BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
In Re: ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
XXXXX ) AND FINAL DECISION
:
: Appeal No.
90-1500
: 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 periods in question are the tax years
XXXXX, XXXXX, and XXXXX.
3. Petitioner stated that about the year XXXXX
he purchased certain investments as tax shelters. Part of the inducement to enter into these investments were
letters from attorneys, representing the entities in which Petitioner was
investing, which certified as to the sound nature of the investments and their
value as tax shelters.
4. These investments have since gone awry and
have caused Petitioner substantial financial strain.
5. Petitioner stated that five or six years
after he made the investments, the Internal Revenue Service (IRS) disallowed
the deductions for these investments, pursuant to an audit, and assessed
penalty and interest. The IRS has since
waived the penalty, but not the interest.
6. The XXXXX tax year is involved in these
difficulties because of a carryback of the investment deductions and their
disallowance to that year.
7. The day before the hearing was spent by
Petitioner in bankruptcy court. He has
filed a Chapter 7 bankruptcy.
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 which led to the imposition of the penalties and interest in this
case were caused by Petitioner's own actions.
Petitioner may have thought at the time he purchased his investments
that he was sufficiently prudent and careful, but the evidence indicates
otherwise. The state is in no way
responsible for the difficulties in this case.
Under such circumstances, the law requires that a penalty be
imposed. Petitioner's bankruptcy does
not discharge such penalties and interest.
Additionally, interest should not be waived because 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 not been
shown which would justify a waiver of the penalty and interest associated with
the tax years XXXXX, XXXXX, and XXXXX.
It is so ordered.
DATED
this 14 day of February, 1991.
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