90-1651 - Income




In Re: )



: Appeal No. 90-1651

: Account No. XXXXX



This matter came before the Utah State Tax Commission upon a Petition for Reconsideration, dated XXXXX, filed by the Petitioner as a result of the Commission's final decision, dated XXXXX.


1. Utah Administrative Rule R861-1A-5(P) provides that a Petition for Reconsideration "will allege as grounds for reconsideration either a mistake in law or fact, or the discovery of new evidence." Under this rule, the Tax Commission may exercise its discretion in granting or denying a Petition for Reconsideration.

2. In paragraph seven on page three, the final decision states: "Petitioner later decided that he should check into his tax liability for the period in question and, therefore, contacted XXXXX for that purpose." The period in question in this case is the tax year XXXXX. The Petition for Reconsideration states that Petitioner did not contact XXXXX until XXXXX because he was aware that he had incurred tax liability for the tax year XXXXX. At this time he did not know that he had incurred any liability for XXXXX, and he was surprised to learn from XXXXX that he owed the tax for the period in question as well as for XXXXX. Petitioner states that it is difficult for him to understand how "in equity" he could be liable for tax in XXXXX when all of his income except for "very basic living expenses" was spent in paying off loans which Petitioner had obtained in order to help defer the cost of his litigation. Petitioner states that "the standard of care required from an American citizen who has been used to filing tax returns all his life would be higher than that called for from a XXXXX citizen who had no previous experience of filing tax returns in the U.S." Previous to the year in question, Petitioner had utilized professional tax preparers in preparing his income taxes. Petitioner relies on equity rather than the law to support his contention that penalty and interest should be waived in this case.

3. Other than the above, the Petition states no mistake in law or fact, nor does it assert the discovery of new evidence. The above contentions by Petitioner are unpersuasive. Whether Petitioner did or did not know that he was liable for tax for the year in question is irrelevant since Petitioner was liable for the tax and was negligent in not remitting the same. The fact that all of his income was consumed to pay off his loans is also irrelevant. The deciding factor is that Petitioner did have income which was taxable. How Petitioner used that income does not alter the fact that it was income upon which tax was due.

4. As far as the standard of care to which Petitioner refers is concerned, Petitioner, by living in the United States, has subjected himself to the laws of the United States regarding the filing and payment of income taxes. Petitioner did file and pay income taxes previous to the year in question. Under the law, Petitioner is held to the same standard of care as anyone else who is required to file tax returns.

5. The Tax Commission is bound by the terms of the law to carry into effect the provisions of the law. Petitioner's appeal to equity does not change the fact that the law has been correctly applied in this case. Equity cannot mandate a different result.

6. Petitioner states that the burden of proof is on the state in proving Petitioner's negligence, similar to a criminal case. Petitioner states that where there is a reasonable doubt regarding negligence, the benefit of the doubt should go to Petitioner. However, Petitioner is mistaken. Utah Code Ann. 59-10-543 provides that the burden of proof is on the Petitioner in cases such as this one. Petitioner has not met the burden of proof to show that he was not negligent in this case.

7. The fact that Petitioner consulted with a graduate student at XXXXX does not indicate that Petitioner took reasonable care. Petitioner may have had trust in the graduate student, but this is no indication that Petitioner's trust was well placed. Apparently, in this case it was not. A prudent person in Petitioner's position would have taken the time to look into his tax liability further to determine whether a tax liability was due, and if it was determined that no liability was due, then a prudent person may well have filed a return showing that fact.

8. Petitioner states that it is difficult for him to conceive of a stronger case for establishing reasonable cause to waive the penalty and interest. Under the above reasoning, however, this case does not meet the standard of reasonable cause. That standard requires that the difficulties which led to the late filing or payment of the tax were circumstances beyond the control of the taxpayer. In this case, such circumstances did not exist. The taxpayer was at all times in control of the situation, but did not sufficiently follow up to insure that his tax liability for the year in question was paid in a timely manner.


Based upon the foregoing, it is the decision and order of the Utah State Tax Commission that the Petition for Reconsideration is denied. It is so ordered.

DATED this 28 day of March, 1991.


R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner