BEFORE THE UTAH STATE TAX
COMMISSION
___________________________________
XXXXX, )
:
Petitioner, ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
v. ) AND FINAL DECISION
:
AUDITING
DIVISION OF THE ) Appeal No. 92-1102
UTAH STATE TAX
COMMISSION, :
)
: Account
No.XXXXXX
Respondent. )
__________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a prehearing conference on
XXXXX. With the consent of the parties,
the prehearing conference was converted to a formal hearing. Alan Hennebold, Presiding Officer, heard the
matter for and on behalf of the Commission.
XXXXX, C.P.A., represented Petitioner.
XXXXX, Assistant Utah Attorney General, represented Respondent.
Based upon the evidence
presented during the hearing, the Commission hereby makes its: FINDINGS OF FACT
1. Petitioner requests waiver of penalty and
interest arising from its withholding tax liability for the XXXXX tax year.
2. Petitioner employs XXXXX, C.P.A., to prepare
its various state and federal tax returns.
3. For the year in question, XXXXX prepared and
filed quarterly withholding tax reports, which reports were filed with the Tax
Commission and paid. However, at the very end of XXXXX Petitioner paid
additional bonuses to its employees.
Taxes were properly withheld from the bonus payments, but not picked up
on the 4th quarter reports. The
bonus-related taxes were included in Petitioner's annual reconciliation form
submitted to the Commission.
However,
the withholding tax attributable to the bonus payments was not remitted.
4. In XXXXX, the Commission discovered Petitioner's
failure to fully pay its XXXXX withholding tax liability. A ten percent late payment penalty was
assessed against Petitioner, as was interest at the statutory rate of 12% per
annum.
5. Upon notice of the deficiency, Petitioner
paid the full amount of tax, penalty and interest. XXXXX then reviewed his records and noted that the reconciliation
had in fact been prepared. Although his
records were unclear on the point, XXXXX has concluded that his staff may have
failed to instruct Petitioner to tender payment of the tax due.
6. XXXXX uses a computerized system for filing
Petitioner and other clients' taxes.
The computerized system is backed up with a manual control card system. XXXXX cannot explain why his system of
internal control failed to catch the error in this instance. He advises that at about the same time, a
similar error was made with respect to another client's withholding tax
account, again for reasons that are unclear.
7. Federal withholding taxes were properly
filed and paid, including amounts attributable to the year end bonus payments.
Commission
records establish that except for the incident in question, Petitioner has
filed its withholding tax returns in a timely manner and paid in full all taxes
due.
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).)
DECISION AND ORDER
The
Petitioner concedes that it failed to timely pay its withholding tax liability
for the XXXXX tax year. XXXXX, the
Petitioner's C.P.A., has testified that the error occurred despite reasonable
procedures to prevent such an error.
XXXXX has also pointed out that Petitioner has fully complied with
withholding tax requirements both before and after the incident in
question. Finally, XXXXX argues that
imposition of interest at a rate of 12% per annum on the late payment of the
withholding tax is sufficient to insure future compliance with tax
requirements.
In
view of the foregoing circumstances, and particularly because of the
inadvertent nature of Petitioner's error and its history of compliance with tax
requirements, the Commission finds reasonable cause to waive the penalty
imposed in this matter. Interest is not waived. IT IS SO ORDERED.
DATED
this 20th day of November, 1992
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
ABSENT
Joe B.
Pacheco S.
Blaine Willes
Commissioner Commissioner