91-0433 - Corporation Franchise

 

BEFORE THE UTAH STATE TAX COMMISSION

_____________________________

XXXXX )

Petitioner : FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

v. : AND FINAL DECISION

AUDITING DIVISION OF THE : Appeal No. 91-0433

UTAH STATE TAX COMMISSION : Account No. XXXXX

Respondent :

___________________________

STATEMENT OF CASE

After submitting briefs on the subject matter of this case, both Petitioner and Respondent waived the right to a formal hearing. This decision is based on the entire contents of the file as presently constituted as of XXXXX.

Based upon the evidence and information contained in the file, the Tax Commission hereby makes its:

FINDINGS OF FACT

1. The tax in question is corporate franchise tax.

2. The period in question is XXXXX through XXXXX.

3. Petitioner was audited for the period in question.

4. During the audit, it was discovered that Petitioner had carried forward losses from the fiscal years ending XXXXX, XXXXX, XXXXX and XXXXX without first carrying them back to prior years.

5. Petitioner reported income in fiscal years ending XXXXX, XXXXX, and XXXXX.

6. The Auditing Division recalculated Petitioner's taxes after applying the losses to the prior years as required by Utah Code Ann. 59-7-108(14). As a result, Petitioner was assessed a tax deficiency of $$$$$, including interest.

CONCLUSIONS OF LAW

A net loss is first carried back to the earliest of the next preceding three years; if not entirely used to offset income of that year, it is carried to the second year preceding the loss year; and any remaining amount is next carried to the taxable year immediately preceding the loss year. Any amount then remaining can be carried to each of the five taxable years following the taxable year of the net loss. (Utah Code Ann. 59-7-108(14)(c).

If the claim for credit or refund relates to an overpayment attributable to a net loss carryback adjustment as provided in SubSection 59-7-108(14), in lieu of the three-year period provided for in Subsection (2)(a), the period shall be that period which ends with the expiration of the 15th day of the 40th month following the end of the taxable year of the net loss which results in the carryback. (Utah Code Ann. 59-7-141(2)(b).

...[I]n some instances, the Tax Commission may disagree with the federal determinations and does not consider them controlling for Utah corporation franchise tax purposes.

11. The items of major importance ordinarily allowed in conformity with federal requirements are:

12. If loss carry-overs and carry-backs (Utah Admin. CodeR865-6F-14 (1991).)

DECISION AND ORDER

In the present case, none of the relevant facts are in controversy. The issue before the Commission is whether or not the relief the Petitioner seeks can be granted. After having reviewed the applicable statutes and rules, the Tax Commission finds that it is unable to grant the Petitioner's request. The statutory provisions covering this situation clearly indicate that the accounting procedures the Petitioner used were not allowed under Utah law and that the statute of limitations for claiming a credit or refund due to the overpayment unfortunately has run.

Based upon the foregoing, the Tax Commission affirms the determination of the Auditing Division in its assessment of a tax deficiency for the audit period. It is so ordered.

DATED this 13th day of February, 1992.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner