91-1067 - Income

 

BEFORE THE UTAH STATE TAX COMMISSION

_____________________________

In Re: ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

: AND FINAL DECISION

: Appeal No. 91-1067

: 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. Present and representing the Petitioners were XXXXX and 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 individual income tax.

2. The period in question is XXXXX.

3. The Petitioners filed their XXXXX individual income tax return in a timely fashion. Thereafter, an audit by the Internal Revenue Service increased their taxable income for that year, with a corresponding increase in their federal income tax.

4. Although the Petitioners were aware of the increase in income resulting from the federal audit of their XXXXX income tax return, they did not file an amended income tax return with the state of Utah for that year. Neither party was aware of their obligation to do so. The Internal Revenue Service subsequently advised the Tax Commission of the results of its audit of Petitioners' XXXXX return. Commission staff then adjusted the Petitioners' XXXXX state income tax return accordingly. As a result, Petitioners' state income tax increased by $$$$$.

5. Commission records indicate that notice of the additional tax liability was sent to Petitioners. However, the address used may have been incomplete. Furthermore, Petitioners had divorced and only one of them continued to live at the address used by the Commission. The Petitioners did not receive the Commission's notices until XXXXX. Petitioner XXXXX then responded with payment of the tax due.

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 Petitioners ask the Commission to waive late payment penalties imposed with respect to their XXXXX tax liability, which liability arises from a federal audit of their income tax return for that year. The Petitioners concede they were aware that the federal audit had increased their taxable income for the year in question. However, Petitioners failed to file an amended income tax return to advise the Commission of their additional income. Utah Code Ann. 59-10-536(5) requires that taxpayers report any change in their federal net income to the Tax Commission within 90 days. It was Petitioners' failure to report the increase in their XXXXX net income which led to the imposition of penalty against them. Had Petitioners amended their state tax return, as required by law, no such penalty would have been imposed. While the Petitioners may not have received notice that a penalty had been imposed, the lack of notice did not cause the imposition of the penalty.

Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify a waiver of the penalty or interest associated with the Petitioners' XXXXX individual income tax liability. It is so ordered.

DATED this 3rd day of December, 1991.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner