BEFORE THE UTAH STATE TAX
COMMISSION
______________________________
In Re: )
:
XXXXX ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
: AND FINAL
DECISION
: Appeal No.
92-0998
: 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. Present and representing the Petitioner was
attorney 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 personal income tax.
2. The period in question is the year XXXXX.
3. Petitioner filed and paid his XXXXX personal
income tax in the amount of $$$$$ on XXXXX.
Penalty and interest was assessed.
4. Earlier, in XXXXX, the Internal Revenue
Service seized all of Petitioner's records, receipts, files, etc. as part of an
ongoing Grand Jury investigation.
5. These records ended up with the U.S.
Attorney's office in XXXXX.
6. By XXXXX, Petitioner still had no access to
the seized records despite repeated requests to the U.S. Attorney for
copies. Petitioner filed an extension
with both the I.R.S. and the state of Utah.
7. Petitioner did not pay any amount with his
extension request because he did not believe that he would owe anything.
8. In the meantime, Petitioner did not recover
copies of any of his records from the federal investigation. Petitioner then sued his former bookkeeper
in Utah court for production of documents.
9. Petitioner was awarded a judgment against
the bookkeeper, but no documents were ever turned over.
10. Petitioner, a XXXXX, then pieced together
his files by contacting numerous brokers, agents, institutions, etc.
11. Approximately three months after this
endeavor concluded, Petitioner was able to file and pay his XXXXX personal
income taxes.
12. The I.R.S. previously waived the penalties
involved for the period in question.
13. The Tax Commission previously waived 10% of
the initial 20% penalty. Interest was
not waived.
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).)
Pertinent
to this case is Utah Administrative RuleR865-9I-23(lB-12): Payment of the tax
amount expected to be due must be made before the original tax return filing
deadline. Payment must equal 90% of the
tax due on the return, after credit...,or must equal the tax amount for the
previous year. Penalty and interest
will apply to returns filed with insufficient interest will apply to returns
filed with prepayments.
DECISION AND ORDER
The
Tax Commission understands why Petitioner was unable to file his return
timely. The extension process exists to
allow for the backlash of extenuating circumstances.
Petitioner,
however, is penalized for not complying with the extension process that was
designed to protect him. According to
the above-cited administrative rule, Petitioner could have either paid the same
amount he paid the year before or he could have paid some educated estimate of
his ultimate XXXXX tax liability when he filed his extension.
In
this case, Petitioner ended up owing over $$$$$ in taxes. If he didn't want to prepay the same amount
he paid in XXXXX, he could have made a ballpark estimate of what he would owe
for XXXXX and paid in advance. It is
difficult to believe that Petitioner had absolutely no idea he would owe any
amount at all for XXXXX when, in fact, he owed a substantial amount.
Based
upon the foregoing, the Tax Commission finds that sufficient cause has not been
shown which would justify a further reduction of the penalty assessed on the
year XXXXX for personal income tax.
Interest is not waived. IT IS SO ORDERED.
DATED
this 8th 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