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
Chairman Commissioner
Joe B.
Pacheco S.
Blaine Willes
Commissioner Commissioner