91-1311 - Corporation Franchise

 

BEFORE THE UTAH STATE TAX COMMISSION

In Re: :

XXXXX ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

: AND FINAL DECISION

: Appeal No. 91-1311

: 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 Petitioner was XXXXX, attorney at law, with XXXXX and XXXXX.

Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:

FINDINGS OF FACT

1. Petitioner seeks waiver of penalty assessed against it with respect to its XXXXX corporate franchise tax liability.

2. Prior to XXXXX, Petitioner and its parent company, XXXXX both filed their respective corporate franchise tax returns on a calendar year basis.

3. During XXXXX, Petitioner merged into XXXXX.

4. Both Petitioner and XXXXX federal returns for XXXXX were due by XXXXX.

5. Petitioner filed a timely extension request with the Commission, accompanied with a check in the amount of $$$$$, in payment of its estimated tax liability. Petitioner's application for extension was approved, establishing a new due date of XXXXX.

6. On XXXXX, Petitioner filed its return, accompanied with a check in the amount of $$$$$ in payment of its remaining ax liability.

7. When Petitioner's return was received by Commission staff, it was processed as a late return. A penalty of $$$$$ was assessed against Petitioner for that reason.

8. Upon receipt of notice of penalty, Petitioner's accounting firm, XXXXX, filed a request for waiver. In its request on behalf of Petitioner, XXXXX explained that the Commission had previously granted an extension for filing.

9. Pursuant to Commission practice, a "XXXXX" was prepared by Commission staff which reported the reason for Petitioner's request as "Taxpayer would like penalty waived because XXXXX." No mention was made of the fact that an extension had been properly requested and granted.

10. Based upon the incomplete information contained in the waiver request, the waiver request was denied. Notice of the denial was not sent to Petitioner's agent, XXXXX, but instead to Petitioner itself on XXXXX.

11. After the request for waiver was denied, no further action was taken by the Commission until collection efforts were commenced on XXXXX. Petitioner, which had been unaware of any delinquency, requested an explanation of the collection action and was advised that the delinquency arose from the penalty discussed above. Petitioner resubmitted a request for waiver of the penalty, but was orally advised that a second request for waiver would not be entertained by the Commission. Petitioner then filed this appeal.

CONCLUSIONS OF LAW

Any party adversely affected by a Commission action may file a petition for agency action. Such a petition shall be filed within 30 days of the date of the notice of the Commission action. (See Utah Administrative Code R861-1A-4).

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

At first blush, it appears Petitioner failed to file a timely appeal in XXXXX of the denial of its request for penalty waiver. However, notice of that denial was not mailed to Petitioner's designated agent, but instead was mailed to Petitioner itself. No further action was taken by Commission staff for several years. Consequently, Petitioner's agent did not know an appeal was necessary, Petitioner assumed its agent was handling the matter, and neither Petitioner nor its agent had cause to discover the truth until much later. Under these circumstances, the Commission concluded that the period for filing an appeal in this matter did not begin until Petitioner became aware of the waiver denial in early XXXXX. The Commission therefore finds Petitioner's appeal to be timely, and will consider the merits of that appeal.

The record clearly establishes that Petitioner was unable to file its XXXXX corporate franchise tax by XXXXX due to its merger with another company. The record is also clear that Petitioner properly obtained an extension of the normal filing deadline, then filed and paid its tax liability within the extension period. Under these circumstances, penalty was improperly assessed against Petitioner. The commission hereby waives the penalty assessed against Petitioner with respect to its XXXXX corporate franchise tax. It is so ordered.

DATED this 7 day of October, 1992.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

R. H. Hansen Roger O. Tew

Chairman Commissioner

ABSENT

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner