93-0148 SALES AND FOOD
BEFORE THE UTAH STATE TAX COMMISSION
In Re: )
XXXXX ) FINDINGS OF FACT,
XXXXX, : CONCLUSIONS OF LAW,
) AND FINAL DECISION
) Appeal No. 93-0148
: 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, an attorney.
Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:
FINDINGS OF FACT
1. The taxes in question are sales and use tax and food tax.
2. The period in question is XXXXX.
3. Petitioner filed its sales and use tax and food tax returns along with payment for the first and second quarters XXXXX in XXXXX. As a result of the untimeliness, the Tax Commission assessed Petitioner late filing and late payment penalties, legal fees and interest on each of these quarters.
4. Petitioner timely filed and paid these same returns due on the third quarter XXXXX; therefore, no penalties exist for this quarter.
5. Petitioner, XXXXX, is requesting a waiver of the penalty and interest amounts due on the first two quarters of XXXXX in addition to a refund of all taxes due on these first three quarters of XXXXX.
6. Bentley leases and manages the XXXXX where the XXXXX is located.
7. Prior to XXXXX, XXXXX also managed and owned the deli. In February, she leased the deli to XXXXX to operate as his own. The management agreement XXXXX entered into with XXXXX details XXXXX's obligation to make weekly tax deposits or face immediate termination of the lease. Further, the contract states that XXXXX agrees to indemnify the owner (XXXXX) against "any and all tax liability arising out of the deli's operations after XXXXX".
8. At the start of the lease, XXXXX allowed XXXXX to use the sales and use tax license number she had obtained on behalf of the deli when she managed it. She assumed that XXXXX would soon get a new license number since he was the new operator. XXXXX never did change the sales and use tax license number.
9. During the time XXXXX ran the deli from XXXXX, XXXXX would ask XXXXX for proof of tax payments. XXXXX stated that XXXXX assured her on several occasions that he was making payments.
10. Then, in the fall of XXXXX, XXXXX intercepted XXXXX's mail and discovered tax notices showing that the deli was delinquent in its taxes.
11. In XXXXX, XXXXX terminated the management agreement due to XXXXX's failure to pay taxes. She then filed the past due returns and made payments.
12. XXXXX subsequently sued XXXXX for breach of contract and received a judgment against him for the tax amount he failed to pay, among other things. At this time, XXXXX believes XXXXX has fled the state.
13. XXXXX contends that she cannot be held liable for the unpaid taxes, penalties and interest amounts for the quarters in question due to the fact that someone else was managing the deli and had full responsibility for the tax remittance.
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
In this case, the XXXXX was required to remit sales and use tax and food tax during the period in question. There is no doubt that the tax was owing and needed to be paid. On this point, the Tax Commission will not refund the tax amount paid for the first three quarters of XXXXX. Petitioner can seek redress against the lessee which it has already undertaken.
Addressing penalties and interest, the Tax Commission finds that sufficient cause has been shown which would justify a reduction of the penalties to 10% of the tax amount owing on each of the first two quarters of XXXXX as they relate to sales and use tax and food tax. The interest is to be recomputed according to these changes. It is so ordered.
DATED this 10TH day of SEPTEMBER, 1993.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val Oveson Roger O. Tew
Joe B. Pacheco Alice Shearer