95-0037

Income Tax

Signed 8/28/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

Petitioner, : FINDINGS OF FACT,

) CONCLUSIONS OF LAW,

v. : AND FINAL DECISION

)

COLLECTION DIVISION OF THE : Appeal No. 95-0037

UTAH STATE TAX COMMISSION, )

Respondent. : Account No. XXXXX

) Tax Type: Penalty & Interest

_____________________________________

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 were 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. Penalties in the amount of $$$$$$ with interest of approximately $$$$$ were assessed against Petitioners relating to income tax for the year ending XXXXX.

2. Petitioners filed timely their XXXXX individual income tax return with a check for payment of the additional tax due.

3. For some reason unknown to the parties the check was not cleared by Petitioners' bank, although Petitioners established that funds were available to cover the check. Petitioners did not receive notice from their bank that the check had not been honored and had been returned to the Tax Commission unpaid.

4. Petitioners were understandably distracted by the serious illness of their child and activities, beginning in XXXXX, to raise the necessary funds to obtain a bone marrow transplant for their child. For these reasons they did notice from their bank statement or balance that the check for payment of their taxes had not cleared.

5. On XXXXX Petitioners received notice from the Tax Commission indicating they had failed to pay the tax amount due. Petitioners immediately mailed a replacement check.

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 of the interest the Commission applies a more stringent reasonable cause standard 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 taxes were due until the funds were actually received by the Tax Commission.

ANALYSIS

Based on Petitioners' bank statement, the Respondent concluded that Petitioners' original check for payment of the income taxes had not cleared due to an error on the part of the Petitioners' bank. Respondent's position was that this bank error coupled with the illness of Petitioners' child was sufficient reasonable cause for waiver of the penalties. Respondent also recommend waiver of the $$$$$ legal filing fee because Petitioners had sent the replacement check prior to the lien being filed. Respondent would not recommend waiver of the interest because interest is waived only in the event an error on the part of the Tax Commission caused the late payment or filing. This late payment appeared to have been caused by Petitioners' bank.

DECISION AND ORDER

Based upon the foregoing, the Tax Commission finds that sufficient cause has been shown which would justify a waiver of the penalties of $$$$$ including the $$$$$ lien filing fee associated with Petitioner's income tax. Sufficient cause has not been shown to waive the interest. It is so ordered.

DATED this 28th 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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