BEFORE THE UTAH STATE TAX COMMISSION
In Re: )
: INFORMAL DECISION
: Appeal No. 93-1435
: Account No. XXXXX
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for hearing on XXXXX, pursuant to the Administrative Procedures Act and the rules of the Utah State Tax Commission for informal proceedings. Alan Hennebold, Administrative Law Judge, conducted the hearing on behalf of the Commission. XXXXX represented himself. This decision is based upon Mr. XXXXX's testimony and information contained in the Commission's file.
Mr. XXXXX asks the Commission to waive late payment penalty and interest in connection with his XXXXX Utah individual income tax.
Mr. XXXXX filed his XXXXX Utah income tax return, showing Utah taxable income of $$$$$. As required by the return form and its instructions, he included as taxable income the amount of Utah withholding tax he had listed as an itemized deduction on Schedule A of his federal income tax return.
Based on the foregoing, Mr. $$$$$'s Utah income tax liability was $$$$$. As he had already paid $$$$$ in withholding tax, he claimed a refund of $$$$$.
On XXXXX, Mr. XXXXX received a "Notice of Change To Return Filed" from the Tax Commission. The Notice informed him that Tax Commission staff had subtracted his Utah withholding tax from his Utah taxable income, resulting in a reduction of his tax liability to $$$$$. His refund was therefore increased to $$$$$, which was $$$$$ more than he had claimed.
Approximately two years later, on XXXXX, Mr. XXXXX received another notice from the Tax Commission, this time advising him that the Tax Commission's adjustment to his XXXXX return had been incorrect. In other words, his tax return had been correct as he had originally submitted it. The notice further advised that he now owed $$$$$ in additional tax, plus interest. He was instructed to pay the tax and interest by XXXXX.
On XXXXX, five days after receiving the foregoing notice, Mr. XXXXX wrote the Tax Commission asking that interest on the additional tax be waived. On XXXXX, he received a letter telling him that the tax must be paid before a waiver of interest could be considered. On XXXXX, he paid the tax. On XXXXX, the Tax Commission assessed a "late payment" penalty of $$$$$ against him. On XXXXX, the Tax Commission advised him that his request for waiver of penalty and interest was denied.
Mr. XXXXX then filed this appeal to the Commission.
DECISION AND ORDER
The root cause of this problem is the Tax Commission's own mistake in computing Mr. XXXXX's Utah taxable income. Mr. XXXXX submitted a correct return in the first place. Furthermore, Mr. XXXXX has taken prompt and reasonable steps to set this matter right.
Based on the foregoing, the Tax Commission finds that no late payment penalty should have been assessed against Mr. XXXXX. The Tax Commission also finds that reasonable cause exists to waive the interest assessed in this matter. The Tax Commission therefore waives all penalty and interest assessed in connection with Mr. XXXXX's XXXXX Utah income tax. It is so ordered.
DATED this 19th day of November, 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 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).