for filing of a notice of lien. Together, the foregoing charges and penalties totalled $$$$$.
DECISION AND ORDER
Utah law imposes a penalty of $$$$$ or XXXXX of the tax, whichever is larger, for late filing of a tax-due return. An equal penalty is imposed for late payment of tax. The Commission may waive, reduce, or compromise such penalties upon a showing of reasonable cause. (Utah Code Ann. §59-1-401.)
Petitioner's error regarding the filing requirements for withholding tax returns are mitigated by Petitioner's inexperience, its successful efforts to correct its errors when they were discovered, the fact it had segregated the tax money in question from its other funds, and finally, by its record of good performance thereafter. The Tax Commission, therefore, finds that reasonable cause exists to waive the late filing and late payment penalties totalling $$$$$ imposed against Petitioner for the second quarter of XXXXX. The lien fee of $$$$$ is not waived. Interest charges will be recomputed in accordance with this decision. It is so ordered.
DATED this 31st day of May, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis