92-1238 - Income

BEFORE THE UTAH STATE TAX COMMISSION

___________________________________

In Re: ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

XXXXX AND ) AND FINAL DECISION

XXXXX, :

) Appeal No. 92-1238

: Account No. XXXXX

)

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STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Alan Hennebold, Presiding Officer, heard the matter for and on behalf of the Commission. XXXXX appeared in person on behalf of himself and 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 individual income tax.

2. The period in question is XXXXX.

3. During XXXXX, Petitioner XXXXX retired from his employment and received a lump sum distribution of retirement benefits. Because Petitioners were unsure of the proper manner in which to report the retirement benefits on their tax returns, they engaged a Certified Public Accountant to prepare their returns for them.

4. Petitioners filed their Utah income tax return on XXXXX, reporting tax liability of $$$$$ less withholding credits of $$$$$. The return was accompanied by payment of the remaining tax due.

5. In XXXXX, Petitioners received a request from Respondent for a copy of their XXXXX federal return. They mailed the requested copy immediately. Shortly thereafter, they received the return back from Respondent, with no comment or request for any further action. Petitioners assumed their income tax returns had been reviewed and were in order.

6. In fact, Respondent had audited Petitioners' XXXXX return during mid-XXXXX and increased Petitioners' liability from $$$$$ to $$$$$.

7. On XXXXX, Petitioners received their first notice of the increase in their tax liability. The notice assessed additional tax of $$$$$, a 10% penalty of $$$$$ and interest at the statutory rate of 12% per annum.

8. Petitioners immediately paid the additional tax due and requested waiver of penalty and interest.

9. Petitioners have previously filed and paid their Utah income tax liability in a timely manner.

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

Petitioners do not contest the additional income tax assessed for XXXXX, but seek waiver of penalty and interest.

Petitioners made reasonable effort to properly file their XXXXX income tax return, even hiring a C.P.A. to complete their return for them. Petitioners have complied with Respondent's requests for information and paid the additional tax due as soon as they received notice of the assessment. Finally, Petitioners' have a history of properly filing and paying their state income tax. Under these circumstances, the Commission finds reasonable cause to waive the penalty assessed against Petitioners with respect to their XXXXX Utah income tax liability.

Petitioners also request waiver of interest which was assessed on Petitioners' unpaid income tax. Petitioners point out that Respondent was slow in discovering Petitioners' tax deficiency and that even after Respondent discovered the deficiency, Petitioners were not notified for several more months. As a result, interest continued to accrue.

The record in this matter shows that Petitioners could have been advised of their XXXXX tax liability by XXXXX, but did not receive notice until XXXXX. For that reason, the Commission abates interest assessed after XXXXX. Interest accrued prior to XXXXX is not waived.

In summary, the Commission waives all penalties assessed against Petitioners in this matter. The Commission also waives interest charges after XXXXX. Respondent is instructed to recompute Petitioner's remaining liability in accordance with this decision, then notify Petitioner of the amount due, if any. IT IS SO ORDERED.

DATED this 13th day of October, 1992.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

ABSENT

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner