BEFORE THE UTAH STATE TAX
COMMISSION
__________________________________
In Re: )
:
XXXXX, ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
) AND FINAL
DECISION
:
) Appeal No.
92-2143
: 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, a certified public accountant.
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 corporate franchise
tax.
2. The period in question is the year XXXXX.
3. At the advice of its out-of-house, certified
public accountant, Petitioner did not file and pay estimated taxes on a
quarterly basis during the XXXXX tax year.
Instead, Petitioner filed and paid its corporate franchise taxes on
XXXXX in the amount of $$$$$.
4. Due to the fact-that Petitioner's tax
liability for XXXXX was over $$$$$, the Tax Commission penalized Petitioner ten
percent and later added another $$$$$ for nonpayment. Interest in the amount of $$$$$ was included.
5. Petitioner's certified public accountant,
XXXXX, testified that XXXXX had only paid $$$$$ in corporate franchise taxes
the prior year in XXXXX. Since XXXXX's
did not expect to exceed that amount in tax liability for XXXXX, Petitioner did
not file estimated quarterly returns.
6. Petitioner's XXXXX tax liability far
surpassed the XXXXX figure due to an unusually successful Christmas
season. Petitioner had not expected to
do so well.
7. Mr. XXXXX testified that he has had other
clients whom the Tax Commission has penalized for failing to foresee a tax
liability of $$$$$ or more in any given year.
He stated that the Commission has waived the penalty and interest
amounts in similar situations. At this
time, however, Mr. XXXXX is advising his clients to always prepay at least the
previous year's tax liability to avoid the Commission's waiver process.
8. Mr. XXXXX also explained that he felt he
must be interpreting the word "expecting" differently than the
Commission does because he runs into problems with these prepayments frequently.
9. Given the circumstances of this case,
Petitioner is requesting a waiver of the penalty and interest amounts.
CONCLUSIONS OF LAW
The
Tax Commission is granted the authority to waive, reduce, or compromise penalties
and interest upon a showing of reasonable cause. (Utah Code Ann. §59-1-401(8).)
Relevant Utah law states the following:
(1)
Every corporation subject to taxation under this chapter expecting to have a
tax liability of $$$$$ or more in the current year, or which had a tax
liability of $$$$$ or more in the previous tax year, shall make payments of
estimated tax in the same manner as is provided for corporations in the
Internal Revenue Code of 1954, or successor statutes.
(2)
If a quarterly estimated tax payment is not made or is underpaid, except as
provided in Subsection (3), there shall be added a penalty as provided in
Section 59-1-401 and interest as provided in Section 59-1-402.
(3)
The penalty or interest may be waived under Subsection (2), if:
(a) the total estimated tax payments for the
tax year equal or exceed the tax liability of the previous tax year; (b) the total estimated tax payments for the
tax year are equal to 90% of the current year tax liability; or (c) the total estimated tax payments equal
90% of the tax liability computed on the current year's income using the
previous year's tax law. (Utah Code Ann. §59-7-122.5).
DECISION AND ORDER
Based
upon the foregoing, the Tax Commission finds that sufficient cause has not been
shown which would justify a waiver of penalty and interest assessments
associated with the corporate franchise tax due on the year XXXXX. Pursuant to
the Statute cited above, Petitioner should have at least paid the amount of
taxes it owed the previous year to avoid penalty and interest assessments. It is so ordered.
DATED
this 26th day of November, 1993.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco Alice
Shearer
Commissioner Commissioner