BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
In Re: )
:
XXXXX, ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
) AND FINAL
DECISION
:
) Appeal No.
92-1734
: Account
No. XXXXX
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. XXXXX, Presiding Officer, heard
the matter for and on behalf of the Commission. Petitioner XXXXX was present and represented himself.
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 personal income tax.
2. The period in question is the year XXXXX.
3. In XXXXX, XXXXX requested that her employer
allow her to withdraw $$$$$ from her profit sharing plan for hardship
reasons. Petitioners were in need of
purchasing a home for their family.
4. This $$$$$ distribution was approved in the
same year on hardship grounds.
5. Upon receiving the money, Petitioners sought
tax advice from the administrator of the profit sharing plan, XXXXX. XXXXX told Petitioners that the lump sum
distribution was not taxable so long as Petitioners used the entire amount to
purchase a home.
6. Petitioners used the $$$$$ to buy a home.
7. In XXXXX, the Internal Revenue Service
contacted Petitioners and disallowed the exemption Petitioners had taken on the
lump sum distribution. Petitioners paid the I.R.S. in the same year.
8. In XXXXX, Petitioners were notified by the
Tax Commission that they owed more taxes for XXXXX based on the I.R.S. audit
change.
9. Petitioners paid the state soon thereafter.
10. Petitioners have since questioned XXXXX
about the inaccurate tax information she gave them. She explained that she thought that Congress had passed a new law
allowing for lump sum distributions to be nontaxable in hardship cases when the
money is used for purchasing a home.
She had learned since then that Congress was only contemplating such a
law.
11. Petitioners were penalized ten percent for
nonpayment of taxes. Another ten percent penalty was assessed for failing to
notify the Tax Commission of the I.R.S. audit change within 90 days of the its
final notice. Interest was also added.
12. Petitioners contend that they reasonably
relied upon the tax advice given them by the administrator of their profit
sharing plan. They are requesting a
waiver of the penalties only.
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 reduction of the penalties in question to a single ten
percent penalty instead of two.
Petitioners failed to contact the Tax Commission after the I.R.S. audit
change within 90 days. Interest is not waived.
It is so ordered.
DATED
this 25th day of February, 1993.
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