92-1471 - Income

BEFORE THE UTAH STATE TAX COMMISSION

_________________________________

In Re: ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

XXXXX, ) AND FINAL DECISION

:

) Appeal No. 92-1471

: 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. Lisa L. Olpin, Presiding Officer, heard the matter for and on behalf of the Commission. Petitioner was present and accompanied by XXXXX, the tax preparer who prepared her XXXXX personal income tax return.

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 XXXXX.

3. Petitioner timely filed her XXXXX personal income tax return and received a refund therefrom.

4. In filing the return on Petitioner's behalf, the tax preparer, XXXXX XXXXX, did not include Petitioner's XXXXX lump sum federal civil service payment as taxable income

5. In so doing, Mr. XXXXX included a statement with the return, explaining why the federal income amount was higher than the state income amount.

6. On XXXXX, the Auditing Division sent Petitioner a letter, requesting an explanation for the difference in federal adjusted income and state adjusted income per information from the Internal Revenue Service.

7. Petitioner responded and pointed out that she had previously explained the discrepancy when she initially filed her XXXXX return.

8. The Auditing Division subsequently disallowed the exemption Petitioner had taken with regards to the lump sum payment.

9. In turn, Petitioner requested a waiver of the ten percent penalty assessment and the interest.

10. This request was denied on XXXXX.

11. Petitioner argues that the penalty and interest should be abated because she filed timely with a full explanation for the reason why the lump sum amount was not included on her return. She believes that the Tax Commission should have discovered her error sooner.

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

Apparently, in this case, Petitioner's XXXXX personal income tax return was not questioned until the Internal Revenue Service provided information to the Auditing Division indicating that Petitioner's stated federal taxable income was not the same as Petitioner's state taxable income.

At that point in time, the Auditing Division scrutinized Petitioner's XXXXX return and asked for the explanation, unaware that one had been previously submitted.

In any case, the Tax Commission has three years to verify a filed return. The fact this error on Petitioner's return wasn't discovered until nearly two and half years after the filing is of no consequence.

Petitioner's accountant offered no explanation for why the lump sum payment was excluded from income on the XXXXX return in the first place. It may be the case that Petitioner may seek compensation for any additional costs from XXXXX, accountant.

Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify a waiver of the penalty and interest associated with the personal income tax for the year XXXXX. It is so ordered.

DATED this 12th day of November, 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