92-1678 - Income



In Re: )






) Appeal No. 92-1678

: Account No. XXXXX



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 Petitioners were XXXXX and XXXXX.

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


1. The tax in question is personal income tax.

2. The periods in question are the years XXXXX through XXXXX.

3. Petitioners are requesting a waiver of the penalty and interest assessments for the years in question.

4. In XXXXX, Petitioners filed their return nearly four weeks late. An audit in XXXXX increased Petitioners' tax liability for XXXXX substantially.

5. In XXXXX and XXXXX, Petitioners filed their respective returns XXXXX years late.

6. Then in XXXXX, Petitioners again filed late. By mistake, they attached their son's W-2 form to the return, showing a withholding amount of only $$$$$. After the error was discovered, the true withholding amount of $$$$$ was applied. Tax Commission records show that Petitioners were charged interest on the resulting $$$$$ deficit and not the originally computed $$$$$ deficit.

7. In XXXXX, Petitioners requested an extension at the time they filed in October XXXXX. Other than withholding credit, no additional payment was sent to cover the delinquency.

8. Petitioners paid off all years in question in February XXXXX.

9. Mr. XXXXX explained that in the early XXXXX's he and his wife purchased an old church for use as a residence and dance studio.

10. In XXXXX, however, Mrs. XXXXX, a dance instructor, became legally blind, causing Petitioners to suffer financially. Mr. XXXXX, a teacher, could not keep up with the financial needs of the family without his wife's income. They had five children.

11. Petitioners filed Chapter 13 bankruptcy, but could not keep up with the payment schedule.

12. In XXXXX, Petitioners were getting by with just enough money for food.

13. Then, in XXXXX, Mr. XXXXX got a second job with the State of Utah in Youth Corrections. Unbeknownst to Mr. XXXXX, his paycheck from the state did not take out sufficient withholding tax as Mr. XXXXX was paid a small amount on each paycheck.

14. This became a problem at tax time on XXXXX when Mr. XXXXX' second income was added to his full-time teaching income, Mr. XXXXX was short on withholding credits.

15. Mrs. XXXXX, in the meantime, underwent three cornea eye transplants and regained much of her vision by XXXXX.

16. By this time, however, Petitioners had filed Chapter 7 bankruptcy in August XXXXX. The bankruptcy was granted in December XXXXX. Petitioners lost their home.

17. In XXXXX, Petitioners obtained a loan from their credit union to pay the Internal Revenue Service and the Tax Commission. Petitioners are paying $$$$$ in monthly payments on the loan.

18. Mrs. XXXXX is doing better and is again teaching dance.

19. Petitioners feel they have paid an emotional price and request that the Tax Commission reduce or waive the penalties and interest to some degree.

20. Mr. XXXXX stated that he did not file the returns on time because he knew he didn't have the money to pay. He did not realize that there was a penalty for non-filing as well as nonpayment.


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).)

Pertinent to this case is Utah Code Ann. 59-10-516(1), The commission shall allow an extension of time, not exceeding six months, for filing returns . . . The payment accompanying the request shall be at least 90% of the total tax reported on the income tax return when it is filed or the same as the total amount of tax paid on the income tax return for the previous year. The extension request and payment are due by April 15th following the close of the taxable year.


Aside from Mrs. XXXXX' eyesight problems, Petitioners filed incorrectly in XXXXX, resulting in twice as much tax liability as initially reported. Then, Petitioners did not file for the next two years. In the last year, the extension request was filed untimely.

Petitioners should have at least filed their returns appropriately during the years in question.

Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify a waiver of the penalties associated with the personal income tax due on the years XXXXX-XXXXX. Interest for the time period of August XXXXX through December XXXXX is waived. It is so ordered.

DATED this 25th day of February, 1993.


R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner