92-1502 - Motor Fuel

BEFORE THE UTAH STATE TAX COMMISSION

___________________________

In Re: ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

XXXXX ) AND FINAL DECISION

:

) Appeal No. 92-1502

: 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. Representing Petitioner by telephone was XXXXX, XXXXX Tax Manager. Present and representing the Auditing Division was XXXXX, Assistant Utah Attorney General.

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 special fuel tax.

2. The audit period in question is March XXXXX through June XXXXX.

3. Petitioner is seeking a waiver of the ten percent negligence penalty only.

4. As a result of the audit in question, Petitioner was assessed an additional $$$$$ in special fuel tax.

5. This figure was derived from documentation that showed that the reported miles traveled by renters was actually too low when compared to highway road maps. Further, the M.P.G. was changed from 10 M.P.G. to 9 M.P.G.

6. The major portion of the additional tax assessment, however, accounts for fuelings Petitioner made to customers out of bulk storage without taxation.

7. Petitioner had three or four bulk storage sites in Utah at the time. When the fuel was placed into the storage tanks, no tax was assessed. This fuel is referred to as "dropped fuel". This fuel was later taxed after it was taken out of storage and used in the Petitioner's rental trucks. The amount of tax is determined by dividing the amount of miles driven by the M.P.G.

8. In Petitioner's case, Petitioner did not always receive mileage records from its customer/drivers whose trucks were fueled with dropped fuel. Without this information, Petitioner claims it could not calculate how much tax was owed.

9. According to Petitioner, most all of the other states tax fuel as it is "dropped" for storage into the ground. Petitioner is later credited for miles driven as driver records are received.

10. When Petitioner computerized its fuel record keeping at the start of XXXXX, Petitioner knew how much dropped fuel it had dispensed and how much of it was not accounted for due to the lack of reported miles driven by renters. According to Petitioner, there was no way to report taxes because the highway mileage factor necessary to compute the tax was nonexistent in their databank.

11. As a result of the audit in question, Petitioner agreed to pay a certain amount of tax for this dispensed dropped fuel that was unreported due to a lack of mileage records.

12. Petitioner argues that while the special fuel tax audit revealed errors in reporting this tax, Petitioner had successfully reported 99% of miles traveled and 97% of fuel usage.

13. Petitioner also contended that by not collecting the special fuel tax up front when the fuel is initially dropped into the ground, the state of Utah created a reporting fiasco. Petitioner claims Utah provided no mechanism to report the dispensed dropped fuel that was unaccounted for in its renters' drivers mileage logs.

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

Based upon the foregoing, the Tax Commission finds that sufficient cause has been shown which would justify a waiver of the penalty associated with the special fuel tax for the audit period in question.

IT IS SO ORDERED.

DATED this 17th 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