94-1441

Income

Signed 8/24/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

Petitioner, : FINDINGS OF FACT,

) CONCLUSIONS OF LAW,

v. : AND FINAL DECISION

)

COLLECTION DIVISION OF THE : Appeal No. 94-1441

UTAH STATE TAX COMMISSION, )

Respondent. : Account No. XXXXX

) Tax Type: Income

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a Formal Hearing on XXXXX. Jane Phan, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing the Petitioner by telephone conference call was XXXXX XXXXX. Present and representing the Respondent was XXXXX.

Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:

FINDINGS OF FACT

1. The interest of approximately $$$$$ at issue stems from unpaid individual income tax.

2. The period in question is the year ending XXXXX XXXXX.

3. The penalties in the amount of $$$$$ that had been assessed against the Petitioner relating to income tax for the period at issue have already been waived by the Commission.

4. Petitioner had moved from the State of Utah in XXXXX and a forwarding address was filed with the United States Postal Service, but not directly with the Tax Commission.

5. The Tax Commission began sending notices of additional taxes assessed on XXXXX.

6. Petitioner testified that when he moved from the State of Utah he was unaware of any additional tax assessment until XXXXX, when he XXXXX of a XXXXX. Petitioner then contacted the State of Utah by phone and found out about the additional assessment.

7. In XXXXX Petitioner mailed a check for the outstanding tax balance.

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(10).)

When considering waiver or reduction of interest the Commission applies stringent reasonable cause guidelines because the State of Utah was denied the benefit of the use of the funds and the taxpayer retained the benefit of the use of the funds from the time the underlying taxes were due until they were actually paid by taxpayer. Generally interest is waived only in the event the Tax Commission or a Tax Commission employee had a hand in causing the payment to be made late.

ANALYSIS

Petitioner argues that the Tax Commission erred in failing to give him timely notice of the additional tax assessment which led to the further accrual of interest. Because of this error Petitioner felt the interest should be waived or reduced. Petitioner also asserted other reasons justified waiver of the interest. One was that the error was out of Petitioner's control. Petitioner stated that he was XXXXX in the XXXXX because of XXXXX and had an accountant prepare his return. The accountant did not include income from XXXXX. However, Petitioner was unaware of the error and thought his tax obligation to the State of Utah was paid in full. In addition, Petitioner stated that he had a good payment history. For these reasons Petitioner asserted that the interest should also be waived.

Respondent stated that because of the circumstances described by Petitioner the penalty had been waived. However, Respondent stated that the grounds for waiving interest are more stringent than for waiving a penalty. The taxpayer must prove that the Tax Commission had a hand in the late payment. Respondent argued that the Tax Commission had not erred in this case. Petitioner did not receive immediate notice of the tax deficiency because Petitioner failed to notify the Tax Commission of a change of address. Respondent maintained that taxpayers have a duty to notify the Tax Commission directly of an address change.

DECISION AND ORDER

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 associated with Petitioner's income tax for the XXXXX tax year. It is so ordered.

DATED this 24th day of August, 1995.

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 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), 63-46b-14(3)(a).)

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