95-1542

Income

Signed 4/4/96

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX,

Petitioner, : ORDER

v. : Appeal No. 95-1542

COLLECTION DIVISION OF THE : Account No. XXXXX

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 Petitioner were XXXXX and XXXXX, CPA. Present and representing Respondent was XXXXX.

Petitioner is appealing the assessment of penalties and interest relating to his income taxes for the year XXXXX. Petitioner was also requesting advisory information as to tax treatment of foreign income taxes for future tax years.

As the appeal was set up to hear only the penalty and interest issue for XXXXX based on the original information provided by Petitioner, that is the only issue the Commission is able to address in this Order. Based on Petitioner's appeal the Collection Division was made the Respondent in this matter and the Collection Division does not have the information or authority to respond to the issue of the foreign income tax credit.

Petitioner explained that for the tax year XXXXX he did not owe any further federal income taxes. He thought, erroneously, that if he did not owe federal taxes he did not need to file a Utah return. He explained that he did not understand the tax laws. Prior to the XXXXX tax year his wife had prepared their tax returns.

Petitioner explained that after the XXXXX return was due an issue arose concerning the amount of the foreign income tax credit to be allowed for federal and state tax purposes on the portion of Petitioner's income that was retained by the government of Taiwan. However, according to Petitioner's statements at the hearing this issue was not the reason the XXXXX Utah return was filed late. It was filed late because Petitioner did not realize he needed to file a Utah return. Petitioner was allowed the opportunity to present posthearing his correspondences with the IRS concerning the foreign tax credit but Petitioner did not do so.

Petitioner requests that the Commission consider allowing an equitable credit for the income retained by the government of Taiwan for years going forward.

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 the penalties or interest assessed for Petitioner's late filing and late payment of XXXXX individual income tax.

For purposes of determining whether Petitioner will be allowed a foreign tax credit in the future for income withheld by the government of Taiwan an Advisory Opinion needs to be issued. Petitioner's request for an Advisory Opinion will be referred to the proper section at the Tax Commission and an Advisory Opinion will then be issued to the Petitioner. Someone from the Advisory Opinion Section will contact Petitioner should they need further information prior to issuing the Advisory Opinion.

This decision does not limit a party's right to a Formal Hearing concerning the penalty and interest for the XXXXX tax year. 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 4 day of April, 1996.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner