91-0701 - Sales

 

BEFORE THE UTAH STATE TAX COMMISSION

____________________________

In Re: ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

XXXXX ) AND FINAL DECISION

:

: Appeal No. 91-0701

: Account No. XXXXX

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STATEMENT OF CASE

On XXXXX, Respondent issued its audit determination assessing Petitioner with additional sales tax and interest. Petitioner appealed the assessment,then withdrew the appeal, acknowledged its liability for the additional tax, and asked that the Commission waive interest charges arising out of this matter.

The parties having waived their right to an in-person hearing. The Commission therefore makes the following findings of fact based on its file in this matter.

FINDINGS OF FACT

1. The tax in question is sales tax.

2. The period in question is XXXXX through XXXXX.

3. On XXXXX, Respondent assessed Petitioner with additional sales tax of $$$$$ for the period in question. The additional tax liability arose from disallowed exempt sales for which no exemption certificates were obtained or retained, additional taxable purchases that did not become an integral part of the product and additional taxable purchases consumed in real property contracts.

4. Although Respondent did not assess penalty against Petitioner, Petitioner was charged with interest accrued on the amount of Petitioner's tax liability.

5. Petitioner appealed the foregoing tax assessment, but then withdrew its appeal and instead asked the Commission to waive the accrued interest charged against it.

6. Petitioner requests waiver of interest on the grounds it believed in good faith that it was not required to that it was not required to collect sales tax on the transactions in question. Because it did not collect the tax from its customers at the time of the transaction, it must now pay the tax from its own funds.

Petitioner contends that payment of interest under these

circumstances will result in undue hardship.

7. Petitioner has frequently been assessed with penalty on its sales tax account during the previous several years.

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

The only issue before the Commission is Petitioner's request for waiver of interest charges which have accrued on its sales tax assessment. The Commission is authorized by statute to waive interest for "reasonable cause". Reasonable cause is cause which arises despite ordinary care and prudence exercised by the taxpayer. Ignorance of the law, standing alone, does not justify waiver of penalty.

In this case, it was Petitioner's lack of knowledge or lack of attention that resulted in the tax assessment against it, which in turn resulted in additional interest charges. Such circumstances are insufficient to support waiver of the accrued interest, particularly in view of Petitioner's poor

history of compliance with the Sales Tax Act.

Based upon the foregoing, the Commission finds that sufficient cause has not been shown which would justify a waiver of the interest associated with Petitioner's sales tax liability for the period in question. Petitioner's request for waiver is therefore denied. It is so ordered.

DATED this 3rd day of June, 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