90-1427 - Withholding








: Appeal No. 90-1427

: 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 was XXXXX.

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


1. The tax in question is withholding tax.

2. The period in question is the audit period XXXXX through XXXXX.

3. Petitioner states that the withholding tax return and payment for the fourth quarter of XXXXX was remitted timely by Petitioner to the Tax Commission. Tax Commission records show no timely filing of the return or payment. Petitioner remits its withholding taxes on a monthly basis. Tax Commission records show that the payment and return for XXXXX was timely filed, but shows no timely payment for either XXXXX or XXXXX XXXXX. No penalty or interest has been imposed for XXXXX.

4. Petitioner states that the payment and return were mailed timely and that the payment was stapled to the return as is Petitioner's custom. Petitioner's copy of the return does show staple marks in the upper left corner, but there is no timely filed return in Tax Commission records.

5. Petitioner submitted a photocopied carbon copy of the check and the return. The check is written out for the amount of tax due for both XXXXX and XXXXX XXXXX and is dated XXXXX, the same date of the return. The return shows that only the monthly payment for XXXXX had been previously paid. The payment for XXXXX amounted to $$$$$. This left a balance due for XXXXX and XXXXX of $$$$$, which is the amount of the XXXXX check. This indicates that the payment for XXXXX had not been timely remitted.

6. For several months, Petitioner did not notice that the check had not been cashed. Petitioner states that it first became aware of the problem through a sales tax audit performed by the Tax Commission. Petitioner states that the first written notification of the problem was not received by Petitioner until the audit report was issued, dated XXXXX. When Petitioner received a copy of the audit report, Petitioner stopped payment on the original check and remitted a new check to the Tax Commission in payment of the tax amount.

7. A review of Petitioner's bank statement shows that Petitioner did have sufficient funds in the bank to cover the original check when it was issued.

8. It is Petitioner's position that the original check was included with the tax return, that both were filed timely, but that the check was lost by the Tax Commission.

9. Petitioner has a good past and subsequent history of timely payment. Based on these facts, Petitioner requests a waiver of the penalty and interest for the period in question.


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).)


Under the above facts, the Tax Commission finds that the penalty amount should be waived only for the month of XXXXX. It appears that Petitioner did make a timely payment of the XXXXX taxes and the difficulties that developed because of the missing check were not due to any fault of the Petitioner. Interest, however, should not be waived because the state was deprived of the tax funds in question for a period of time and should be compensated for that loss of use. Additionally, Petitioner should have become aware of the fact that the check had not been cashed long before Petitioner did become aware of it and, therefore, the delay between the due date of the tax in question and the actual payment by the second check is at least partially due to the fault of Petitioner.

Regarding the month of XXXXX, the evidence shows that the return and payment for that month were not timely received and, therefore, the penalty and interest should not be waived for that month.

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 month of XXXXX. The penalty associated with the month of XXXXX is not waived. Interest is not waived but shall be adjusted to account for the reduction of the penalty. It is so ordered.

DATED this 15 day of February, 1991.



R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner