94-0610
Withholding
Signed 3/23/95
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
XXXXX, )
:
Petitioner, : ORDER
:
v. : Appeal No. 94-0610
:
AUDITING
DIVISION OF THE : Account No. XXXXX
UTAH STATE TAX COMMISSION, :
:
Respondent. : Tax Type: Withholding
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a Prehearing Conference on
XXXXX. At that time, it was agreed that
the Prehearing Conference would be converted to a Settlement Conference and the
issues would be presented for decision.
G. Blaine Davis, Administrative Law Judge, heard the matter for and on
behalf of the Commission. Present and
representing Petitioner were XXXXX.
Present and representing Respondent were XXXXX, Assistant Attorney
General, together with XXXXX from the Auditing Division.
Respondent
performed an audit on the books and records of Petitioner, which was a XXXXX
and had XXXXX at the time the audit was made.
During
the audit period, the petitioner had several employees who were XXXXX but were
XXXXX as part of their employment and were paid wages and salaries XXXXX. During that time, Petitioner withheld income
tax for XXXXX from the wages and salaries of its employees, but it did not
XXXXX from their wages and salaries.
In
addition, Petitioner also had at least one employee XXXXX plus the officers and
directors of the company. Petitioner
withheld Utah income taxes from the wages and salaries of the employees XXXXX,
but it did not use the appropriate schedules in withholding income tax from the
wages and salaries of the XXXXX XXXXX.
Petitioner represented that they were sometimes XXXXX XXXXX and were not
always able to XXXXX on the same XXXXX as the other employees. Therefore, when they had XXXXX the XXXXX,
they withheld Utah income taxes, but it was not in a XXXXX and was not based
upon the schedules. Petitioner
represented that they felt the same percentage applied for all times, so they
simply took the same percentage which resulted in XXXXX
All
of the XXXXX have filed their Utah income tax return and have paid all tax
due. The XXXXX who has not yet filed
will likely do so in the near future, but he is no longer employed by
Petitioner and they have no control over when, or if, he files his returns.
Petitioner
has paid to the state the full amount of tax which should have been withheld,
and if the XXXXX who has not yet filed, does file, and pays the amount of tax
due thereon, then Petitioner would be entitled to a refund of the amounts which
it has paid which should have been withheld from the wages and salaries of that
XXXXX.
During
the period in question, Petitioner timely filed its withholding tax returns,
and timely paid the amounts which had been withheld from the employee's
salaries.
As
part of the audit performed by Respondent, a XXXXX XXXXX was imposed for not
withholding the proper amounts pursuant to the withholding tables, and for also
not withholding Utah income tax from the salaries of the employees who were
XXXXX.
As
of XXXXX, following the period for which the audit assessment has been paid,
the Commission has now adopted Rule R865-9I-14(b), which now permits employers
who have XXXXX to only withhold the Utah tax to the extent that it exceeds the
tax the employer is required to withhold for the other state in which the
employees are working, which avoids having to withhold tax for two separate
states thereby significantly reducing the employee's take home pay. Petitioner testified that it did not
understand that it should have withheld the full amount for both states, but it
would have been reluctant to do so because it would have significantly reduced
the XXXXX.
All
of the tax, penalties, and interest in this proceeding have now been paid. The only issue is the request to waive the
penalty and interest. In addition, as
was stated above, there may be a potential refund if the XXXXX who has not yet
filed his return does in fact file and pay the amounts due in the future. However, that issue is not presented for
decision in this hearing.
In
reviewing this matter, where Petitioner timely filed withholding returns and
paid the amount of tax which had been withheld and shown to be due pursuant to
those withholding returns, the Commission believes that the petitioner made a
mistake by not withholding from the proper tables, but does not believe that it
was sufficient negligence to impose XXXXX.
This is especially true where there was a reasonable explanation given
as to why they did not use the same withholding tables which were used to
withhold income taxes from the salaries and wages from XXXXX, i.e., the
sporadic nature in which they had sufficient funds for payment of the XXXXX.
In
addition, the Commission determines that where the actions of Petitioner in not
withholding income tax for separate states in full amounts from the wages of
employees has now been approved by the adoption of RuleR865-9i-14(b), that it
was not a sufficient mistake to impose the XXXXX.
DECISION AND ORDER
Based
upon the information presented at the conference, and the records of the Tax
Commission, the Commission finds sufficient cause has been shown to waive the
penalties associated with the audit for the period XXXXX. However, sufficient cause has not been shown
to waive or reduce the interest assessed for those time periods.
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 23rd day of March, 1995.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco Alice
Shearer
Commissioner Commissioner
^^