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