92-0139 - Income







) Appeal No. 92-0139

: Account No. XXXXX




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:


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.


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).)


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.


R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner