BEFORE THE UTAH STATE TAX COMMISSION
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
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
Joe B. Pacheco S. Blaine Willes