95-1498
Income
Signed 1/30/96
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
XXXXX, )
:
Petitioners, : ORDER
:
v. : Appeal No. 95-1498
:
: Account
No. XXXXX
COLLECTION
DIVISION 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 Petitioners were XXXXX and XXXXX. Present and representing Respondent were
XXXXX and XXXXX.
Petitioners
are appealing the assessment of penalties and interest relating to Petitioners'
income tax for the years XXXXX, XXXXX, XXXXX, XXXXX, XXXXX and XXXXX. For XXXXX the penalty assessed was $$$$$ and the interest was approximately
$$$$$. For XXXXX the penalty assessed
was $$$$$ and the interest was approximately $$$$$. For XXXXX the penalty assessed was $$$$$ and the interest
approximately $$$$$. For XXXXX the
penalty assessed was $$$$$ and the interest was approximately $$$$$. For XXXXX the penalty assessed was $$$$$ and
the interest was approximately $$$$$.
For XXXXX the penalty assessed was $$$$$ and the interest was
approximately $$$$$.
At
the hearing Petitioners explained that the years in question were very
difficult. Mr. XXXXX had several
arthoscopy surgeries on his knee and was unable to work for months after the
surgeries. When he was able to work it
was at a job for much less pay which led to serious financial trouble for
Petitioners, including losing their home.
Petitioners found these medical and financial problems along with
numerous other hardships which occurred during these years to be overwhelming
and Petitioners were unable to cope with filing state or federal tax returns or
paying the amounts they owed.
In
XXXXX Petitioners filed late all the state tax returns for the years in question. Petitioners explained that they each have
been working two jobs trying to pay back the debts incurred during these
problem years. Mrs. XXXXX is having
extra withholding taken out of her paychecks to go towards the back taxes owed.
Petitioners
were allowed to provide post hearing documentation concerning Mr. XXXXX's
medical problems and they did provide information to establish that he had
several surgeries on his knee which had been injured in XXXXX. After the original injury and surgery the
surgeries began again in XXXXX of XXXXX, and occurred XXXXX of XXXXX, XXXXX of
XXXXX, and XXXXX of XXXXX. Besides the
surgeries the medical records indicate complications and difficulties in the
healing and recovery process.
Respondent
stated that the Petitioners had not shown sufficient reasonable cause for
waiver of the penalties. Financial
hardship is not reasonable cause for waiver of penalties or interest. Respondent pointed out that serious illness
could be reasonable cause for waiver of
penalties only if it occurred immediately prior to the due date of the
return. Mr. XXXXX had not been
hospitalized on or immediately prior to the due date of the returns at
issue. Further, Respondent pointed out
that Petitioners had established a pattern of late filing and late payment.
Respondent
stated that the grounds for waiving interest are more stringent than for
waiving a penalty because the State of Utah was denied the use of the funds
from the time the taxes were due.
Respondent
stated the Petitioners could continue to pursue an offer in compromise after a
decision had been made by the Commission on the appeal.
Petitioners
also expressed some concern with whether they had been treated fairly through
the waiver process by the Collection Division.
It appears that Petitioner had some confusion between the appeals
process and the offer in compromise process.
The Collection Agent working with Petitioners had suggested offer in
compromise while the Petitioners wanted to appeal. After reviewing the file and information presented by both
parties there appears to have been no misconduct on the part of the agent and
all Tax Commission policies and procedures were followed.
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 that they presented Petitioners' circumstances during the years
in question were unfortunate. However, they do not fall under the reasonable
cause guidelines sufficient for waiver of penalties or interest. Petitioners had entered into a pattern of
not filing or paying their income taxes timely for a period of several years. None of the surgeries occurred on or just
prior to the due dates of the taxes.
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
the penalties and interest assessed relating to Petitioners' income tax for the
years XXXXX, XXXXX, XXXXX, XXXXX,
XXXXX, XXXXX.
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 30th day of January, 1996.
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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