94-2256

Income Tax

Signed 4/20/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

:

Petitioner, : ORDER

:

v. : Appeal No. 94-2256

:

COLLECTION DIVISION OF THE : Account No. XXXXX

UTAH STATE TAX COMMISSION, :

:

Respondent. : Tax Type: Income Tax

_____________________________________

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 by telephone conference call were XXXXX and XXXXX, CPA. Present and representing Respondent was XXXXX.

Penalties of $$$$$ and interest of approximately $$$$$ were assessed against Petitioner relating to income tax for the XXXXX period. Petitioner had requested waiver of the penalties and interest from the Collection Division Waiver Unit which was denied. At the conference Petitioner stated that he had a minority partnership interest in some rental property which during the prior year had generated about $$$$$ in income. Petitioner was a silent partner and his partner managed the rental income. Petitioner stated that he was blind and had to rely on his partner, his accountant and others to manage his financial matters. Petitioner always received from his partner the K-1 necessary for completing his individual income taxes late and did not receive the K-1 for XXXXX until XXXXX. Petitioner had prepaid what he and his accountant thought his state tax liability would be for XXXXX, which was %%%%% of the liability of the prior year. When Petitioner received the K-1 from his partner the income for XXXXX had increased from the $$$$$ of the prior year to about $$$$$. This left Petitioner with a tax liability much larger than he expected. On XXXXX he filed in person his XXXXX income tax return without payment and made a request that he be allowed to pay installments on the remaining liability. He was told that the Tax Commission would send him a payment schedule. Petitioner says this never occurred.

At the conference Respondent stated that the penalty was assessed because Petitioner had failed to pay the income tax owed within the extension period. Respondent stated that the penalty was validly assessed and should not be waived because the Petitioner had not shown sufficient reasonable cause.

In considering Petitioner's request for waiver or reduction of the interest the Tax Commission applies more 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 paid by Petitioner.

DECISION AND ORDER

Based upon the information presented at the conference, and the records of the Tax Commission, the Commission finds sufficient cause has not been shown to waive or reduce the penalties of $$$$$ and interest of approximately $$$$$ assessed relating to income tax for the XXXXX period.

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

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