BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
Petitioner, : AND FINAL DECISION
v. : Appeal No. 91-0833
: Account
No. XXXXX
AUDITING
DIVISION OF THE :
UTAH STATE TAX COMMISSION, :
Respondent. :
_____________________________________
STATEMENT OF CASE
By
agreement of the parties, this matter comes before the Utah State Tax
Commission for decision based upon the information contained in the
Commission's file.
Based
upon the record before it, the Commission hereby makes its:
FINDINGS OF FACT
1. The tax in question is withholding tax.
2. The period in question is XXXXX through
XXXXX.
3. On XXXXX, Respondent issued its amended
assessment for additional tax totalling $$$$$.
The additional tax was assessed pursuant to two schedules, identified as
Schedule A and Schedule B. Schedule A imposed tax of $$$$$, the amount
Petitioner had withheld from employee wages, but not remitted to the Tax
Commission. Schedule B imposed tax of
$$$$$ for tax Petitioner had failed to withhold from employee wages.
4. Respondent also assessed Petitioner with penalties
for nonpayment of the foregoing withholding taxes. As to Schedule A, penalty of 100% was imposed on the grounds
Petitioner had fraudulently withheld payment with intent to evade the tax. A 10% negligence penalty was imposed with
respect to Schedule B. Petitioner was
also penalized for failure to file annual tax reconciliation forms and copies
of W-2 forms.
5. Petitioner did not file withholding tax
returns for the years XXXXX through XXXXX.
6. Petitioner does not contest the tax assessed
in this matter, but seeks waiver of penalty and interest.
CONCLUSIONS OF LAW
Each
employer shall, on or before the last day of April, July, October, and January,
pay to the commission the amount required to be deducted and withheld from
wages paid to any employee during the preceding calendar quarter (Utah Code
Ann. §59-10-406(1)(a).)
Each
employer shall file a return, in a form the commission prescribes, with each
payment of the amount deducted and withheld under this part . . . . (Utah Code
Ann. §59-10-4006(2).)
Each
employer shall file an annual return, in a form the commission prescribes. . .
. (Utah Code Ann. §59-10-406(3).)
The
penalty for underpayment of tax is as follows:
(a)
If any underpayment of tax is due to negligence, the penalty is 10% of the
underpayment.
(b)
If any underpayment of tax is due to intentional disregard of law or rule, the
penalty is 15% of the underpayment.
(c)
For intent to evade the tax, the penalty is the greater of $500 per period or
50% of the tax due.
(d)
If the underpayment is due to fraud with intent to evade the tax, the penalty
is the greater of $500 per period or 100% of the underpayment. (Utah Code Ann. §59-1-401(3)(d).)
The
penalty for failure to file an information return or a complete supporting
schedule is $50 for each return or schedule up to a maximum of $1,000. (Utah Code Ann. §59-10-401(4).)
In
the income tax arena, fraud is an actual intentional wrongdoing with the
specific intent to evade tax believed to be owing. . . . (Jensen v. State Tax
Commission, No. 910151, filed July 23, 1992.)
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
Because
Petitioner concedes that the tax in this matter is properly assessed, the only
issue before the Commission is Petitioner's request that penalty and interest
be waived.
A
100% fraud penalty has been assessed in connection with the audit's Schedule
A. Petitioner concedes it failed to
file the returns relating to Schedule A or remit the taxes withheld from
employee wages. While such evidence is
sufficient to establish Petitioner's intent to evade such taxes, it is
insufficient to establish the specific intent necessary to impose the more
stringent fraud penalty. The Commission
therefore concludes that Petitioner may be assessed a 50% penalty for intent to
evade the tax due under Schedule A, but may not be assessed with the 100% fraud
penalty.
A
10% negligence penalty has been imposed in connection with the tax assessed
under Schedule B. Petitioner's pattern
of violating withholding tax requirements justifies a 10% negligence penalty,
at the least.
The
final item of penalty is that imposed under Utah Code Ann. §59-1-401(3)(d) for
failure to file information returns or supporting schedules. The statute
imposes a $50 penalty for each missing return or schedule, up to a maximum of
$1,000. Petitioner concedes it failed
to file such returns and schedules.
As
to Petitioner's request that penalty and interest be waived, Petitioner has
shown no basis to support such a waiver.
Based
upon the foregoing, the Tax Commission hereby reduces the penalty assessed with
respect to Schedule A of Respondent's assessment from 100% to 50%. All other penalties and interest, as well as
the tax itself, are affirmed.
Respondent is instructed to recompute Petitioner's liability in
accordance with this decision. It is so
ordered.
DATED
this 21 day of April, 1993.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco S.
Blaine Willes
Commissioner Commissioner