93-0750

Income

Signed 2/17/94

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

:

Petitioner, ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

v. ) AND FINAL DECISION

:

COLLECTION DIVISION OF THE ) Appeal No. 93-0750

UTAH STATE TAX COMMISSION, :

) Account No. XXXXX

:

Respondent. )

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a prehearing conference on XXXXX. With the consent of the parties, the prehearing conference was waived and the matter was heard as a formal hearing. Paul F. Iwasaki, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX. Present and representing the Respondent was XXXXX, Assistant Attorney General.

Based upon the testimony and evidence 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. During the XXXXX tax year, the Petitioner was married to XXXXX. They were subsequently divorced the following year.

4. During the XXXXX income tax year XXXXX, without the knowledge of the Petitioner, submitted a W-4 form to his employer claiming he was exempt from withholding requirements. This lead to an under withholding of income tax.

5. Because XXXXX was responsible for completing the income tax returns and handling those matters, the Petitioner was unaware of the fact that XXXXX had under withheld his income tax for the period in question and that additional tax in the amount of $$$$$ was due when the return was filed.

6. The Petitioner did not know of the fact that additional taxes were due until she was notified by the Tax Commission on or about XXXXX.

7. Records of the Tax Commission indicate that notices and demands for payment of taxes were sent to XXXXX on a regular basis since XXXXX. Because XXXXX was a primary taxpayer on the account, notice was not sent to the Petitioner.

8. Records of the Tax Commission indicate that payments on the account had been made and that as of XXXXX, there was a balance due of $$$$$. Of that amount, $$$$$ represented tax due, $$$$$ represented penalty due, and $$$$$ represented interest due.

9. The Petitioner's representative requested that his client be held responsible only for her pro rata share of the above in the amount of $$$$$. He argued that his client should not be held liable for the entire amount because her former husband was responsible for the deficiency and she had no knowledge of his actions.

CONCLUSIONS OF LAW

If the federal income tax liabilities of husband and wife, . . . , are determined on a joint federal return they shall file a joint return under this chapter and their tax liability shall be joint and several. (Utah Code Ann. '59-10-503.)

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(a).)

DECISION AND ORDER

Under Internal Revenue Code '6013(e), a spouse may be relieved of tax liability where there has been a "substantial understatement of tax attributable to gross erroneous items of one spouse" provided that "the other spouse establishes that in signing the return he or she did not know, and had no reason to know, that there was such substantial understatement and taking into account all the facts and circumstances, it is inequitable to hold the other spouse liable for the deficiency in tax for such taxable year attributable to such substantial understatement."

In the present case, the Tax Commission finds that under the facts and circumstances surrounding this case, the Petitioner is relieved of liability for the $$$$$ due in income tax for the XXXXX year. Tax Commission further finds that sufficient cause has been shown to waive the penalties and interest associated with the XXXXX income tax year as assessed against the Petitioner. It is so ordered.

DATED this 17th day of February, 1994.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

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 final order to file in Supreme Court a petition for judicial review. Utah Code Ann. ''63-46b-13(1), 63-46b-14(3)(a).

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