BEFORE THE UTAH STATE TAX COMMISSION
In Re: )
XXXXX ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
: AND FINAL DECISION
: Appeal No. 91-1250
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Paul F. Iwasaki and Lisa L. Olpin, Presiding Officers, heard the matter for and on behalf of the Commission. This hearing was conducted by telephone with XXXXX, Corporate Tax Manager, who represented the 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 corporate franchise tax.
2. The period in question is XXXXX through XXXXX.
3. Petitioner is a XXXXX corporation doing business in Utah. Petitioner properly paid taxes for the calendar year ending XXXXX.
4. In XXXXX, Petitioner anticipated changing its fiscal year from the calendar year to the year ending XXXXX. Petitioner applied to the IRS for the fiscal period change.
5. While awaiting IRS approval, Petitioner filed an extension on XXXXX on its Utah XXXXX return. In so doing, Petitioner paid $$$$$ which was 100% of Petitioner's taxes for XXXXX.
6. On XXXXX the IRS approved the fiscal period change to XXXXX and granted Petitioner 30 days to file and pay its XXXXX taxes.
7. On XXXXX, Petitioner filed and paid its XXXXX Utah taxes in the amount of $$$$$. Considering the extension, Petitioner's filing and payment were two months late. Petitioner was, therefore assessed $$$$$ plus interest.
8. Also on XXXXX, Petitioner filed an extension with the IRS for the fiscal year ending XXXXX.
9. On XXXXX, Petitioner filed and paid its XXXXX Utah taxes in the amount of $$$$$. No extension had been filed. Petitioner was assessed $$$$$ for late filing and $$$$$ for late payment, plus interest.
10. For the years XXXXX and XXXXX, the Collection Division calculated a total of $$$$$ owing in penalties and interest.
11. After reconsideration by the Commission on XXXXX, Petitioner's penalty was reduced to a total of $$$$$ plus $$$$$ adjustment in interest.
12. Petitioner appeals all amounts in penalties and interest owing.
CONCLUSIONS OF LAW
1. Petitioner did not file its XXXXX return and pay its corresponding taxes within the extension time limit. Utah Code Ann. §59-7-124(3) reads as follows:
(3) The commission shall allow an extension of six months for filing returns if on or before the due date of the return a proper application (Form TC-559), accompanied by the remittance required by §59-7-126, is filed with the commission.
Petitioner did file its extension and pay the necessary prepayment for the year of 1988 as outlined by Utah statute; however, Petitioner failed to file its return and make payment within the six-month grace period. Thus, the penalty plus interest assessment was appropriate for XXXXX. Petitioner did not file an extension in XXXXX.
2. In any case, Petitioner was required to notify the Tax Commission of its intention to adopt a year other than the calendar year for tax reporting purposes. Utah Administrative Rule R865-6F-2 states, in pertinent part:
A. In order to establish a fiscal year in lieu of a calendar year as the basis of reporting for Utah corporation franchise tax purposes, such fiscal year must be adopted on or before the due date for filing the return (not including extensions). The Tax Commission must be notified in writing on or before the date of the fiscal period selected. The filing of a return on or before such due date, constitutes notification, provided the return clearly indicates the fiscal period selected.
B. A corporation . . . which fails to give notification of a fiscal period within the time set forth must file its returns on a calendar-year basis.
At the time that Petitioner filed its extension in XXXXX, it did not clearly indicate the intention to change its fiscal year from the calendar year end to XXXXX. Petitioner admits that it continued to file its returns and to make payments as if the calendar year were still in effect until the IRS granted approval.
In light of Petitioner's actions, the Tax Commission proceeded as usual, i.e., it treated Petitioner as a taxpayer with a calendar year reporting period. As such, Petitioner failed to file its XXXXX and XXXXX returns and to make their respective payments on time.
3. Petitioner cannot assert that Utah Code Ann. §59-7101(d) requires the Tax Commission to waive any penalties or interest incurred while acquiring federal approval of the fiscal period change. Section 59-7-101(d) reads:
(d) The taxable year for Utah corporate franchise or income tax purposes shall be the same as the taxable year for federal income tax purposes.
In light of the above statue, the Tax Commission is accepting of newly adopted taxable periods that are requested by taxpayers; however, this accommodation can only occur once the taxpayer apprises the Commission of the change.
Petitioner cannot advance this contention in any case because it missed the deadlines for a XXXXX fiscal year end as well as a calendar year end time period in both XXXXX and XXXXX.
Now that the Commission is aware of the new fiscal year date, it has accepted them as outlined in the statute. Under the circumstances of the previous years in question, however, Petitioner is still charged with the penalty and interest assessments.
DECISION AND ORDER
In light of the foregoing, the Tax Commission finds that sufficient cause does not exist to further reduce the penalty associated with the corporate franchise tax due for the years XXXXX and XXXXX. It is so ordered.
DATED this 19th day of December, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes