BEFORE THE UTAH STATE TAX COMMISSION
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
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
Joe B. Pacheco Alice Shearer