91-0936 - Withholding Royalties Oil & Gas

 

BEFORE THE UTAH STATE TAX COMMISSION

______________________________

In Re: ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

XXXXX ) AND FINAL DECISION

:

: Appeal No. 91-0936

: Account No. XXXXX

__________________________________

STATEMENT OF CASE

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. XXXXX, Manager of Petitioner's Tax Department, participated by telephone on behalf of Petitioner.

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 XXXXX production withholding tax.

2. The period in question is the second quarter, XXXXX.

3. Prior to XXXXX, Petitioner's mineral production business was done through a XXXXX company. Thereafter, Petitioner disbanded the XXXXX company and incorporated its XXXXX interests with its other business activities. Consequently, Petitioner has itself been responsible for filing and paying XXXXX production withholding tax since XXXXX.

4. Petitioner did not receive a XXXXX withholding tax report form for the period in question, which report was due by XXXXX. In XXXXX, Petitioner adapted a different tax form and used the adapted form to report and pay the XXXXX withholding tax due.

5. Because Petitioner's tax report was not received by the filing deadline of XXXXX, a 10% late filing penalty of $$$$$ was assessed against Petitioner, together with associated interest. The Commission later reduced the penalty to $$$$$.

6. During the years prior to XXXXX, Petitioner's subsidiary company was frequently late in filing its XXXXX withholding tax reports. The reports have been filed and paid on time since Petitioner assumed responsibility in XXXXX, except for the period now in question.

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

Under Utah's statutes governing XXXXX production withholding tax (Chapter 6, Title 59, Utah Code Ann.) Petitioner must file and pay XXXXX withholding tax on a quarterly basis. Petitioner's report and tax payment due on XXXXX was not received until XXXXX resulting in a 10% late filing penalty of $$$$$. The Commission has since reduced that penalty to $$$$$.

In requesting that the remaining $$$$$ penalty be waived, Petitioner points to its history of compliance with the requirements of the XXXXX production withholding tax. Petitioner also points out that it did not receive the tax report form, and was therefore forced to use a different report form. While the points raised by Petitioner are mitigating factors, they are not a complete excuse for Petitioner's failure to file its mineral withholding tax report on time. The Commission has already taken such mitigating factors into account in its previous decision to reduce the penalty from $$$$$ to $$$$$.

Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify a further reduction of the penalty assessed against Petitioner for the period in question. It is so ordered.

DATED this 9th day of July, 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