Penalty & Interest
BEFORE THE UTAH STATE TAX COMMISSION
COLLECTION DIVISION OF THE : Appeal No. 93-1629
UTAH STATE TAX COMMISSION, :
Respondent. : Account No. XXXXX
Type: Penalty & Interest
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a Settlement Conference on XXXXX. G. Blaine Davis, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present by telephone and representing the Petitioner were XXXXX and XXXXX. Present and representing the Respondent was XXXXX.
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 corporate franchise tax.
2. The period in question is XXXXX.
3. A penalty was imposed upon Petitioners for failing to make the quarterly estimated tax payments which are required.
4. Petitioner represented that the company suffered two different fire loses and believed that the amount which had been paid in would be sufficient to pay all of the corporate franchise tax which would be due.
5. The company did have insurance to cover part of the losses, and they had included estimates of the insurance proceeds as income, and still believed that the payments would be sufficient to pay the amount of the tax.
6. At the end of the year, a large insurance settlement was received, and it significantly changed the amount of tax they were required to pay.
7. It is the position of Petitioner that they are entitled to annualize their income, and when it is annualized, they were not required to make payments each quarter of amounts in excess of those which had been paid in.
8. The Petitioners submitted a schedule which verified that for each period during the year they had prepaid sufficient amounts when the income is calculated on an annualized basis.
9. The Petitioners represent that Utah State Tax Commission Bulletin Number 2-89 and 18-92 authorize the annualization of income for calculating prepayments of quarterly corporate franchise tax.
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).)
CONCLUSIONS OF LAW
Utah State Tax Commission Bulletin Numbers 2-89 and 18-92 authorize the annualization of income for purposes of computing the quarterly corporation franchise tax prepayment, as does section 6655(d) and (e) of the Internal Revenue Code.
DECISION AND ORDER
Based upon the foregoing, the Tax Commission finds that sufficient cause has been shown to determine that the penalty should not have been imposed, and it is accordingly waived.
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
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 26th day of July, 1994.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val Oveson Roger O. Tew
Joe B. Pacheco Alice Shearer