92-1612 - Income



In Re:                                                                           )           FINDINGS OF FACT,

                                                                                    :           CONCLUSIONS OF LAW,

XXXXX,                                                                     )           AND FINAL DECISION


                                                                                    )           Appeal No. 92-1612

                                                                                    :           Account No. XXXXX



            This matter came before the Utah State Tax Commission for a formal hearing on XXXXX.  Paul F. Iwasaki, Presiding Officer, heard the matter for and on behalf of the Commission.  Present and representing the Petitioner was XXXXX.

            Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:


            1.  The tax in question is income tax.

            2.  The period in question is XXXXX.

            3.  When the Petitioner filed his XXXXX Utah income tax return, he did so using form TC-40S.

            4.  On line 6 of that return the taxpayer is instructed to enter "1/2 federal tax liability on federal return (see instructions, page 5)".

            5.  The instructions of page 5 state, "Line 6-Federal Tax: enter one half of your federal income tax from line 7 of the federal return, form 1040EZ or line 22 of form 1040A."

            6.  The Petitioner misunderstood the instruction to refer to form 1040, which is the federal income tax return form he used, as well as to form 1040EZ.  Line 7 of form 1040 is the line on which wages, salaries, and tips are reported.  Therefore, the Petitioner entered $$$$$ as one half of his federal tax liability.

            7.  The Petitioner realized the possibility that there had been an error made when he finished the return and calculated that a refund was due him.  The Petitioner did not call the Tax Commission nor seek outside help because he believed that he followed the instructions correctly.

            8.  The Petitioner later received notice from the Commission that additional tax was due and was also made aware that a penalty in the amount of $$$$$ was assessed as well as interest applied at the statutorily prescribed rate.

            9.  The Petitioner requested a waiver of the penalty and interest associated with the XXXXX income tax year.  By subsequent Commission action, the penalty portion was waived.  The Petitioner seeks waiver of the interest assessed.


            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).)


            In the present case, the Petitioner asserts that waiver of the interest assessed would be appropriate because the instructions provided him when filing his return were confusing thus leading to an incorrect return being filed.  The Commission finds that under the circumstances of the present case, a bona fide mistake on the Petitioner's part could have been prompted by his misreading of the instructions.  Therefore, waiver of the penalty which had been imposed was appropriate.  Such an error, however, does not necessarily also require a finding that waiver of the interest is also appropriate.

            The Tax Commission finds that because the Petitioner had use of the money which he otherwise would not have had during the time in question, a waiver of the interest assessed would not be appropriate.

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

            DATED this 12th day of November, 1992.


R. H. Hansen                                                                Roger O. Tew

Chairman                                                                      Commissioner

Joe B. Pacheco                                                            S. Blaine Willes

Commissioner   Commissioner