BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
In Re: )
XXXXX ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
: AND FINAL
DECISION
:
: Appeal No.
90-2048
: 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 were XXXXX & 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 income tax.
2.
The periods in question are the tax years XXXXX and XXXXX.
3.
In XXXXX, Petitioners bought into a tax shelter through XXXXX. In XXXXX, Petitioners bought into the tax
shelter again. Petitioners have never
received anything from XXXXX to indicate that this tax shelter exists.
4.
In XXXXX, Petitioners were notified by the Internal Revenue Service (IRS) that
they had additional tax liability for the years in question due to the
disallowance of the tax shelter. XXXXX
told Petitioners that they did not have to pay these taxes because the statute
of limitations had run out on the assessment of this tax.
5.
Correspondence and negotiations occurred between Petitioners through XXXXX and
the IRS through XXXXX, when Petitioners took out a second mortgage on their
home and paid the IRS tax liability of $$$$$.
6.
In XXXXX, XXXXX moved from the state of Utah to XXXXX. Since that time, XXXXX has been convicted on
criminal charges for some of his activities regarding tax shelters.
7.
Petitioners kept working through XXXXX from XXXXX when they first became
acquainted with him until XXXXX when he left the state, even after it became
evident to them that there were difficulties in XXXXX's manner of proceeding. However, Petitioners testified that they
felt that they were already committed and XXXXX continued to make them promises
that things would work out and they, therefore, continued to work with him with
the hope that the difficulties would be solved.
8.
Penalties and interest have been assessed to Petitioners' account for the
deficiencies in tax due for the years in question which were the result of the
facts as outlined above. Petitioners
now request that these penalties and interest be waived based upon the
circumstances of this case.
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 apparent that Petitioners were negligent by entering into a questionable
enterprise and then continuing with that enterprise when its difficulties
became evident. Therefore, the
assessment of the negligence penalty is appropriate in this case. Additionally, interest should not be waived
because the state was deprived 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 not been
shown which would justify a waiver of the penalty and interest associated with
the tax years XXXXX and XXXXX. It is so
ordered.
DATED
this 15 day of February, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner