95-1623

Corporate Franchise

Signed 2/29/96

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX,

Petitioner, : ORDER

v. : Appeal No. 95-1623

COLLECTIONS DIVISION OF THE : Account No. XXXXX

STATE TAX COMMISSION, :

STATE OF UTAH, :

Respondent. : Tax Type: Corporate Franchise

_____________________________________

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. Gail S. Reich, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner by telephone was XXXXX and XXXXX. Present and representing Respondent was XXXXX.

This appeal involves corporate franchise tax for the year ending XXXXX. Underpayment penalties were assessed in the amount of $$$$$. Interest has incurred in the amount of approximately $$$$$. The penalties were imposed on the underpayment amounts since Petitioner failed to prepay either 100% of the prior year’s tax, or 90% of the current year’s tax. Additionally, no prepayments were made for the first two periods of the fiscal year in issue. The payments for the second two periods did not meet either of the prepayment requirements.

Petitioner indicated that the type of business, that is, engineering and construction, results in wide fluctuations in earnings from year to year and quarter to quarter, preventing the Petitioner from being able to estimate the tax for the year. Respondent indicated that that is precisely the reason that there is an alternative, namely, being able to pay 100% of the prior year’s tax. Petitioner indicated that it was not even possible to know the prior years tax for the first two quarterly payments of the year in issue. Petitioner indicated that it would require looking at two years prior for an estimate. Following Petitioner’s logic and looking at the record two years prior to the year in issue, Petitioner is showing a tax liability of $$$$$. That would require a $$$$$ payment per quarter. Not even that amount was paid. In fact, nothing was paid for the first two quarters.

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

The Commission has reviewed the entire record and the arguments presented by the parties.

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 the corporate franchise year ending 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 29 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