BEFORE THE UTAH STATE TAX COMMISSION
In Re: ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
XXXXX ) AND FINAL DECISION
: Appeal No. 91-1416
: 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.
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 individual income tax.
2. The period in question is XXXXX.
3. The Petitioner filed his XXXXX individual income tax return in a timely fashion. Thereafter, an audit by the Internal Revenue Service increased his taxable income for that year, with a corresponding increase in his federal income tax.
4. The increase in Petitioner's XXXXX income resulted from the following circumstances. Petitioner agreed to resell certain shares of stock to the issuing corporation. An initial down payment and two additional payments were to be made during XXXXX. A final payment was to made during XXXXX. All such payments were made through a local bank, serving as XXXXX agent. The corporation made the three payments required during XXXXX, which payments were properly reported on Petitioner's XXXXX state and federal income tax returns. However, the corporation also made the final payment, scheduled for XXXXX, to the escrow agent on XXXXX. Petitioner was unaware that the final payment had been made during XXXXX. Consequently, the final payment was not included on Petitioner's XXXXX returns, but was instead included in his XXXXX returns. A subsequent Internal Revenue Service audit discovered the error and made the necessary corrections to Petitioner's XXXXX and XXXXX income tax returns.
5. Immediately after completion of the foregoing federal audit, Petitioner filed amended income tax returns with the state of Utah for XXXXX and XXXXX. Petitioner's state income tax liability increased from $$$$$ to $$$$$. He was assessed interest, as well as a late payment and negligence penalty of $$$$$.
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
In considering Petitioner's request for waiver of penalties associated with his XXXXX income tax liability, the Commission notes that the penalty arose from an unscheduled payment by a third party to an escrow account at the very end of XXXXX. The result of the unscheduled payment was to shift anticipated income from the XXXXX tax year to the XXXXX tax year. When Petitioner learned of the foregoing facts during the course of an Internal Revenue audit, he corrected his state income tax returns as well, prior to any intervention from Commission staff.
Based upon the foregoing, the Tax Commission finds that sufficient cause has been shown to justify waiver of the penalty assessed with respect to Petitioner's XXXXX individual income tax liability. It is so ordered.
DATED this 25th day of March, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes