90-2376 - Income








: Appeal No. 90-2376

: Account No. XXXXX



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 Petitioner was XXXXX. Present and representing the Operations Division of the Utah State Tax Commission was XXXXX.

Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:


1. The tax in question is individual income tax.

2. The period in question is the tax year XXXXX.

3. Petitioner requests a "refund" of penalties and interest which Petitioner was required to pay to the Internal Revenue Service (IRS) for the late filing and payment of his federal income tax for the year in question.

4. Petitioner states that when he mailed his state and federal income tax extension forms for the period in question, it appears the check which Petitioner had made payable to the IRS was mistakenly included by Petitioner in the envelope with the state extension form. Petitioner states that a refund was being anticipated from the state for the year in question.

5. When the Tax Commission received Petitioner's extension form with the check, the Tax Commission stamped the check payable to itself and deposited the check. XXXXX, representative for the Operations Division of the Utah State Tax Commission, testified that Tax Commission policy is that when the dollar amount on the check matches the amount on the federal extension form, the check is cashed by the Tax Commission. XXXXX testified that only when the dollar amount on the check does not match the amount on the extension form will the Tax Commission withhold cashing the check and consult with the taxpayer. He also testified that it is commonplace for the Tax Commission to receive checks made payable to the IRS in cases where the taxpayer has intended to pay the tax to the Tax Commission, but through confusion on the taxpayer's part has written the check out to the IRS. He testified that at the time the Tax Commission received Petitioner's check and extension form, the Tax Commission had no way of knowing whether or not Petitioner owed tax, and if so, how much tax was owed.

6. Petitioner states that the Tax Commission "fraudulently" altered his check by making it payable to itself rather than consulting with him, and that the state had the benefit of the money which was supposed to be remitted to the IRS. Petitioner states that the Tax Commission was not a holder in due course of the check and that, therefore, he is seeking damages under the provisions of the Uniform Commercial Code (UCC).

7. A refund, with interest, was paid to the Petitioner from the Tax Commission for the amount of the check which Petitioner had mailed to the state with the extension form.


1. The provisions in Utah relative to income tax refunds are Utah Code Ann. 59-10-529(7)(b), (12),59-10-531,59-10-532,59-10-533, and59-10-538, and Tax Commission RulesR865-9I-28 andR865-9I-29. In none of these statutes or rules is there any provision for a refund of the type which Petitioner seeks.


The refund provisions in Utah statutes and rules contemplate that refunds shall be given in cases where a tax amount has been overpaid or paid erroneously to the state, and that these refunds are to be accompanied by appropriate interest. This was done in this case and the Tax Commission fully complied with the law. The IRS penalty and interest amounts are not amounts which were ever remitted to the Utah State Tax Commission, the Tax Commission never had possession of the funds, and, therefore, a request for refund on those amounts is inappropriate. Petitioner's difficulty regarding the IRS penalty and interest assessments is a problem which must be resolved between Petitioner and the IRS. The state has already fulfilled its obligations under the law and is no longer obligated to Petitioner.

Petitioner's citations to the UCC and his allegation that the Tax Commission was not a holder in due course are inapposite in this case. These are matters appropriately within the jurisdiction of a court of law and are not to be determined by an administrative body such as the Tax Commission.

Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify any refund on Petitioner's income tax account for the tax year XXXXX, beyond the refund which has already been remitted according to law. It is so ordered.

DATED this 2 day of December, 1991.



R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner