BEFORE THE UTAH STATE TAX
COMMISSION
_________________________________
XXXXX, )
: FINDINGS
OF FACT,
Petitioner, ) CONCLUSIONS OF LAW,
: AND FINAL
DECISION
v. )
AUDITING
DIVISION OF THE :
UTAH STATE TAX
COMMISSION, ) Appeal No. 92-1669
:
Respondent. ) 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. Present and representing the Petitioner was
XXXXX, president. Present and
representing the Respondent was XXXXX.
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 withholding tax.
2. The period in question covers the years
XXXXX, XXXXX, XXXXX and XXXXX.
3. Petitioner went into business in XXXXX. By XXXXX, the company acquired more help and
the payroll increased.
4. At that time, the owner, XXXXX, hired his
wife as the business manager to do the bookkeeping, accounting and payroll for
the company. His wife had graduated from the XXXXX with an M.B.A. degree the
summer of XXXXX.
5. Mrs. XXXXX was also secretary/treasurer of
the corporation.
6. With confidence in his wife's abilities, Mr.
XXXXX handled the other aspects of running the business.
7. Mr. XXXXX would sign checks his wife would
bring to him. These checks included withholding
payments to the Tax Commission.
8. Although Mr. XXXXX was aware that his
company was at times tight on money, he believed that the withholding taxes
were being paid.
9. Also, during the years in question,
particularly XXXXX through XXXXX, Mrs. XXXXX would submit documentation to
Petitioner's accountant. Mrs. XXXXX
never indicated to the accountant that there were tax delinquencies
accumulating.
10. In February XXXXX, Mr. XXXXX learned through
a customer that Petitioner had a reputation for bouncing checks. This customer wanted to know if Petitioner's
cash flow problem was at an end.
11. Unaware of the bounced checks, Mr. XXXXX
went to his wife for an explanation.
Mrs. XXXXX then told her husband that she had not filed withholding tax
returns nor had she sent in the checks to the Tax Commission that had been
signed.
12. Mrs. XXXXX had also not entered the
withholding checks' numbers on the check register. Further, she had falsified information requested by Petitioner's
accountant.
13. Mr. XXXXX explained that his wife was
attempting to alleviate the cash flow problem by using withholding tax money to
pay vendors.
14. Upon learning of his wife's actions, Mr.
XXXXX released his wife of her duties as business manager. He discovered the unmailed withholding
checks in her office along with a court summons in his name that his wife had
signed for and not given him.
15. Mr. XXXXX acknowledged that perhaps his
management style had fostered the lack of communication at his business.
16. Petitioner was assessed several ten percent
penalties for failing to file and to pay timely in addition to two $$$$$
penalties for failing to provide an information return or a complete supporting
schedule at the end of XXXXX and XXXXX.
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
Mr.
and Mrs. XXXXX worked together in their business pursuits. Had the two of them communicated about the
financial status of the corporation as two responsible corporate officers do,
Petitioner would not find itself in the present situation. The delinquency continued for the better
part of 3 years and at least one officer was aware of this at the time.
Based
upon the foregoing, the Tax Commission finds that sufficient cause has not been
shown which would justify a waiver of the penalties assessed on withholding tax
on the periods in question. Interest is
not waived. It is so ordered.
DATED
this 8th 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