91-0537 - Sales




In Re: )


XXXXX ) Appeal No. 91-0537

: Account No. XXXXX



This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Alan Hennebold, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner were XXXXX, and XXXXX.

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


1. The tax in question is sales tax.

2. The periods in question are the fourth quarter of XXXXX, and the second, third and fourth quarters of XXXXX.

3. During XXXXX, XXXXX began operating XXXXX Services. XXXXX had recently immigrated to the United States from XXXXX and was unfamiliar with federal and state tax laws. He therefore employed a local tax preparation service to obtain the necessary tax accounts and to explain his tax obligations to him. As part of that process, XXXXX obtained a sales tax account with the Utah State Tax Commission.

4. Despite his efforts to fulfill his tax obligations, XXXXX was confused about the requirements for filing sales tax returns. As a result, his sales tax return for the fourth quarter of XXXXX, due on XXXXX, was not filed until XXXXX. When filed, it was accompanied by full payment of the tax due. XXXXX was also late in filing his sales tax returns for the second, third and fourth quarters of XXXXX. In each case, the return was filed approximately two months late and was accompanied by full payment of the tax liability shown on the return.

5. With respect to each of the quarterly sales tax returns in question, XXXXX was assessed a 10% late filing penalty. Added together, the penalties total $$$$$.

6. After XXXXX discovered that he had failed to file his sales tax returns on time, he discontinued the services of his original accounting service and obtained other professional assistance. The business was then incorporated as XXXXX. Since then, all sales tax returns have been filed on time, with full payment of all tax liability.

7. In XXXXX, the Petitioner sent a letter to Commission staff seeking relief from the penalties imposed in this matter. Petitioner was informally advised that the penalties would be abated. No further communication was received on the subject until four years later, when Petitioner received a telephone call from Commission staff. Petitioner was asked to submit a copy of its previous letter, which it did. The gap in communication between Commission staff and Petitioner may have been due to Petitioner's incorporation and name change.


Utah law authorizes imposition of a 10% penalty for late filing of a tax-due return. (Utah Code Ann. 59-1-401(1).)

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-l-401(8).)


The record in this matter establishes that the Petitioner began business operations in Utah without experience in American tax practices. He sought professional assistance in complying with tax requirements, but still failed to understand the filing requirements of Utah's sales tax law. Petitioner's misunderstanding led to late filing for the first few quarters his business was in operation. However, when the Petitioner comprehended the nature of the problem, he obtained the professional assistance necessary to resolve the matter. Since that time, his record of compliance with the sales tax requirements has been spotless.

In view of the foregoing, the Commission concludes the Petitioner has made a conscientious effort to comply with the provisions of Utah's sales tax law. Under these circumstances, the Tax Commission finds sufficient cause exists to waive the penalty associated with the Petitioner's sales tax liability for the fourth quarter of XXXXX, and the second, third and fourth quarters of XXXXX. Interest assessed with respect to those periods is not waived, but will be recomputed in accordance with this decision. It is so ordered.

DATED this 31 day of May, 1991.


R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner