BEFORE THE UTAH STATE TAX
COMMISSION
________________________________
XXXXX, )
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
v. : AND FINAL DECISION
COLLECTION
DIVISION OF THE : Appeal No. 91-1579
UTAH STATE TAX COMMISSION, : Account
No. XXXXX
Respondent. :
__________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Paul F. Iwasaki, Presiding
Officer heard the matter for and on behalf of the Commission. Present and representing the Petitioner was
XXXXX. Present and representing the Respondent was XXXXX, Assistant Utah
Attorney General.
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 withholding tax.
2. The audit period in question is XXXXX
through XXXXX.
3. On or about XXXXX, the field auditor met
with XXXXX, also known as XXXXX, for an opening conference regarding the
audit. XXXXX is the owner of XXXXX.
4. XXXXX stated to the auditor that he had
operated different businesses under different names and that such businesses
were engaged in telephone soliciting.
XXXXX stated that XXXXX was the name of the parent business for the
other businesses.
5. The auditor asked a number of questions of XXXXX
regarding those he had employed as telephone solicitors to determine if those
individuals were employees of XXXXX or were independent contractors.
6. The auditor determined that the telephone
solicitors were indeed employees of XXXXX and were not acting as independent
contractors. That determination was
made by applying the Internal Revenue Services' 20 point common law factors to
determine independent contractor/employee status to the individuals in question.
7. Although represented by counsel at the
hearing, XXXXX did not attend the hearing.
8. The Auditing Division imposed a withholding
tax deficiency in the amount of $$$$$, a penalty in the amount of $$$$$ and
interest calculated at the statutorily prescribed rate for the Petitioner's failure
to file and pay the withholding tax for the period in question.
CONCLUSIONS OF LAW
Each
employer shall, on or before the last day of April, July, October, and January,
pay to the Commission the amount required to be deducted and withheld from wages
paid to any employee during the preceding calendar quarter under this
part. (Utah Code Ann.
§§59-10-406(1)(A).)
"Employee
means and includes every individual performing services for an employer, either
within or without, or both within or without the state of Utah, or any
individual performing services within the state of Utah, the performance of
which service constitutes, establishes, and determines the relationship between
the parties as that of employer and employee . . . . (Utah Code Ann. §59-10-401(1).)
The
petitioning party shall have the burden of proof to establish that his petition
should be granted. (Utah State Tax
Commission Administrative Rule R861-1A-7(lG).)
DECISION AND ORDER
In
the present case, with the exception of a singular piece of evidence, the
Petitioner presented no evidence to rebut or otherwise contradict the
determination of the field auditor.
Likewise, the Petitioner presented no testimony or evidence in support
of its argument that the telephone solicitors employed by the Petitioner were
independent contractors.
The
only item of evidence cited by the Petitioner as supporting its proposition was
the contract allegedly entered into between the Petitioner and the telephone
solicitors it employed.
That
document was entitled "XXXXX".
In that document, it is stated that "the parties intend that an
independent contractor - employer relationship will be created by this
contract."
Although
such agreements are sometimes useful in determining the intentions of the
parties, such contracts are not necessarily controlling in determining the
employment status of an individual.
Such status is determined by evaluating each individual in light of the
20 common law factors established by the Internal Revenue Service and making a
determination from there.
Although
the Commission finds that the Petitioner has failed to establish by a
preponderance of the evidence that its petition should be granted, the Tax
Commission is not persuaded that the imposition of a 15% penalty for an
intentional disregard of a law or rule in addition to a 10% failure to file and
a 10% failure to pay penalty was appropriate.
At the hearing, the auditor testified that the 15% penalty was imposed
because such a penalty was "pretty standard". No further explanation was provided for the
imposition of the 15% penalty.
Specifically, there was no showing that the Petitioner intentionally
disregarded a known law or rule in not collecting or remitting the withholding
tax and the evidence presented would not sustain such an inference.
Based
upon the foregoing, the Tax Commission affirms the determination of the
Auditing Division establishing a withholding tax deficiency and imposing a
XXXXX penalty for failing to file a withholding tax return and a XXXXX penalty
for failing to pay the return. The Tax
Commission reverses however, that portion of the audit report which imposed a
XXXXX penalty for intentional disregard of a rule or law. Interest shall be applied at the statutorily
prescribed rate. It is so ordered.
DATED
this 8 day of September, 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