BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX, ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
Petitioner, : AND FINAL DECISION
:
v. : Appeal No. 90-1556
: Account
No. XXXXX
AUDITING
DIVISION OF THE :
UTAH STATE TAX COMMISSION, :
Respondent. :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Paul F. Iwasaki, Presiding
Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was
XXXXX, Attorney at Law. Present and
representing the Respondent was XXXXX, Assistant Attorney General.
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 audit period in question is XXXXX
through XXXXX.
3. The Petitioner is a XXXXX Corporation which
has been qualified to do business in the state of Utah since XXXXX.
4. The Petitioner owns a franchise granting exclusive
rights to the sale of XXXXX in XXXXX western states.
5. As part of its business, the Petitioner
transports XXXXX from the manufacturer in XXXXX to its operating base in XXXXX,
Utah.
6. The Petitioner employs Utah residents, local
XXXXX drivers, to drive the XXXXX from XXXXX to XXXXX, Utah.
7. The Petitioner believed that the XXXXX
drivers it hired to transport the XXXXX were acting as independent contractors,
and not as employees of the Petitioner.
Therefore, the Petitioner did not withhold income tax from their wages.
8. As a result of an audit, the Respondent
determined the XXXXX drivers to be employees of the Petitioner and assessed a
withholding deficiency in the amount of $$$$$.
An additional $$$$$ was assessed for penalty and interest charges.
9. The Petitioner was credited with $$$$$ for
taxes which had been paid and accounted for in the income tax returns of the
XXXXX drivers in question.
10. In approximately XXXXX or XXXXX, the
Petitioner was audited by the Internal Revenue Service (IRS). At that time, the IRS found the bus drivers
to be independent contractors and not employees of the Petitioner. Therefore, the IRS had determined that taxes
on the wages earned by the bus drivers need not be withheld by the Petitioner.
11. The Petitioner requested a waiver of the
penalties and interest associated with the audit period XXXXX through XXXXX.
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
the present case, based upon the IRS audit conducted on the Petitioner's
records approximately ten years ago, the Petitioner had a reasonable and good
faith belief that its treatment in not withholding income taxes for the bus
drivers in question was correct. Based
upon that, and also based upon the fact that without exception, each XXXXX
driver filed and paid the income tax due for the periods in question, a
sufficient basis upon which to waive the penalty and interest associated with
the audit period in question exists. It
is so ordered.
DATED
this 2 day of April, 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