95-1091

Income

Signed 12/22/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

:

Petitioner, : ORDER

:

v. :

:

AUDITING DIVISION OF THE : Appeal No. 95-1091

STATE TAX COMMISSION, :

STATE OF UTAH, : Account No. XXXXX

:

Respondent. : Tax Type: Income

_____________________________________

STATEMENT OF CASE

This matter came before the Utah Tax Commission for an Initial Hearing pursuant to the provisions of Utah Code Ann. §59-1-502-5, on XXXXX. Joe B. Pacheco, Commissioner, heard the matter for and on behalf of the Commission. The hearing had originally been scheduled for a Status Conference but was converted to an Initial Hearing upon the approval of the parties. Present and representing Petitioner by telephone was XXXXX. Present and representing Respondent were XXXXX and XXXXX from the Auditing Division.

Additional tax of $$$$$ and two 10% penalties and interest were assessed against Petitioner relating to her individual income tax for the year XXXXX. The assessment was based on an audit by the Internal Revenue Service (IRS) and the resulting final determination which increased Petitioner's federal taxable income. The IRS reported the increase of Petitioner's federal taxable income to the Respondent, and the Respondent made the appropriate changes to Petitioner's state taxable income issuing the statutory notice of audit change on XXXXX. Petitioner agrees with the additional tax assessment and now appeals only the penalty and interest. Respondent requests that the Appeal be dismissed because of the ultimately filing of the petition for redetermination.

At the hearing, Petitioner explained that in XXXXX she was a senior in high school and that her parents prepared her income tax form, and apparently had made an error in determining her taxable income for XXXXX. The IRS subsequently discovered the error and made a final determination increasing her federal taxable income. The notice of change from the IRS was received by Petitioner in XXXXX. Petitioner said she went on a mission for the LDS Church in XXXXX and did not return until the fall of XXXXX, which was after the notice from the IRS was received.

Further, during the period from XXXXX to XXXXX the following occurred:

1. She used her parents mailing address when she filed the XXXXX return on XXXXX.

2. Her parents moved twice during that period of time.

3. She returned from her LDS mission subsequent to the receipt of the notice from the IRS.

4. Petitioner got married in XXXXX and established her own residence at a new address.

Petitioner stated she was not aware of the State statute which required her to file an amended Utah State tax return. Although Respondent explained that the statute set out in the Utah Code requires a taxpayer to notify the Commission, by filing an amended return, within 90 days of a final determination from the IRS which affects the taxpayers State tax liability. If the Petitioner fails to notify the Tax Commission, the Commission is not aware of the change until so notified by the IRS which may take several years. The delay in Petitioners' case was caused by Petitioner failing to file an amended return with the State of Utah and filing to pay the assessment within the statutory time. Respondent did not have any information concerning the change of addresses as described by Petitioner.

APPLICABLE LAW

State taxable income is defined as Federal taxable income with some modifications, subtractions and adjustments. Utah Code Ann. §59-10-112. For the purposes of determining State taxable income, Federal taxable income means taxable income as defined in §63, of the Internal Revenue Code (Utah Code Ann. §59-10-111).

If a change is made in a taxpayers net income on his or her Federal income tax return, either because the taxpayer has filed an amended return, or because of an action by the Federal government, the taxpayer must notify the Utah Tax Commission within 90 days after the final determination of such change. (Utah Code Ann. §59-10-536(5)(a).

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

When the IRS made a final determination to increase Petitioner's Federal taxable income, this resulted in a change in Petitioner's State taxable income. The Legislature, by statute, has placed the burden upon the taxpayer to notify the State Tax Commission of this change. Petitioner failed to do so and a 10% negligence penalty was assessed in additional with interest from the time the additional tax was originally due in XXXXX of XXXXX. On failure to respond to the initial request sent by the Tax Commission, an additional 10% late payment penalty was assessed.

The Commission finds that Petitioner was at an address which was not a permanent address, and presumably out of state, when she was on her LDS mission. During the search of forwarding address for the Petitioner the Tax Commission would not necessarily look for the address of Petitioner's parents who had also moved during this period of time.

Based upon the information presented at the hearing and the records of the Tax Commission, the Commission finds that Petitioner did not act timely to file her petition for redetermination and therefore dismisses the appeal. This decision does not limit a party's right to a Formal Hearing. 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 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 22nd day of December, 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 R861-1A-5(P) and Utah Code Ann. §§59-1-601(1),63-46b-13 et. seq.)

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