BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. ) AND FINAL DECISION
OPERATIONS DIVISION OF THE ) Appeal No. 93-0563
UTAH STATE TAX COMMISSION, :
Respondent. ) Tax Type: Ind. Income
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. G. Blaine Davis, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner was Mr. XXXXX. Present and representing Respondent was Mr. XXXXX, Assistant Attorney General. XXXXX also appeared on behalf of Petitioner.
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 income tax.
2. The period in question is XXXXX.
3. On or about XXXXX, Petitioner filed a form TC586 requesting additional time in which to file his XXXXX individual income tax return. At the time he requested an extension of time, he prepaid an amount of $$$$$. Petitioner had paid $$$$$ in taxes for the prior calendar year.
4. Petitioner believed that he thereafter filed his income tax return. His return had been prepared on or about XXXXX, by Mr.XXXXX and Company, Certified Public Accountants in XXXXX, Utah. The income tax return reflected an amount of $$$$$ of income tax due to the State of Utah, less the $$$$$ paid with the request for an extension, for a balance due of $$$$$.
5. The Petitioner believed that the return had been filed.
6. The records of the Utah State Tax Commission did not reflect that the XXXXX income tax return of Petitioner had been paid, and on XXXXX, Petitioner was sent a letter informing him that the Commission did not have a record of his income tax return having been filed, and asking him to respond and file the return.
7. On XXXXX, Petitioner wrote a letter back to the Utah State Tax Commission in which he stated that the return had been prepared for him by an accountant and he assumed it was filed around XXXXX. He did indicate that he had been unable to locate evidence of the exact day of filing or the exact day of payment of the remaining balance due. He indicated that he would attempt to locate the items and give them to the Tax Commission immediately, but suggested that the fault was that of the Tax Commission and not his.
8. Nothing further happened on this case from XXXXX, until XXXXX, when the Utah State Tax Commission again sent Mr. XXXXX a letter indicating that it had no record of his XXXXX income tax return having been filed. Petitioner testified that after his letter of XXXXX, he assumed that the Tax Commission had found its error and/or had located his tax return, and he did nothing further.
9. By the time of the hearing, on XXXXX, Petitioner stipulated that he could not prove that he had filed a return, and in fact suspected that he did not, because he found the original copy of his tax return.
10. A photocopy of the XXXXX income tax return of Petitioner had been sent to the Tax Commission along with the letter of XXXXX. However, that copy of the return was unsigned and was not treated as the filing of a tax return by the Tax Commission.
11. The Petitioner now acknowledges that he did not file his tax return and did not make payment of the additional $$$$$. However, Petitioner takes the position that the State of Utah cannot now pursue this matter because the statute of limitations has run, and/or if the statute of limitations has not run, that the State still cannot pursue him on this matter because of the doctrine of "laches." It is further his position that if the filing of a return is the time for the commencement of the statute of limitations, that when he mailed in an unsigned copy of the return to the Respondents on XXXXX, along with the letter of the same date, that it constituted the filing of a return to start the statute of limitations period.
Persons who are residents of the State of Utah or receive the required amount of income from within the State of Utah are required to file individual income tax returns with the State of Utah. (Utah Code Ann. '59-10-501,59-10-502, and 59-10-503).
Persons who are required to file returns are required to pay therewith the amount of tax due. (Utah Code Ann. '59-10-514).
To constitute the filing of a return, a return must be signed by the tax payer. (Utah Code Ann. '59-10-512).
Any assessment of taxes must be made within three years from the date of filing a return. Since the limitations period is three years from the date of filing a return, the limitations period does not commence to run until a tax return has been filed. (Utah Code Ann. '59-10-536).
Laches normally has two elements: (1) a lack of diligence on the part of the party against whom Laches is to be asserted, and (2) an injury to the other party caused by the lack of diligence. (Plateau Mining Company, v. Utah Division of State Lands and Forestry, 802p.2nd 720 (1990)).
Laches is not asserted when there is merely delay, but only when there is a delay which works a substantial disadvantage to another. (Papanikolas Bros. Enters. v. Sugarhouse Shopping Center. 535 p.2nd 1256 (1975)).
Laches cannot be a defense before the statute of limitations has expired. (F.M.A. Fin. Corp. v. Build, inc. (1965) 404p.2nd 670, 17 Utah 2nd 80).
Laches normally does not apply to tax and penalty assessments. (Kraye, S. Howard v. U.S. 1992 DC NM, 7 AFTR 93-855, 93-1 USTC 50047).
It is clear from the evidence that Petitioner did not timely file his XXXXX individual income tax return, and that the State Tax Commission had no knowledge of that until his letter dated XXXXX. The Petitioner's position that his mailing an unsigned copy of the return to the State Tax Commission on that date and providing such copy to the Commission constituted the filing of a return, is without merit. The provisions of '59-10-512, Utah Code Ann., as amended, clearly require the signing of a return. Therefore, the Petitioner has still not, as of the day of the hearing filed his XXXXX individual income tax return with the Utah State Tax Commission.
Because Petitioner has never filed a return, the statute of limitations has never commenced, and therefore cannot expire. The provisions of '59-10-536, Utah Code Ann., as amended, are clear that the limitation on time to assess additional taxes is "within three years after the return was filed." Therefore, the statute of limitations has not expired, and the limitations period will not commence to run until the Petitioner files a signed copy of his return with the Tax Commission.
As to the arguments regarding the Doctrine of Laches, the Commission finds that the doctrine is never applied in tax cases, and that even if it were applied to such tax cases, the Petitioner has not submitted any substantial evidence to show that he has been disadvantaged or injured because of the lack of pursuit of this matter by the Respondent. The Petitioner was at least equally as culpable and responsible for the delay as was the Respondent, by his representation that he would continue to look for evidence of filing the return and would provide it to the Respondent as soon as it had been located. Therefore, he simply is not in the position of having "clean hands" to claim that the Respondent was not diligent in the pursuit of the matter. Petitioner was no more diligent in pursuing the matter than was Respondent. Further, the Respondent had been somewhat lulled into a sense that there would be further contact from the Petitioner before further actions would be taken.
DECISION AND ORDER
Based upon the foregoing, the Tax Commission hereby finds that the Petitioner has not filed his XXXXX individual income tax return, that the statute of limitations has not expired, and has not even commenced, and further finds that the Doctrine of Laches does not prevent or prohibit the Respondent from making an assessment of the tax due, or in any other lawful manner pursuing this case. It is so ordered.
DATED this 21st day of September, 1994.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val Oveson Roger O. Tew
Joe B. Pacheco Alice Shearer
NOTICE: You have twenty (20) days after the date of a final order to file a Request for Reconsideration with the Commission. If you do not file a Request for Reconsideration with the Commission, you have thirty (30) days after the date of a final order to file a.) a Petition for Judicial Review in the Supreme Court, or b.) a Petition for Judicial Review by trial de novo in district court. (Utah Administrative Rule R861-1-5A(P) and Utah Code Ann. ''59-1-601(1), 63-46b-13(1), 63-46-14(3)(a).)