BEFORE THE UTAH STATE TAX
COMMISSION
________________________________
In Re: ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
XXXXX ) AND FINAL DECISION
:
: Appeal No.
91-0482
: 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 Petitioner were
XXXXX, CPA and 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 sales tax.
2. The period in question is the audit period
XXXXX through XXXXX.
3. The penalty and interest in this case was
assessed upon Petitioner's tax liability which resulted from a sales tax audit
performed by the Tax Commission on Petitioner's records. This audit revealed that Petitioner's
records and accounting system was not sufficient because proper controls were
not in place to ensure the proper collection and accrual of sales taxes. Customers were purchasing merchandise tax
free without Petitioner acquiring proper information to verify the exempt
nature of these sales. A reconciliation
of Petitioner's general ledger to the sales tax returns resulted in large
differences which could not be explained or supported by Petitioner's records.
4. Petitioner states that the penalty in this
case should be waived, because the total tax deficiency discovered pursuant to
the audit was only $$$$$, which, in Petitioner's words, "represents a
margin of error of less than 3%."
Petitioner
is of the opinion that this 3% margin of error reflects a common
misunderstanding in the linen supply industry of the nuances of sales tax laws.
5. Petitioner had been previously audited by
the Tax Commission, but, according to Petitioner, the previous audits had not
been as thorough as that which has given rise to this case. These audits did not reveal the deficiencies
noted in the audit for this case.
6. The audit also revealed that Petitioner was
collecting tax where tax was not due, as well as not collecting tax that was
due. Petitioner feels that some
consideration should be given for the fact that, in some of these transactions,
tax was collected and remitted when it should not have been, which resulted in
an overpayment to the state. These
overpayments have now been corrected.
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
Prior
to this audit, Petitioner had a reasonable basis to believe that its tax
accounting methods were proper, because Petitioner had previously been audited
by the Tax Commission and the deficiencies discovered in this audit were not discovered
in the prior audits.
Based
upon the foregoing, the Tax Commission finds that sufficient cause has been
shown which would justify a waiver of the penalty associated with Petitioner's
sales taxes for the audit period XXXXX through XXXXX. Interest shall be
adjusted to account for the waiver of the penalty. It is so ordered.
DATED
this 28th day of June, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
ABSENT
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner