95-0877

Income

Signed 9/28/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

Petitioner, : ORDER

v. : Appeal No. 95-0877

COLLECTION DIVISION, : Account No. XXXXX

OF THE UTAH STATE :

TAX COMMISSION, :

Respondent. : Tax Type: Income

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for an Initial Hearing 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 Respondent was XXXXX. Present and representing Petitioner was XXXXX.

Penalties in the amount of $$$$$ and interest of approximately $$$$$ were assessed against Petitioner relating to income tax for XXXXX. Petitioner had requested a waiver of the penalties and interest from the Collection Division Waiver Unit which was denied. Petitioner now appeals the penalties and interest.

At the hearing Petitioner explained that for the XXXXX tax year he had planned on filing taxes jointly with his wife and had an arrangement with his wife that she would have extra withholding taken out of her pay check while Petitioner had less take from his paycheck. The idea was that the withholding would be combined in the joint filing. However, Petitioner stated that in XXXXX, just a few days prior to the filing deadline, Petitioner's spouse separated from Petitioner and refused to file a joint return. They were later divorced. This left Petitioner with a state tax liability of $$$$$ of which only $$$$$ had been withheld from Petitioner's wages. Petitioner went on to explain that he was not able to control how the taxes were filed, that his actions were what a reasonable person would have done under the circumstances and he felt that he had been duly diligent. The circumstances were beyond his control and under his ex-wife's control.

Petitioner states that because of his ex-wife's unexpected decision not to combine withholding, along with other separation expenses, he was unable to pay the XXXXX income tax liability on XXXXX. So Petitioner filed his return timely with a letter asking that arrangements be made for payment. Petitioner states that he initiated contact concerning a payment plan and it was maybe XXXXX before the Tax Commission set one up, although Petitioner had already started making payments prior to this time. Petitioner made payments timely pursuant to the payment plan. Petitioner stated that prior to the year in question he had a XXXXX year history of no late payments or late filings. And after this incident he has again been timely. Petitioner stated that because of the costs of divorce, alimony and other debts he was required to pay he had to declare bankruptcy.

Respondent stated that the return had been filed timely by Petitioner but payment was not with the return. The penalty assessed had been a 10% late payment penalty based on the unpaid balance at the time of the filing. Respondent stated that divorce and financial difficulty did not come under the reasonable cause guidelines for waiver of penalties and interest. Interest is waived generally only when an error on the part of the Tax Commission or a Tax Commission employee caused the late payment or filing.

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).)

DECISION AND ORDER

Based upon the information presented at the hearing, 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 assessed relating to Petitioner's XXXXX income tax.

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 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