BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
In Re: ) FINDINGS OF FACT
: CONCLUSIONS
OF LAW AND
) FINAL
DECISION
XXXXX, :
) Appeal No.
92-0139
: Account
No. XXXXX
)
___________________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Lisa L. Olpin, Presiding
Officer, heard the matter for and on behalf of the Commission. Petitioners were present and represented
themselves. 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 personal income tax.
2. The period in question spans the years XXXXX
through XXXXX .
3. The Operations Division of the Tax
Commission contends that Petitioners did not file any personal income tax
returns between the years XXXXX and XXXXX until XXXXX.
4. XXXXX, on the other hand, claims he timely
filed Petitioners' personal income tax returns for all years through XXXXX and
the year XXXXX.
5. He admits that he did not file their XXXXX,
XXXXX and XXXXX tax returns on time.
6. He filed their XXXXX-XXXXX tax returns in
XXXXX. Petitioners received a refund in
each of these years.
7. In XXXXX, Mr. XXXXX recalls that he went to
the Tax Commission. He went to claim a refund from the previous year's taxes
because he was short on cash.
8. As a result of his visit to the Tax
Commission in XXXXX, Mr. XXXXX learned that there was no record of him with the
Tax Commission. Based on this
knowledge, Mr. XXXXX decided not to file returns since the state had apparently
no knowledge of him in the tax records anyway.
9. Mr. XXXXX admits he did not file a return
for the tax years XXXXX, XXXXX and XXXXX.
He is uncertain if he filed a return for XXXXX.
10. In XXXXX, Petitioners started business with
their own convenience store. Mr. XXXXX
had an accountant, XXXXX, help with the bookkeeping.
11. This accountant told Mr. XXXXX he at least
needed to file his XXXXX, XXXXX and XXXXX personal income tax returns.
12. The accountant apparently prepared these
three years of returns and dated them XXXXX.
13. In XXXXX, Petitioners' business ran into
financial problems and Petitioners did not pay their sales and use taxes to the
state.
14. The Tax Commission sent a collector to work
with Petitioners regarding their sales tax.
15. In XXXXX, Petitioners requested chapter
seven bankruptcy which was later granted.
16. At the request of the Tax Commission, Mr.
XXXXX brought copies of all of his worksheets for all of the years in question
to the Commission. His worksheets are
copies of tax forms that he worked on; they are not necessarily true copies of
the original returns he claims he filed. Mr. XXXXX stated that there are
mathematical errors and possibly other kinds of clerical-type errors on these
worksheets.
17. XXXXX also brought in his copies of his W-2
forms from the previous years.
18. Regarding tax year XXXXX, the Tax Commission
contends Petitioners owed $$$$$ in personal income tax based on Internal
Revenue Service sources. Mr. XXXXX,
however, claimed that the Internal Revenue Service audited his XXXXX return.
He and the I.R.S. examined his return and after correcting errors, Mr.
XXXXX ended up owing $$$$$ in state income tax for XXXXX. Mr. XXXXX did not inform the Tax Commission
of this adjustment.
19. The Tax Commission has no record of
receiving Petitioners' XXXXX return prior to XXXXX.
20. Mr. XXXXX of the Operations Division stated
generally that any subsequent adjustments by the Internal Revenue Service would
not automatically be reported to the Tax Commission.
21. Regarding tax year XXXXX, Mr. XXXXX only had
a copy of his W-2 form, no worksheets.
The Tax Commission prepared a state return for the XXXXX for XXXXX.
22. Petitioners' XXXXX and XXXXX returns are
signed by the accountant, XXXXX.
Petitioners' XXXXX return is stamped "original signed by
XXXXX". Mr. XXXXX claims he filed
these three late returns with his XXXXX return. He did not submit any payment with them.
23. The Tax Commission has no record of
receiving the XXXXX through XXXXX returns prior to XXXXX.
24. Petitioners received a $$$$$ refund as a
result of their timely XXXXX return.
25. Petitioners timely filed an extension
request for the year XXXXX. They did not file their return, however, until July
XXXXX. The Tax Commission denied their
$$$$$ refund request because Petitioners filed outside of the three year
statute of limitations.
26. Petitioners received refund credit on their
personal income tax returns for the years XXXXX, XXXXX and XXXXX.
27. At the formal hearing in this matter, the
Operations Division stated that it was not interested in pursuing Petitioners'
personal income tax liabilities for the years XXXXX through XXXXX due to the
age of these returns.
28. Petitioners are requesting that the Tax
Commission accept the amount of money they have already paid in taxes and to
abate the penalty and interest amounts.
CONCLUSIONS OF LAW
The
Tax Commission is granted the authority to waive, reduce, or compromise
penalties and interest upon a showing of reasonable cause. (Utah Code Ann. §59-1-401(8).)
Further,
relevant Utah law states: If a refund or credit is due because the amount of
tax deducted and withheld from wages exceeds the actual tax due, no refund or
credit may be made or allowed unless the taxpayer or his legal representative
files with the commission a tax return claiming the refund or credit:
(i)
within three years from the due date of the return, plus the period of any
extension of time for filing the return.
(Utah Code Ann. §59-10-529(7)(a)(i).)
DECISION AND ORDER
Per
the Operation Division's request, the Tax Commission will allow a portion of
Petitioners' personal income tax returns, specifically the year XXXXX through
XXXXX, to remain as filed without further action on the part of the Tax
Commission.
Further,
the Tax Commission finds that the amount of tax due for the year XXXXX is
$$$$$.
Additionally,
the Tax Commission holds that Petitioners did not timely file and pay their
XXXXX through XXXXX personal income taxes.
This determination is based on the fact that Mr. XXXXX learned he was
not listed on Tax Commission records in XXXXX and, by his own admission, chose
not to file as a direct result. The penalties and interest are not waived.
Petitioners
are also not entitled to the $$$$$ refund they requested in XXXXX for the year
XXXXX because they did not timely file their return on XXXXX. In this case, the statute of limitations
runs from XXXXX to XXXXX.
In
conclusion, the interest and penalty assessments are a result of Petitioners'
own choice to play the odds that the Tax Commission would not find them. While there is no sure explanation for why
Petitioners' names are missing on Tax Commission records other than failure to
file or a computer error, Petitioners concede that they did not file for three
or possibly four of those years.
In
this matter, Petitioners should be content that a greater penalty is not
imposed for intentional disregard of a law or rule. Nothing prevented Petitioners from coming forward to ascertain
that they were properly accounted for in the tax records as are thousands of
other Utah taxpayers. It is so ordered.
DATED
this 17th day of November, 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