BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
In Re: ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
XXXXX ) AND FINAL DECISION
:
: Appeal No.
90-1619
: 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 Petitioners was
XXXXX, Attorney at Law.
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 and XXXXX.
3. When the tax return for the XXXXX tax year
became due, Petitioners and their accountant had some indication that there
were going to be difficulties with this tax return because Petitioners were
involved in a tax shelter which was being audited. The accountant accordingly filed an extension for XXXXX in order
to give Petitioners and the accountant time to evaluate the results of the
audit and its impact on Petitioners' XXXXX taxes.
4. During the months following, Petitioners'
accountant moved several times, each time leaving no forwarding address. Petitioners, however, were able to locate
the accountant and ask him regarding the status of their tax return. The
accountant told Petitioners that he was taking care of everything in a timely
manner. Petitioners then began to
submit records to this accountant so that he could prepare their XXXXX tax
return.
5. The accountant again moved at least once
more and was subsequently incarcerated.
Petitioners are not sure of the exact reason why the accountant was
incarcerated. Petitioners began to try
to locate the records that were in this accountant's possession, but were
unable to locate most of these records. This began to occur about the time when
the XXXXX tax return was due, but Petitioners had been informed by the
accountant that an extension had been filed and they accordingly believed they
had some time to be able to locate their records and file their return for
XXXXX.
6. Petitioners then hired a new accountant who
helped them to recreate most of the records which were never located. Once this was done the tax returns for the
periods in question were filed in early XXXXX.
7. From the information Petitioners were able
to piece together, it appeared to Petitioners that their former accountant had
not filed the extension for XXXXX and had not done anything else on their tax
returns for either of the two years in question.
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
It
is clear in this case that Petitioners relied on their former accountant to
their detriment. Since this accountant
had possession of Petitioners' records and represented to Petitioners that he
was performing his duties regarding their taxes in a timely and proper manner,
when in fact he was not, the circumstances which led to the late filing and
payment of Petitioners' taxes for the periods in question were circumstances
beyond Petitioners' control. This
indicates that, pursuant to long established Tax Commission policy, the penalty
amount should be reduced to $$$$$.
Interest, however, should not be waived since the state was deprived of
the use of the tax funds in question for a period of time, through no fault of
its own, and should be compensated for that loss of use.
Based
upon the foregoing, the Tax Commission finds that sufficient cause has been
shown which would justify a reduction of the penalty associated with the tax
years XXXXX and XXXXX, to the amount of $$$$$.
Interest is not waived, but shall be adjusted to account for the
reduction in the penalty. 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