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, :
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.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis