Signed 6/26/95






XXXXX                        :

XXXXX,                       )

Petitioner,        :    FINDINGS OF FACT,


v.                           :    AND FINAL DECISION


COLLECTION DIVISION OF THE   :    Appeal No. 94-1372


Respondent.        :    Account No. XXXXX

)    Tax Type:  Sales Tax




                       STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a Formal Hearing on XXXXX.  Commissioner Alice Shearer and Jane Phan, Administrative Law Judge, heard the matter for and on behalf of the Commission.  Present and representing the Petitioner was XXXXX Petitioner.  Present and representing the Respondent was XXXXX XXXXX of the Collection Division Legal Unit.

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 tax.

2.  The period in question is the audit period of XXXXX XXXXX.

3.  Petitioner paid and is not appealing the assessment resulting from the audit. The subject of this appeal is the interest assessed relating to the audit of approximately $$$$$.

4.  The tax assessment resulting from the audit was $$$$$.

5.  Approximately XXXXX of the audit assessment related to XXXXX made by Petitioner in XXXXX for which Petitioner did not collect Utah sales tax.  The remainder of the audit assessment related to errors in Utah operations which Petitioner did not dispute.

                        APPLICABLE 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).)

                      CONCLUSIONS OF LAW

In considering waiver of interest the Commission applies more stringent reasonable cause guidelines than it does for waiver of penalties because the State of Utah was denied the benefit of the use of the funds from the time the taxes were due, until they were actually paid by Petitioner.  Generally, interest will be waived only if the lateness in payment was caused by an error of the Tax Commission or a Tax Commission employee.

Ignorance of the law is not considered reasonable cause and the obligation remains with the taxpayer to learn the applicable tax laws.  Reliance on competent tax preparers, in some circumstances, may be sufficient reasonable cause for waiver of penalties but generally not interest.


Petitioner's arguments for waiver pertain only to the interest relating to the XXXXX sales which were XXXXX of the total audit assessment.  Petitioner's position was that the interest from this XXXXX should be waived because the Tax Commission was at fault in failing to clarifying or make known to tax preparers the law relating to sales tax on XXXXX sales.

Petitioner based this argument on the fact that Petitioner did not know that taxes were owed to the State of Utah for the sales made in XXXXX, so Utah sales tax was not charged to the XXXXX customers.  When the audit assessment was made Petitioner paid the additional tax due out of its own funds.  Further, Petitioner's representative explained that since he is not an expert on tax law he had to rely on accountants and others for tax advise.  Petitioner's representative testified that these people gave Petitioner incorrect advice as to the XXXXX sales and did not seem to know the tax law involved.  This indicated to Petitioner that law was unclear.

          Respondent's position was that the interest should not be waived because the guidelines for waiving interest applied by the Tax Commission are more stringent than for waiving a penalty.  For waiver of interest the taxpayer must prove that the Tax Commission had a hand in the late filing and/or late payment.  Respondent stated that Petitioner had not met this burden of proof. 


Petitioner has not shown that the Tax Commission had a hand in Petitioner's failing to pay the required sales tax.  Based upon the foregoing, the Tax Commission finds that sufficient cause has not been shown which would justify a waiver or reduction of the interest of approximately $$$$$ associated with the sales tax assessment from the audit period of XXXXX XXXXX through XXXXX XXXXX  It is so ordered.

DATED this 26th day of June, 1995.


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 a final order to file a Request for Reconsideration with the Commission.  If you do not file a Request for Reconsideration with the Commission, you have thirty (30) days after the date of a final order to file a.) a Petition for Judicial Review in the Supreme Court, or b.) a Petition for Judicial Review by trial de novo in district court.  (Utah Administrative Rule R861-1-5A(P) and Utah Code Ann. ''59-1-601(1), 63-46b-13(1), 63-46-14(3)(a).)