Individual Income

Signed 8/24/95





Petitioner, : ORDER

v. : Appeal No. 93-0997





Respondent. : Tax Type: Individual Income



This matter came before the Utah State Tax Commission for a Settlement Conference pursuant to the provisions of Utah Code Ann. 59-1-502.5, on XXXXX. G. Blaine Davis, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner was XXXXX. Present and representing Respondent was XXXXX from the Collections Division.

In this proceeding, Petitioner has requested that the penalty and interest be waived which were imposed upon him for amounts owed on his individual income tax returns for XXXXX, XXXXX, and XXXXX.

Petitioner represented that numerous years ago he was in business and in XXXXX he started using the accounting firm of XXXXX. He continued using that accounting firm through XXXXX, when Petitioner sold his business. Upon the sale of his business, Petitioner became semi-retired and remained so through XXXXX. After the sale of his business, and during his semiretirement, the accounting firm of XXXXX had allegedly improperly advised Petitioner that it was not necessary for him to file an annual tax return.

On XXXXX, Petitioner received a notice from the Utah State Tax Commission inquiring about his tax returns for the years since he sold his business. At that time, he contacted the C.P.A. firm of XXXXX who reviewed the matter and advised him that he should have been filing income tax returns since XXXXX. Petitioner alleges that until he received the notice, that he did not know that he was required to file a tax return, and that his failure to file was based upon the improper advice received from XXXXX.

The Respondent had made an estimate of amounts due, and on XXXXX, Petitioner met with XXXXX from the Collections Division and made an offer to settle and wrote a check for the amount of $$$$$. Following the payment of such check, Petitioner assumed the matter was closed and took no further action. The Respondent accepted the check and removed the liens from the property of Petitioner. However, Petitioner never presented a formal offer in compromise, and such an offer was never presented to the Commission for its approval.

As of the date of the hearing, XXXXX, Petitioner had still never filed an actual return with the Utah State Tax Commission for XXXXX, XXXXX, and XXXXX.

At the hearing, Petitioner was granted 10 days in which to provide copies of his tax returns which were not available at the hearing. On XXXXX, his representative called and indicated that Petitioner could not locate his returns, and that he was going to have to request copies of the tax returns from the Internal Revenue Service. Two additional extensions of time were provided for Petitioner to obtain those tax returns, because he had difficulty obtaining them from the Internal Revenue Service. The tax returns were finally filed in early XXXXX, and they confirm, in general, the amounts which had been imposed by the Collections Division.

Petitioner has requested that the Commission waive the Penalty and Interest associated with the non-filings for the years in question based upon reliance upon a competent tax advisor, and he has further asked the Commission to consider his payment of $$$$$ on XXXXX as payment in full, based upon his assumption that the matter was closed and based upon never hearing anything further from the Collections Division and also upon the fact that the Collections Division removed the tax lien on his property. Petitioner feels that the facts substantiate his claim that the payment was in compromise of all other amounts due and owing.

At the same time that Petitioner wrote the check to the Tax Commission, Petitioner did pay to the Internal Revenue Service an amount of approximately $$$$$ which was accepted by the Internal Revenue Service as payment in full of the obligation due to the Federal Government for the same periods of time as those at issue in this proceeding. The payment of the check in the amount of $$$$$ paid the full amount of tax determined to be due, but it did not pay any of the penalty or interest which Petitioner has asked be waived.

Upon a review of the files, it appears that when Petitioner met with XXXXX, that they did not discuss an offer in compromise, but instead discussed a waiver of the penalty and interest. The amount paid by Petitioner to the Tax Commission paid the full amount of the tax, but left the penalty and interest still unpaid. Therefore, it appears that the intent of XXXXX was to submit a proposed waiver of the penalty and interest. That waiver was in fact submitted, and was ultimately denied by the Commission.


Based upon the information presented at the conference, and the records of the Tax Commission, the Commission finds that Petitioner did rely upon a competent tax advisor who advised him that it was not necessary for him to file a return, and accordingly, the Commission finds sufficient cause has been shown to waive the penalty assessed for the years in question. However, Petitioner had the utilization of the tax funds for a substantial period of time, and therefore the Commission finds that sufficient cause has not been shown to waive the interest assessed for the subject time periods. The Commission further finds that the Petitioner did not submit an offer in compromise in XXXXX, pursuant to the Commission requirements. Therefore, an offer in compromise has never been approved by the Commission and is not herein approved. The request to waive the penalty is therefore granted, but the request to waive interest is denied.

This decision does not limit a party's right to a formal hearing. However, this Decision and Order will become the Final Decision and Order of the Commission unless any party to this case files a written request within thirty (30) days of the date of this decision to proceed to a Formal Hearing. Such a request shall be mailed to the address listed below and must include the Petitioner's name, address, and appeal number:

Utah State Tax Commission

Appeals Division

210 North 1950 West

Salt Lake City, Utah 84134

Failure to request a Formal Hearing will preclude any further administrative action or appeal rights in this matter.

DATED this 24 day of August, 1995.


W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner