BEFORE THE UTAH STATE TAX COMMISSION
XXXXX, ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
Petitioner, ) AND FINAL DECISION
) Appeal No. 93-0752
AUDITING DIVISION OF THE :
UTAH STATE TAX COMMISSION ) Account No. XXXXX
Respondent. ) Tax Type: Sales & Use
STATEMENT OF CASE
This matter came before the Utah Tax Commission for a prehearing conference on XXXXX. Alan Hennebold, Presiding Officer, heard the matter on behalf of the Commission. XXXXX, owner, and XXXXX, accountant, represented Petitioner. XXXXX, Assistant Utah Attorney General, and XXXXX of the Auditing Division, represented Respondent.
With the parties' consent, the Presiding Officer converted the prehearing conference to a formal hearing. Based upon the evidence presented at the hearing, the Tax Commission hereby makes its:
FINDINGS OF FACT
1. Petitioner contests the penalty assessed against it arising from its sales tax liability for the second quarters of XXXXX and XXXXX.
2. Petitioner has been in business for 11 years. During that time, it has properly reported and paid its sales tax liability in a timely manner.
3. Respondent audited Petitioner's sales tax liability for the period XXXXX through XXXXX. The audit found additional sales tax liability of $$$$$ for the audit period, out of Petitioner's total liability of $$$$$.
4. The audit also revealed that Petitioner had not prepaid its sales tax liability for the second quarters of XXXXX and XXXXX. Respondent therefore assessed a penalty of 10% of the tax Petitioner should have prepaid for those quarters. The penalties so computed were $$$$$ for the second quarter of XXXXX and $$$$$ for the second quarter of XXXXX, for a total penalty of $$$$$.
5. The penalty associated with the second quarter of XXXXX has since been waived by Commission action, leaving a penalty balance of $$$$$.
6. Petitioner did not prepay its sales tax liability for the periods in question because it was unaware of its obligation to do so. It customarily received quarterly report forms from the Commission which were completed by Petitioner's independent accountant. Petitioner then filed and paid such reports in a timely manner. It did not receive any prepayment report form or other no tification of the prepayment requirement.
CONCLUSIONS OF LAW
During the periods in question, certain taxpayers were required to prepay 90% of their sales and use tax liability for the months of April and May of each year. The return and payment were due on or before June 15th of each year.
Utah Code Ann. ''59-12-108 and 59-1-401 provides for imposition of penalties for failure to make the required prepayment. (Utah State Tax Commission Administrative Rule R865-19-87S.)
The Tax Commission is granted the authority to waive, reduce, or compromise penalties and interest upon a showing of reasonable cause. (Utah Code Ann. '59-1-401(8).)
DECISION AND ORDER
At the outset, the Commission notes that prepayment of sales tax was required by Utah's Sales and Use Tax Act only under certain conditions, and has recently been removed from the Act. Nevertheless, the prepayment requirement was in effect during the periods in question, and the law as it then existed provided for penalties to be imposed for failure to comply with the statute. For that reason, Respondent assessed Petitioner with the penalties which are the subject matter of this appeal. Those penalties have previously been reduced to $$$$$.
The Commission is granted authority by Utah Code Ann. '59-1-401(8) to waive or reduce penalties upon a showing of reasonable cause. In this case, the parties agree that Petitioner has an otherwise unblemished record of compliance with the Sales and Use Tax Act and that Petitioner had no notice of the prepayment requirement. The parties further agree that Petitioner would have complied with the prepayment requirement if it had known of it, and that Petitioner had reported and paid the tax by the time Respondent's audit discovered Petitioner's error.
Based upon the foregoing, the Tax Commission finds that reasonable cause exists to waive the penalty associated with Petitioner's prepayment liability for the second quarters of XXXXX and XXXXX. It is so ordered.
DATED this 10th day of August, 1993.
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 the final order to file a request for reconsideration or thirty (30) days after the date of 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).
*Since the hearing on this case, Chairman R. H. Hansen and Commissioner S. Blaine Willes have been replaced by Chairman W. Val Oveson and Commissioner Alice Shearer. Chairman Oveson and Commissioner Shearer participate in this decision after having been fully informed of the facts and circumstances regarding this case.