93-2154
Sales
Signed 12/14/93
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
In Re: )
: FINDINGS OF FACT,
XXXXX ) CONCLUSIONS OF LAW,
: AND FINAL DECISION
:
) Appeal No. 93-2154
: Account No. XXXXX
_____________________________________
STATEMENT OF
CASE
This matter came before the Utah State
Tax Commission for a formal hearing upon an Order to Show Cause on XXXXX. Lisa L. Olpin, Presiding Officer, heard the
matter for and on behalf of the Commission.
Present and representing the Petitioner was XXXXX, an attorney. Present and representing the Respondent was
XXXXX, Assistant Utah Attorney General.
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 sales and use tax.
2.
The audit period in question is XXXXX.
3.
Petitioner is requesting a waiver of the penalty assessment.
4.
Upon completion of its audit on sales and use tax, the Auditing Division
of the Tax Commission sent Petitioner a notice of audit results in the first
statutory notice dated XXXXX. A second
statutory notice was sent on XXXXX with the audit summary attached.
5.
This audit assessed Petitioner sales tax in the amount of $$$$$ (Exhibit
A) for failing to collect sales tax on delivery charges. Interest in the amount of $$$$$ was added.
6.
The audit also included an assessment for failure to remit use tax in
the amount of $$$$$ (Exhibit B).
Interest in the amount of $$$$$ was charged.
7.
Petitioner chose not to dispute the assessment reflected in Exhibit B
and paid the tax and interest amount ($$$$$) in full within 30 days on XXXXX.
8.
Petitioner then filed a Petition for Redetermination on the remaining
assessment (Exhibit A and the interest charged thereon) on a good faith belief
that the assessment was in error.
9.
Mr. XXXXX, executive vice-president and chief operating officer at XXXXX
during the audit period, testified that he believed that Petitioner received
billing notices from the Tax Commission between the time of filing the petition
for redetermination and the hearing in the matter. He recalls that the billings showed not only the disputed tax
amount and interest, but also a penalty.
He presented no documentation, however, in support of this recollection.
10.
By the time of the hearing, Mr. XXXXX understood that the Petition for
Redetermination encompassed the tax, interest and a newly assessed penalty
amount.
11. At the hearing held in XXXXX on
the merits of the Petition for Redetermination, Petitioner addressed the question
of whether or not the sales tax assessment was just; there was no mention of
the interest and no reference to a penalty assessment.
12.
In the final decision in this matter, the Tax Commission upheld the
sales and use tax assessment. This
written decision, however, was silent on whether or not the interest was waived
or reduced.
13.
Further, the Commission erroneously acknowledged in paragraph 11 of the
final decision that Petitioner was disputing penalties that the Tax Commission
had assessed previously. No ruling on a reduction or a waiver of a penalty was
given, however.
14.
As a result of the wording of the final decision, Mr. XXXXX testified
that he assumed that the interest and any existing penalty had been waived.
15.
Petitioner then filed a Petition for Reconsideration on the sales tax
question in XXXXX which was denied in XXXXX.
16.
In XXXXX, the Tax Commission billed Petitioner $$$$$ (the total tax
initially assessed on Exhibits A and B), $$$$$ in interest and $$$$$ for late
payment (a penalty).
17.
In XXXXX, Petitioner began making payments to the Tax Commission on the
total amount.
18.
XXXXX, deputy director of the Auditing Division, testified that
Petitioner's $$$$$ payment received in XXXXX was credited to Petitioner's
outstanding interest amount previously assessed on the audit in question. This explains why the later billing in XXXXX
reflects no change in tax amount owing.
19.
Further, Mr. XXXXX stated that the Commission does not bill a taxpayer
once an appeal has been filed. Tax
Commission records show that a hold had been placed upon Petitioner's account
and that no billings were reported during the appeals process in this matter.
20.
Additionally, Mr. XXXXX testified that the ten percent penalty discussed
above was assessed after the Petition for Reconsideration had been denied. This was done automatically by the computer
once Petitioner failed to pay within 30 days of the denial order.
21.
A review of Petitioner's account on the audit in question and the Tax
Commission's written billing notice dated XXXXX show that no penalty whatsoever
was assessed against Petitioner in this case until XXXXX.
22.
Petitioner is requesting that the penalty amount be waived because the
final decision dated XXXXX orders Petitioner to pay sales tax only. Further, Petitioner feels that it should be
not required to pay a penalty when it had a good faith belief that it was not
required to collect sales tax on deliveries. And lastly, Mr. XXXXX explained
that XXXXX was sold in XXXXX, leaving any remaining tax liability on himself
and other obligated individuals. Any
assessment would be a financial burden to them especially when they could not
feasibly seek payment from past customers.
23.
Respondent argues that the ten percent late penalty assessed for failure
to pay within 30 days of the denial of the Petition for Reconsideration is
proper pursuant to Utah Code Ann. '59-1-401.
CONCLUSIONS OF
LAW
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
Based upon the testimony and evidence
presented, the Tax Commission first finds that the ten percent penalty in
dispute was assessed for failure to pay within thirty days of the Commission's
denial of the Petition for Reconsideration.
Since no acceptable reason for nonpayment was given, the Commission
affirms the assessment of a ten percent penalty.
Further, the Commission orders the
penalty calculated as follows:
$$$$$ (the total tax assessment)
-$$$$$ (full payment of Exhibit B)[1]
$$$$$
x
.10
$$$$$ late payment penalty
The Collections
Division is ordered to adjust the records and to recompute interest
accordingly.
DATED
this 14th day of December, 1993.
BY ORDER OF THE
UTAH STATE TAX COMMISSION.
W. Val Oveson Roger O. Tew
Chairman Commissioner
Joe B. Pacheco Alice Shearer
Commissioner Commissioner
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 Supreme Court a petition for judicial
review. Utah Code Ann. ''63-46b-13(1), 63-46b-14(3)(a).
^^