BEFORE THE UTAH STATE TAX
COMMISSION
____________________________
In Re: ) FINDINGS
OF FACT,
: CONCLUSIONS
OF LAW,
XXXXX ) AND FINAL DECISION
:
: Appeal No.
90-1430
: 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 was
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 individual income tax.
2.
The period in question is the tax year XXXXX.
3.
The additional tax due for the period in question on Petitioner's individual
income tax was the result of an Internal Revenue Service (IRS) audit based upon
the XXXXX Tax Reform Act. The audit
involved the allowance of investment interest versus interest incurred in
purchasing and operating an active trade or business, and the IRS ultimately
determined that Petitioner's interest on a stock business acquisition was
investment interest.
4.
Petitioner, under the advice of his accountant, did not include this as income
on his tax return for the period in question because the accountant felt that
the recent law change gave no guidance as to the application of the law to
Petitioner's circumstances. Based on
these facts, the IRS waived penalties assessed on the federal income tax and
Petitioner requests that the Utah State Tax Commission also waive the penalties
associated with this period.
5.
By letter dated XXXXX, the Tax Commission reduced the penalties assessed from
$$$$$ to $$$$$. This was a XXXXX
reduction. Shortly before this
reduction was granted, an additional $$$$$ was added in error to the original
penalty amount of $$$$$. Petitioner was
evidently not informed of this additional, erroneous assessment. Therefore, when the XXXXX decision from the
Tax Commission was received by Petitioner, it appeared to Petitioner that the
reduction of the penalty was in the amount of only $$$$$, when in actuality the
Commission intended a XXXXX reduction in the penalty amount.
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
evidence shows that Petitioner acted under the advise of his accountants in
completing and filing the tax return for the period in question. The difficulty
was caused by a change in the federal law, the complexity of which rendered it
difficult for Petitioner and his professional tax preparers to determine the
correct amount of tax. This indicates
that the penalty for the period in question should be waived.
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 tax year
XXXXX. Interest shall be adjusted to
account for the waiver of the penalty.
It is so ordered.
DATED
this 20 day of December, 1990.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
ABSENT
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner