95-1246

Income

Signed 2/15/96

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

Petitioners, ) INFORMAL DECISION

v. )

AUDITING DIVISION OF THE ) Appeal No. 95-1246

UTAH STATE TAX COMMISSION, :

) Account No. XXXXX

Respondent. ) Tax Type: Income

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission pursuant to the Administrative Procedures Act and the rules of the Utah State Tax Commission for informal proceedings. An Informal Hearing was held on XXXXX. The matter had originally been scheduled for a Status Conference but had been converted to an Informal Hearing by the motion of the Administrative Law Judge and upon the agreement of the parties. Jane Phan, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioners was XXXXX. Present and representing Respondent were XXXXX and XXXXX.

Based upon the evidence in the file and presented at the Informal Hearing, the Commission makes its:

FINDINGS

Petitioners are appealing the penalties of $$$$$ and interest of $$$$$ assessed relating to Petitioners' income taxes for XXXXX. Petitioners had originally appealed the assessment of additional taxes but at the hearing Respondent's representatives explained that after allowing Petitioners' withholdings they had revised the amount of the additional tax assessment from $$$$$ to $$$$$. Petitioners agreed that $$$$$ was owed for XXXXX and did not appeal this amount.

Petitioner explained that they had gone through a difficult period of time due to a layoff and had been unable to pay all their taxes. Petitioner stated that for XXXXX and other years from XXXXX through XXXXX she filed the state tax returns but did not include payment for the balance owed over and above the amount that had been withheld from paychecks. In the spring of XXXXX Petitioners were able to obtain a home equity loan to pay taxes owed. Petitioner contacted the Tax Commission several times in person and by letter to obtain a pay off balance for all years. She states that on several occasions she was given a pay off balance, paid the balance, then was told that they owed additional amounts. Tax Commission employees had not included a balance for XXXXX in these payoffs. On XXXXX, Petitioners wrote requesting the balance owed up through XXXXX. On XXXXX, Petitioners were told the balance owed was $$$$$. On XXXXX, Petitioners paid this amount with a letter which said that this was the final payment and should clear up all tax liability owed. Then in XXXXX of XXXXX Petitioners received the Statutory Notice of Estimated Income Tax for XXXXX. Petitioners stated that had they known there was a balance for XXXXX they would have paid it in XXXXX or XXXXX with the equity loan to avoid incurring further interest.

At the hearing Respondent explained that the Tax Commission did not receive the XXXXX return when it should have been filed in XXXXX. Respondent stated that when giving the payoff balances the Collection Division had not included XXXXX because the estimated income tax audit had not been complete at that point. Further, Respondent stated that the IRS had made an adjustment to Petitioners' XXXXX federal return and by law Petitioner at that point was required to file an amended return.

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

From the information presented Petitioners did make an effort in XXXXX and XXXXX of XXXXX to pay outstanding balances and were not given complete information from Tax Commission employees. Based on the information they received from Tax Commission employees Petitioners delivered to the Tax Commission what they thought was the final payment along with a letter that stated this is the "final payment and should clear up all tax liability owed." Payment was accepted by the Tax Commission without confirming that it was the "final payment."

Based on these factors the Tax Commission finds sufficient cause does exists to waive the $$$$$ late filing penalty, the $$$$$ late payment penalty and the interest of $$$$$ associated with the Petitioners' income tax for XXXXX. It is so ordered.

DATED this 15th day of February, 1996.

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 Petition for Judicial Review by trial de novo in district court. (Utah Administrative Rule R861-1A-5(P) and Utah Code Ann. '63-46b-13 et. seq.)