94-1601

Income

Signed 4/20/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

Petitioner, : ORDER

v. : Appeal No. 94-1601

: Account No. XXXXX

COLLECTION DIVISION OF THE :

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 were XXXXX of XXXXX, and XXXXX. Present and representing Respondent was XXXXX.

Penalties of $$$$$ and interest of approximately $$$$$ were assessed against Petitioner relating to income tax for the $$$$$ tax year. The underlying amount of income tax owed for $$$$$ was $$$$$. Penalties of $$$$$ and interest of $$$$$ were assessed against Petitioner relating to income tax for the $$$$$ tax year. Petitioner had requested waiver of the penalties and interest from the Collection Division Waiver Unit which did reduce the penalties for XXXXX to $$$$$ but denied waiver or reduction of the remaining penalties and interest for XXXXX and XXXXX.

At the conference Petitioner's representatives stated that the XXXXX income tax return was filed and taxes were paid late, on XXXXX. Petitioner's representatives stated that Petitioner was not notified until XXXXX that the Tax Commission had not received the late filed XXXXX return. After receiving notice Petitioner delivered a copy of the XXXXX return in XXXXX to the Tax Commission. Petitioner felt that it was the Tax Commission who lost the return and payment so that all penalties and interest accruing after XXXXX should be waived.

Respondent stated that the penalties assessed for the XXXXX period consisted of a $$$$$ late filing and a $$$$$ late payment penalty and both would have been fully and validly assessed against Petitioner if Petitioner had filed, as Petitioner alleged, on XXXXX, which was XXXXX late. Respondent stated that the Petitioner's account history at the Tax Commission indicated that Petitioner did not file the XXXXX return until XXXXX and did not pay the tax owed until later.

Respondent stated that if Petitioner would provide documentation which indicated that Petitioner had written a check, and funds were available to cover the check, for the payment of the XXXXX. Respondent would recommend waiving any additional interest accruing after XXXXX. Petitioner was given two weeks to provide these documents. Petitioner did provide copies of his bank statements which indicated funds were available to pay the XXXXX taxes in XXXXX and XXXXX. However, Petitioner did not provide a check register or other evidence that the check had been written.

Petitioner requested waiver of penalties and interest assessed relating to Petitioner's XXXXX income tax. Petitioner's representatives stated that Petitioner had requested that his income tax refund for XXXXX be credited towards his XXXXX income tax. Petitioner's representatives stated the Tax Commission, instead of following Petitioner's request, applied the refund towards payment of XXXXX penalties and interest without notifying Petitioner. They stated that when Petitioner filed his XXXXX income tax return he thought the refund would be credited so he deducted the amount of the refund from his payment. The result was Petitioner incurred penalties and interest for XXXXX income taxes. The penalties incurred for Petitioner's XXXXX income tax were validly assessed for late payment and late filing and were not increased after XXXXX although interest continued to accrue. In considering Petitioner's request for waiver or reduction of the interest the Tax Commission applies stringent reasonable cause standards because Petitioner continued to enjoy the benefit of the use funds and the State of Utah was denied the benefit of the use of the funds from the time the underlying taxes were due until they were actually received by the Tax Commission.

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 remaining penalty of $$$$$ relating to income tax for XXXXX. Sufficient cause has not been shown to waive or reduce the penalties of $$$$$ relating to income tax for XXXXX, or the interest relating to income tax for both 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 20 day of April, 1995.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner