BEFORE THE UTAH STATE TAX
COMMISSION
_______________________________
In Re: )
: FINDINGS
OF FACT,
XXXXX ) CONCLUSIONS OF LAW,
: AND FINAL
DECISION
:
: Appeal No.
91-0533
: Account
No. XXXXX
: Tax Type:
Penalty/Int.
_____________________________
STATEMENT OF CASE
This
matter came before the Utah Tax Commission for a formal hearing on XXXXX. Alan Hennebold, Presiding Officer, heard the
matter for and in behalf of the Commission.
Present and representing the Petitioner was XXXXX, Esq.
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 corporate franchise
and income tax.
2. The periods in question are XXXXX through
XXXXX.
3. Petitioner is a XXXXX. It has never maintained a place of business
in Utah, nor had employees in Utah. The
dispute which is the subject matter of this appeal arises from Petitioner's
participation as a limited partner in "XXXXX", which limited
partnership conducted certain real estate development activities in Utah.
4. The Petitioner's interest in the XXXXX was
the subject of extensive litigation, ultimately resolved In Re: XXXXX, Case No.
XXXXX, U.S. Bankruptcy Court for the XXXXX. The Petitioners' share of the
limited partnership was determined as a result of that litigation. Until resolution of the litigation, the
Petitioners' interest in the partnership distributions could not be determined.
5. Immediately following the resolution of its
litigation, Petitioner filed Utah tax returns for the years in question,
together with its request for waiver of penalties. In filing those returns, Petitioner calculated its tax liability
as though all of its partnership income was derived from Utah, even though some
of the income may have been derived from other states and therefore not subject
to Utah tax. The Petitioner did so do
to its inability to obtain more accurate information from XXXXX. Petitioners' tax returns were all filed
during XXXXX.
6. The Collections Division of the Utah State
Tax Commission has imposed late filing and late payment penalties totalling
$$$$$ for each of the years in question, together with associated
interest. Payments by Petitioner have
been applied first to penalty and interest, leaving an unpaid tax balance which
has continued to accumulate interest.
As of XXXXX, that interest amounted to $$$$$.
CONCLUSIONS OF LAW
The
Tax Commission is granted the authority to waive, reduce, or compromise penalties
and interest upon a showing of reasonable cause. (Utah Code Ann. §59-1-401(8).)
DECISION AND ORDER
As
a preliminary note, the Petitioner contends it was not subject to the minimum
corporate franchise tax of $$$$$ per year which was assessed against it for
XXXXX and XXXXX. A review of the
applicable statues indicates that the tax was properly levied against the
Petitioner for those years.
The
Petitioner has established that its entire relationship with Utah arises from
its participation in a limited partnership devoted to real estate
development. The Petitioner has further
demonstrated that the partnership was embroiled in litigation practically from
the time the Petitioner became involved and that the direct result of that
litigation was that the Petitioner's share in the partnership, and consequently
its profits from the partnership, were in dispute. It was not until resolution of the litigation that the Petitioner
could determine its income and submit its tax returns for the years in question.
It is noted that the Petitioner submitted its returns, and payment as soon as
the foregoing litigation had been settled and the Petitioners' share of profits
could be determined.
Under
the foregoing circumstances, the Commission concludes the Petitioner had
reasonable cause for its delay in filing and paying its corporate franchise and
income tax liability for the years in question. The Commission therefore waives penalty assessed against
Petitioner with respect to the tax years XXXXX through XXXXX. The Commission does not waive interest
charges, but instructs Commission staff to redetermine interest charges after
penalty assessments have been removed in accordance with this decision. It is so ordered.
DATED
this 27th day of August, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco S.
Blaine Willes *
Commissioner Commissioner