94-1593

Income
Signed 3/28/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

:

Petitioner, : ORDER

:

v. : Appeal No. 94-1593

:

COLLECTION DIVISION OF THE : Account No. XXXXX

UTAH STATE TAX COMMISSION, :

:

Respondent. : Tax Type: Income

_____________________________________

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. Jane Phan, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner was XXXXX. Present and representing Respondent was XXXXX.

Penalties of $$$$$ relating to income tax for XXXXX and penalties of $$$$$ relating to income tax for XXXXX were assessed against Petitioner. Petitioner was charged approximately $$$$$ in interest for XXXXX and XXXXX but has paid the interest and is not making it a part of this appeal. Petitioner had requested a waiver of the penalties from the Collection Division Waiver Unit which was denied. Petitioner now appeals this denial.

At the hearing Petitioner stated that in XXXXX the Internal Revenue Service(IRS)audited his XXXXX and XXXXX federal income tax filings. Upon completion of the audit the IRS disallowed two types of deductions. One related to major items expended on rental property and the other concerned deductions for his son's XXXXX costs. Petitioner settled with the IRS in XXXXX. Petitioner stated that he was told by an IRS agent that the IRS would inform the State of Utah of the changes in Petitioner's federal returns and supply the necessary information. Petitioner stated that from this conversation he did not think that he had to contact the State of Utah concerning the changes.

At the conference Petitioner questioned the Tax Commission's ability to charge a penalty for XXXXX because he thought that this would be barred by the statute of limitations. Further, Petitioner stated that the Tax Commission should take more effort to see that taxes were just and equal than in collecting money from penalties. Petitioner felt that he had used due diligence and that should be considered reasonable cause.

At the conference Respondent stated that taxpayers are required by law to file with the Tax Commission any changes made to their federal return. However, Respondent stated that he had heard others complain that IRS employees told them the IRS would notify the State of Utah about amended returns. Respondent stated that if Petitioner could provide a statement from an IRS employee stating he or she told Petitioner that the IRS would notify the State of Utah concerning the changes to Petitioner's federal income tax then the Respondent would agree to waive the penalties for both XXXXX and XXXXX.

The Settlement Conference was continued until XXXXX to allow Petitioner time to provide this statement. During the time allowed Petitioner did not provide a letter from an IRS employee. Petitioner did provide a letter in which he confirmed that it was his understanding that the IRS would supply the Tax Commission all the necessary information.

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 totaling $$$$$ assessed relating to income tax for XXXXX and XXXXX. 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 28 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

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