BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX ) AMENDED
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
v. : AND FINAL DECISION
COLLECTION
DIVISION OF THE : Appeal No. 91-0912
UTAH STATE TAX COMMISSION, :
Respondent. : Account No. XXXXX
: Tax Type:
Penalty & Interest
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on XXXXX.
XXXXX Administrative Law Judge, heard the matter for and on behalf of the
Commission. Present and representing
the Petitioner was XXXXX. Present and
representing the Respondent 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 Corporate Franchise
tax.
2. The period in question is XXXXX.
3. The tax return was filed in XXXXX. According to the testimony of the
Petitioner, the person responsible for filing the returns erroneously thought
that he could not file the Utah return without payment. According to
Petitioner, the return was timely prepared for the XXXXX extension deadline
period. The federal return, with no tax
due, was timely filed.
4. In XXXXX the penalty was reduced from $$$$$
to $$$$$.
APPLICABLE LAW
The
Tax Commission is granted the authority to waive, reduce, or compromise
penalties and interest upon a showing of reasonable cause. (Utah Code Ann. §59-1-401(8).)
ANALYSIS
Petitioner
is basing its claim for further reduction of penalty on financial
hardship. Petitioner had suffered
substantial losses for many years. According to Petitioner, at the end of XXXXX
the net operating loss carried forward for Utah was almost $$$$$. Petitioner's only business was XXXXX. During XXXXX, XXXXX took back the remaining
unsold lots as payment on its mortgage.
Petitioner did not receive cash from this transaction. Petitioner felt there would be enough net
operating loss carried forward to offset the forgiveness of debt income. This proved to be true for the federal
income tax liability, but because Utah only allows a five year carry forward,
it was not true for the Utah tax.
Petitioner further represented that the company had some utility deposits
refunded in December of XXXXX. These
refunds were used to pay the Tax Commission in full in XXXXX. This was the first cash with which to pay
the tax on what the Petitioner identified as phantom income of XXXXX. Petitioner indicated that other creditors
did not receive payment before the Tax Commission received its payment.
Recognizing
that financial hardship is not grounds for waiver of penalty, Respondent
indicated to Petitioner at the hearing that an offer in compromise would be
most appropriate. XXXXX indicated at
the hearing that she would pursue the possibility of an offer in compromise on
this matter.
DECISION AND ORDER
Based
upon the foregoing and a thorough review of the entire evidence of record, the
Tax Commission finds that the record does not establish reasonable cause to
justify further reduction of the penalty associated with the corporate
franchise tax for the XXXXX tax year.
It is so ordered.
DATED
this 6 day of October, 1994.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco Alice
Shearer
Commissioner Commissioner