93-0307

Income

Signed 5/7/93

BEFORE THE UTAH STATE TAX COMMISSION

_____________________________________

In Re: )

) INFORMAL DECISION

XXXXX, )

) Appeal No. 93‑0307

) Account No. XXXXX

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission pursuant to the Administrative Procedures Act and the rules of the Utah State Tax Commission for informal proceedings. As provided for by Utah Code Ann. 63‑46b‑5, this decision is based upon information contained in the Tax Commission's file.

FINDINGS

Petitioners filed their XXXXX individual income tax returns on XXXXX, showing tax due of $$$$$ and credits for withholding tax of $$$$$. The Tax Commission issued a refund check of $$$$$.

A subsequent audit of Petitioner's return disclosed that Petitioners had deducted 100% of their federal income tax liability on their state return, rather than 50% as permitted by law. As a result, the audit increased their tax liability from $$$$$ to $$$$$. An audit assessment letter was sent to Petitioners on XXXXX. On XXXXX, Petitioners paid the amount of additional tax due. With their payment they requested waiver of a portion of the accrued interest in the amount of $$$$$, on the grounds the Tax Commission had failed to discover Petitioners' error on their XXXXX tax return within a reasonable time.

On XXXXX, Petitioners paid the interest accrued to that date of $$$$$. However, that same day a $$$$$ late payment penalty was assessed against them.

DECISION AND ORDER

Once notified of their error, Petitioners have responded promptly to pay their additional tax in this matter. No penalty should have been assessed against Petitioners, and all penalties are hereby waived by the Tax Commission with respect to the XXXXX tax year.

As to Petitioners' contention that interest should be abated because of the time it took Commission staff to discover Petitioners' error, the Commission does not agree. The error could not be discovered until Petitioners' federal tax information had been received from the Internal Revenue Service and compared to Petitioners' state return. Furthermore, the assessment of interest is merely a charge for the time value of tax funds during the period it was held by Petitioners. The Tax Commission finds sufficient cause does not exist to waive the interest associated with Petitioners' XXXXX Utah income tax liability. It is so ordered.

DATED this 7 day of May, 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

NOTICE: You have twenty (20) days after the date of the final order to file a request for reconsideration or thirty (30) days after the date of the final order to file in District Court a petition for judicial review. Utah State Tax Commission Administrative Rule R861‑5A‑1(p) and Utah Code Ann. '63‑46b-14(3)(a).

^^