91-1179 - Withholding Tax

 

BEFORE THE UTAH STATE TAX COMMISSION

____________________________

In Re: )

:

: FINDINGS OF FACT,

XXXXX : CONCLUSIONS OF LAW,

: AND FINAL DECISION

: Appeal No. 91-1179

_____________________________________

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 by telephone and representing the Petitioner was XXXXX, Petitioner's Vice President.

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 XXXXX and XXXXX; and XXXXX and XXXXX.

3. For several years prior to the periods in question, Petitioner relied upon an experienced employee to prepare and file its withholding tax returns. Beginning with the withholding tax return for XXXXX, the employee began to sporadically miss filing deadlines. As a result, the commission imposed a 10% late filing penalty and an additional 10% late payment penalty against Petitioner's withholding tax liability for XXXXX. A 10% late filing penalty was imposed against Petitioner's withholding tax liability for XXXXX. However, because the same employee who failed to file the returns also received the notices of penalty, Petitioner was not advised of the problem. During early XXXXX, Petitioner finally discovered that penalty and interest had been assessed with respect to its withholding tax liability. The Petitioner then took measures to insure that future withholding tax returns were filed and paid in a timely manner. There have been no further delinquent withholding tax returns since that time.

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

Petitioner's failure to file and pay withholding tax in a timely manner is due to the negligence of one of Petitioner's employees. Because the employee had previously demonstrated the ability to file the required returns, Petitioner relied upon her to continue to perform that duty. When the employee failed to make the required filings she withheld that information from the Petitioner, thereby preventing corrective action until after penalties had been imposed for the periods now in question.

Because an employer has a duty to supervise and monitor its employees in the performance of their work, the foregoing circumstances do not constitute a sufficient basis to completely waive the penalties which have been assessed against Petitioner. However, they do tend to instigate Petitioner's responsibility for the late filing and payment of the returns in question. Furthermore, Petitioner has corrected the problem and is now filing and paying its withholding taxes on time.

Based upon the foregoing, the Tax Commission finds that sufficient cause has been shown which would justify a reduction of the penalty associated with the Petitioner's withholding tax liability for XXXXX to 10%. The penalty previously imposed with respect to XXXXX will remain unchanged. Interest is not waived but will be recomputed in accordance with this decision. It is so ordered.

DATED this 20th 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