BEFORE THE UTAH STATE TAX COMMISSION
In Re: ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
XXXXX ) AND FINAL DECISION
: Appeal No. 90-1504
: Account No. XXXXX
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a formal telephone 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.
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 withholding tax.
2. The periods in question are the first and second quarters of XXXXX.
3. Beginning with the periods in question, XXXXX had to take over the business of Petitioner from a previous owner who had purchased the business previously from the XXXXX and had then left the business and defaulted on his obligations, leaving the business in the XXXXX hands.
The XXXXX had not operated the business for the previous five years and had grown unaccustomed to the mechanics of operating the business, including the filing of tax returns.
4. The returns sent to Petitioner from the Tax Commission for the periods in question indicate the correct address and account number, but have a person by the name of "XXXXX" as the owner of Petitioner. XXXXX testified that they do not know who XXXXX is and that, as far as they know, he has never had any connection with Petitioner.
5. Confused by the incorrect name on the return for the first quarter of XXXXX, Petitioner contacted the Tax Commission in XXXXX for instructions and was initially told to scratch out the name of XXXXX and insert the XXXXX names instead, and to remit the tax. However, the Tax Commission employee with whom Petitioner had consulted later called back and told Petitioner not to pursue that course, since confusion might result, and to await new withholding return forms which that employee would mail to Petitioner. Petitioner states that it never received these new forms. The XXXXX do not know the name of the person at the Tax Commission with whom they consulted.
6. After receiving this last instruction from the Tax Commission, Petitioner set aside the papers and the money concerned to await the arrival of the new forms. This was done with the form for the second quarter of XXXXX as well, when the wrong name still appeared on that form. Petitioner was still awaiting the new returns from the Tax Commission. Petitioner thereafter forgot about the problem and, therefore, the taxes for the periods in question were not filed and paid until XXXXX after Petitioner had received a notice from the Tax Commission.
7. Based upon the foregoing facts, Petitioner requests that the penalty and interest assessed in this case be waived.
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
In view of the confusion created by the erroneous name on the returns and the instructions from the Tax Commission employee for Petitioner to await the arrival of new forms from the Commission, the Tax Commission finds that the penalty in this case should be waived. Interest, however, should not be waived because the state was deprived of the use of the tax funds in question for a period of time and should be compensated for that loss of use.
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 first and second quarters of XXXXX. Interest shall be adjusted to account for the waiver of the penalty. It is so ordered.
DATED this 20 day of February, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis