BEFORE THE UTAH STATE TAX
COMMISSION
_________________________________
In Re: ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
XXXXX, ) AND FINAL DECISION
:
) Appeal No.
92-1545
: Account
No. XXXXX
__________________________________
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. Attorneys XXXXX and XXXXX represented
Petitioner by telephone. XXXXX,
Assistant Utah Attorney General, also represented the Auditing Division by
telephone.
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 sales and use tax.
2. The audit in question spans XXXXX through
XXXXX.
3. Petitioner was assessed $$$$$ in sales and
use tax as a result of the audit in question.
A ten percent penalty plus interest was also assessed.
4. According to the audit, Petitioner had
failed to collect sales and use tax on sales it made to certain customers. The majority of the uncollected tax was a
result of sales to two customers, namely XXXXX Company and XXXXX Company.
5. Petitioner claims it had oral agreements
with both customers whereby each customer would self-accrue sales tax and remit
it on its own accord.
6. These two customers never provided tax
exemption certificates to XXXXX.
7. In a letter from XXXXX, senior staff counsel
for XXXXX, she explains that during the audit period XXXXX had mistakenly
remitted sales tax on XXXXX purchases to XXXXX.
8. XXXXX claims it learned of this error when
XXXXX contacted it as a result of the audit in question. XXXXX claims it then sent $$$$$ in sales and
use taxes to Utah (presumably to XXXXX).
9. In an affidavit by XXXXX, disbursements supervisor
of XXXXX Company, XXXXX stated that XXXXX had been self-accruing and remitting
sales and use taxes on XXXXX purchases to XXXXX when XXXXX contacted it as a
result of the audit in question.
10. The Tax Commission had audited Petitioner
the preceding period. Petitioner was assessed an additional $$$$$ for failing
to remit sales and use taxes on certain purchases.
11. It was apparent from testimony that XXXXX
had allowed some customers during the previous audit period to self-accrue
sales and use taxes with the understanding that they would remit the taxes to
the proper entity. The customers, in
turn, did not remit all of the taxes.
12. In this previous audit, however, XXXXX
purchases were not included in the audit as these purchases were deemed out of
state purchases (interstate commerce) and not subject to Utah tax.
13. In the present audit, XXXXX purchases from
XXXXX account for approximately $$$$$ of the $$$$$ tax assessment.
14. At the hearing, there was no evidence
provided that would indicate that the nature of the sales transactions between
XXXXX and XXXXX had changed from the previous audit period to the audit period
in question.
15. During the first audit, Tax Commission
auditors apparently did not fully investigate the type of sales Petitioner made
to XXXXX.
16. It was not until the second audit that the
auditors specifically examined all of the sales to XXXXX and determined that
the sales were, in fact, not a part of interstate commerce, but were taxable to
Utah.
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 assessed for the audit period
in question. It is conceivable there
was confusion on the part of Petitioner as to how to tax the XXXXX and XXXXX
purchases in light of the previous audit.
Interest is not waived. It is so
ordered.
DATED
this 7th day of December, 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