91-1366 & 91-1367 - Sales

 

BEFORE THE UTAH STATE TAX COMMISSION

____________________________

In Re: )

:

XXXXX ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

: AND FINAL DECISION

:

: Appeal Nos. 91-1366 &

: 91-1367

_______________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a formal hearing by telephone on XXXXX. Lisa L. Olpin, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX, and XXXXX, manager of corporate taxes, both of 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 sales and use tax.

2. The two periods in question are (1) XXXXX through XXXXX and (2) XXXXX through XXXXX.

3. In XXXXX, XXXXX, a XXXXX, bought XXXXX of Utah. XXXXX was a XXXXX company.

4. Later, XXXXX changed XXXXX name to XXXXX Corporation.

5. When XXXXX first purchased XXXXX, it retained the same staff of employees.

6. In late XXXXX or early XXXXX, the office manager of XXXXX left. A new office manager from the XXXXX office took over. He was not knowledgeable of Utah tax laws.

7. XXXXX sent directives to XXXXX regarding the proper tax procedures to follow. XXXXX felt confident in their Salt Lake City staff to meet those criteria.

8. XXXXX conducted internal audits of itself. Everything always appeared to be in order. XXXXX never checked over the audits or the audit procedures.

9. In XXXXX, XXXXX sold XXXXX.

10. Later, the Tax Commission audited XXXXX and found two periods wherein sales and use tax were outstanding.

11. For the period of XXXXX through XXXXX, XXXXX failed to file and to pay sales tax in the amount of $$$$$. A penalty in the amount of $$$$$ was assessed, plus interest.

12. For the period of XXXXX through XXXXX, XXXXX failed to file and to pay sales tax in the amount of $$$$$. A penalty in the amount of $$$$$ was assessed, plus interest.

13. XXXXX filed its returns and paid its delinquent taxes for the periods in question on XXXXX.

14. Poor record keeping and a misunderstanding of the law are the reasons why the returns and payments were never made.

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 Tax Commission understands that Petitioner did not purposely try to avoid paying taxes; however, the circumstances of this case do not describe a situation where a waiver of the penalty is appropriate.

Here, it is clear that Petitioner had the responsibility to oversee the financial affairs of XXXXX. Sending communiques and memos regarding financial obligations was an attempt to meet this responsibility, however, it was ineffective and incomprehensive. Leaving the task to lesser employees was Petitioner's choice that has resulted in tax penalties. The consequences of electing to do business in this manner falls on Petitioner.

Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify a waiver of the penalty associated with the two periods in question. It is so ordered.

DATED this 22nd day of January, 1992.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

ABSENT

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner