Signed 1/31/94






In Re: )



: Appeal No. 93-1664


: Account No. XXXXX




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. Lisa L. Olpin, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX, C.P.A., Petitioner's controller.

Petitioner is seeking a waiver of penalty and interest assessments on the monthly withholding tax periods of XXXXX.

According to Tax Commission records, Petitioner filed and paid its withholding tax on the months in question on XXXXX. As a result, the Commission penalized Petitioner two 10% penalties on each of the months. Interest was added.

Petitioner claims that its controller employed from XXXXX to XXXXX was incompetent. He was hired because of his past experience and qualifications as an accountant handling a multi-million dollar business. During his tenure with Petitioner, however, this controller failed to file federal and state returns among many other things.

Upon questioning from his superiors about possible shortcomings in the accounting department, the controller responded that he was handling the problems. Petitioner assigned him two employees to help alleviate the workload, thinking this was a solution.

When the controller failed to produce financial statements on a consistent basis, Petitioner's stockholders called in a consultant who discovered irregularities in the accounting department. Petitioner then fired the controller.

Since the termination, Petitioner has learned of the many filing obligations that the controller had failed to make, including failing to pay premiums to the Utah State Workers' Compensation Fund and failing to file and pay federal withholding tax. Both Workers' Compensation and the Internal Revenue Service have abated penalties assessed for the failure to file and pay timely.

Moreover, the Industrial Commission denied the ex-controller unemployment insurance benefits for the period of his employment with Petitioner.


Based upon the information presented at the conference, and the records of the Tax Commission, the Commission finds sufficient cause has been shown to abate a single 10% penalty assessed for the period XXXXX. The remaining 10% penalty and interest are not waived.

This decision is based upon the determination that an employer is responsible for the actions of its employees. Partial abatement of penalties was allowed in consideration of the employee's attempt to deceive his employer and the employer's attempt to correct the situation.

This Decision and Order will become the Final Decision and Order of the Commission unless the parties to this case file a written request for a Formal Hearing within ten (10) days of the date of this decision. 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

160 East 300 South

Salt Lake City, Utah 84134


It is so ordered.

DATED this 31st day of January, 1994.



W. Val Oveson Roger O. Tew

Chairman Commissioner


Joe B. Pacheco Alice Shearer

Commissioner Commissioner