91-0814 - Withholding Tax

 

BEFORE THE UTAH STATE TAX COMMISSION

__________________________

In Re: ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

XXXXX ) AND FINAL DECISION

:

: Appeal No. 91-0814

: 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 was 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 withholding tax.

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

3. Petitioner, as a business entity, was undercapitalized from the beginning, according to XXXXX, and went out of business in XXXXX, because it could not compete with larger travel agencies.

4. Some of the difficulty in this case was initially caused by the fact that XXXXX was under the impression that his employee had been filing and paying the taxes, but she had not been doing so for either the federal or state withholding taxes. When Petitioner investigated this difficulty, he found that the employee was withholding the tax, but she was not aware that it was her responsibility to also remit the tax. She was under the impression that her only function was a withholding and record keeping function.

5. XXXXX is currently unemployed, and under the burden of some of the debts which accrued while the Petitioner business was in operation.

6. By letter dated XXXXX, the Tax Commission reduced the original $$$$$ penalty to $$$$$, a reduction of 50%.

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 Tax Commission finds that sufficient consideration has already been given to the circumstances of this case in the large adjustment in the penalty which has already been granted. Additionally, interest should not be waived because the state was deprived of the use of the tax funds for a period of time, through no fault of its own, and should be compensated for this loss of use. Petitioner is responsible for the actions of its employees, and the negligence evidenced by Petitioner's employee in not filing and paying the taxes is negligence for which Petitioner is responsible. Therefore, the penalty is appropriate.

Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify a waiver of the remaining penalty and interest associated with Petitioner's withholding tax for the first, second, and fourth quarters of XXXXX; and the first, second, and third quarters of XXXXX. Interest, however, shall be adjusted to account for the previous reduction in the penalty as noted on the XXXXX, Tax Commission letter. It is so ordered.

DATED this 27th day of June, 1991.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner