92‑1389

Income

Signed 10/28/92

BEFORE THE UTAH STATE TAX COMMISSION

_________________________________

In Re: )

: FINDINGS OF FACT,

XXXXX ) CONCLUSIONS OF LAW,

: AND FINAL DECISION

)

: Appeal No. 92‑1389

)

: Account No. XXXXX

_______________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a prehearing conference on XXXXX. Alan Hennebold, Presiding Officer, heard the matter on behalf of the Commission. Petitioner XXXXX, appeared on his own behalf. XXXXX, Assistant Utah Attorney General, appeared for Respondent Audit Division, with XXXXX of Respondent's staff.

With the agreement of the parties, the prehearing conference was converted to a formal hearing. Based upon the evidence presented at the hearing, the Commission hereby makes its:

FINDINGS OF FACT

1. The assessment in question is penalty and interest arising from Petitioner's XXXXX individual income tax.

2. During XXXXX, Petitioner received scholarship funds under a federal program administered by the XXXXX. Petitioner also received other stipends from the University.

3. Petitioner received a XXXXX W‑2 form from the University that showed his stipend income, but did not include his scholarship funds. He inquired of the University payroll office about the omission and was told the matter would be reviewed. Later, after hearing nothing from the payroll office, he called again and was told the W‑2 form was correct and that the scholarship funds were not income for tax purposes.

4. From other sources, Petitioner understood that a certain portion of his scholarship was not considered income. He concluded that the W‑2 form reflected such an exclusion, and therefore filed both his state and federal income tax returns based on the income shown on his W‑2 form.

5. The IRS subsequently informed Petitioner that an additional portion of his scholarship should have been included as income. The IRS recomputed his federal tax, advised him of the additional tax due, and also told him that the changes would be reported to Utah for state income tax purposes. An IRS agent also told Petitioner that he would be contacted by the State of Utah. Petitioner consequently did nothing to amend his Utah income tax return, but instead waited to be contacted by Utah.

6. Petitioner was subsequently advised by Respondent that his Utah income tax liability had been recomputed to reflect the additional income from his federal return. By Respondent's calculation, Petitioner's tax liability rose from $$$$$, as originally reported, to $$$$$.

7. Upon receipt of the foregoing notice, Petitioner recomputed his own income tax and filed an amended return, establishing his actual XXXXX income tax liability of $$$$$. As $$$$$ had already been paid, Petitioner's outstanding tax liability was $$$$$, which he paid.

8. Respondent has assessed late filing and late payment penalties totalling $$$$$, plus interest at the statutory rate of 12%.

9. Commission records indicate that except for the incident in question, Petitioner has filed and paid his state income tax liability on time.

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

Petitioner took reasonable steps to determine his income for XXXXX. His delay in filing an amended state income tax return and his delay in paying the tax was due to incorrect advice received from his employer and the I.R.S. When the matters were brought to his attention, he immediately filed an amended return and paid the tax due. Also, Petitioner has a record of properly filing and paying his state income tax liability.

Based upon the foregoing, the Commission finds sufficient cause has been shown to justify waiver of penalty associated with Petitioner's XXXXX Utah income tax liability.

Interest is not waived, but will be recomputed in accordance

with the penalty waiver granted by this decision. It is so ordered.

DATED this 28th day of October, 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

NOTICE: You have twenty (20) days after the date of the final order to file a request for reconsideration or thirty (30) days after the date of final order to file in Supreme Court a petition for judicial review. Utah Code Ann. ''63‑46b‑13(1), 63‑46b‑14(2)(a).