94-0608 and 94-1331
Sales Tax
Signed 5/5/95
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
XXXXX, )
:
Petitioner, : ORDER
:
v. : Appeal Nos. 94-0608
: and
94-1331
AUDITING AND
COLLECTION ) Account No. XXXXX
DIVISIONS OF
THE, :
UTAH STATE TAX COMMISSION, :
Respondent. : Tax Type: Sales Tax
_____________________________________
STATEMENT OF CASE
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. Alice Shearer, Commissioner, and G. Blaine
Davis, Administrative Law Judge, heard
the matter for and on behalf of the Commission. Present and representing Petitioner were XXXXX, together with
XXXXX. Present and representing
Respondent was XXXXX, Assistant Attorney General, together with XXXXX from the
Collections Division.
This
proceeding is a request by Petitioners to waive the penalty and interest which were imposed upon them for late filing
and late payment of sales taxes for the XXXXX, and the XXXXX XXXXX. However, for the XXXXX, there is only a late
filing penalty but no late payment penalty, and for the XXXXX, there is only a
late payment penalty, but not a late filing penalty. There is no dispute that the returns were filed late and paid
late for the periods for which the penalties have been imposed, and in most
cases they were filed and paid XXXXX, rather than just being a XXXXX.
The
Petitioner alleges that for XXXXX involved, the tax returns were timely
prepared, and a check was written out and signed by XXXXX, but that employees
of the Petitioner, together with the XXXXX for the Petitioner, were in
collusion and set aside the returns and checks after they had been signed by
the XXXXX. The money which was needed
for payment of the returns had been XXXXX for payment of the XXXXX for which
the XXXXX of the Petitioner were also the XXXXX of those corporations. Two of the employees involved in that matter
were XXXXX Petitioner XXXXX. Petitioner
alleges that when it found out what had transpired, that the XXXXX were all
XXXXX Petitioner.
At
the hearing, the request was made for Petitioner to provide substantiation that
the returns had been prepared timely, and that checks had been written timely
for payment of the amount. Petitioner
agreed to provide any copies of returns and copies of numbered checks in the
sequence for that time period, together with bank statements to show that
checks around that point in time were the ones being written. Petitioner, after the hearing, has
represented that it cannot locate copies of any such returns or checks. Accordingly, the Commission is willing to
accept the representations of Petitioner that the funds were diverted to other
uses, but without some tangible evidence, the Commission does not make a
finding as to whether the returns and checks were in fact prepared on a timely
basis. However, even if the Commission
did make such a finding, where these returns were XXXXX and the funds to pay
the taxes were XXXXX of Petitioner, and XXXXX other XXXXX and XXXXX who XXXXX,
there is no showing of reasonable cause under the standards which the
Commission has adopted. Therefore, the
Commission finds that there is no
reason to waive the penalties as requested by Petitioner based upon a
reasonable cause basis.
Petitioner
also alleges that in XXXXX when the XXXXX and XXXXX with the Collections
Division of the Utah State Tax Commission, XXXXX met on XXXXX with XXXXX of the
Collections Division. They entered into
an installment payment agreement with the Collections Division, wherein they
agreed to make substantial monthly payments in exchange for the Collections
Division not XXXXX. Petitioner
represented that XXXXX promised that if
Petitioner would comply with the installment agreement, that the penalties and
interest would be waived. There was no
evidence of that allegation at the hearing, and Petitioner agreed to later provide a statement from XXXXX to confirm
that representation. An XXXXX was filed
in the XXXXX. XXXXX stated that he met
with the XXXXX of Petitioner, and indicated that if the installment agreement
was followed that he would recommend that the Commission abate the penalties, and he indicated that the
Commission "XXXXX." Petitioner did thereafter timely comply with
the agreement, and the full amount of taxes, penalty, and interest were paid
pursuant to the installment agreement.
XXXXX
is no longer an employee of the Utah State Tax Commission, but it is XXXXX that
he did not XXXXX that the penalties would be abated if there was compliance
with the installment agreement.
Further, XXXXX did not have the authority to make such a
commitment. That authority is reserved
only to the Commissioners. Nothing was
ever presented to the Commissioners, and there was no written or oral agreement
to waive the penalties if Petitioner complied with the installment agreement.
Petitioner
has requested that the Commission determine the representations of XXXXX to be
reasonable cause, and waive the penalty.
However, such representations clearly do not meet the guidelines for
reasonable cause as established by the Commission. Although Petitioner has not established such reasonable cause,
the Commission recognizes that Petitioner may have misinterpreted the authority
of the XXXXX, and XXXXX may have believed that such penalties would be waived
if there was compliance with the installment agreement, and Petitioner did
comply with the terms of the installment agreement. However, if the Commission waives the full penalty, then, even
though Petitioner failed to file its sales tax returns and pay the taxes
thereon for XXXXX, Petitioner would have been treated equally with other
taxpayers who fully complied with the law.
Petitioner did not comply and, in fact, was a very XXXXX. Petitioner had very substantial amounts of
money which it had collected from the public and its employees. These XXXXX rather than remited to the State
Tax Commission. While the penalties
were fully and properly imposed pursuant to the provisions of law, there is an
indication that Petitioner believed
that part or all of the penalties would be compromised. However, the person who lead the Petitioner
to so believe that such a compromise might be made, did not have authority to
make any commitments regarding a compromise.
Nevertheless, the Commission determines that because of the possible
belief of Petitioner that compliance with the installment agreement would
result in waiver of the penalties, the Commission has determined that it is
reasonable to compromise and abate the late filing penalty in the amount of
$$$$$ which had been imposed against Petitioner. However, the Commission strongly believes that because of the
Petitioner's total disregard of the legal requirements to timely file its
returns and pay its taxes for a period of XXXXX, a substantial penalty should
be imposed upon Petitioner. Therefore the Commission does not compromise or
abate the late payment penalty in the amount of XXXXX.
DECISION AND ORDER
Based
upon the information presented at the conference, and the records of the Tax
Commission, as stated above, the Commission hereby abates the late filing
penalty in the amount of $$$$$, the Commission does not abate the late payment
penalty of $$$$$. Sufficient cause has
not been shown to waive any of the interest assessed for the period stated
above.
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 5th day of April, 1995.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco Alice
Shearer
Commissioner Commissioner
^^