96-0100

Sales

Signed 7/5/96

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX,

Petitioner, : ORDER

v. : Appeal No. 96-0100

COLLECTION DIVISION OF THE : Account No. XXXXX

UTAH STATE TAX COMMISSION, :

Respondent. : Tax Type: Sales Tax

_____________________________________

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. This matter had originally been scheduled in error by the Appeals Division as an Informal Hearing. Because of the amount at issue the Administrative Law Judge converted the Informal Hearing to the Initial Hearing in this matter. Present and representing Petitioner was XXXXX, Petitioner's Chief Financial Officer. Present and representing Respondent was XXXXX.

Petitioner is appealing the assessment of interest totaling approximately $$$$$ relating to sales tax for the audit period of XXXXX. The assessment arose from an Amended Audit Report and Third Statutory Notice, dated XXXXX. Petitioner had appealed the original audit assessment by filing a Petition for Redetermination on XXXXX. While the appeal was pending Petitioner provided additional supporting documentation and the Auditing Division revised its audit. Petitioner agreed to the revised audit, which specifically listed the interest at issue in this appeal, and signed a Memorandum of Understanding with the Auditing Division.

On XXXXX, the Commission issued an Order of Approval of the amended audit based on the agreement between the Petitioner and the Auditing Division. As was specifically stated in the Order of Approval, Petitioner had twenty days from the date of the order to request reconsideration with the Commission or thirty days to file and appeal with the Utah Supreme Court or the District Court.

In XXXXX, well passed the time allowed to appeal the audit, Petitioner wrote a letter specifically requesting waiver of penalties and interest. Penalties had not been assessed in the audit but apparently were assessed later for late payment of the final amount owed. The November letter also expressed disagreement with the audit. The Collection Division processed the letter as a waiver request and waived all penalties but denied waiver of the interest.

Petitioner appealed the waiver decision by letter dated XXXXX. In that letter Petitioner's representative requested waiver of the interest. He also stated that he was willing to settle for the assessed tax amount if interest was waived.

At the hearing, Petitioner's representative requested that the interest be waived or the audit reopened. The representative for Petitioner was not aware that the audit had been appealed or that Petitioner had entered into the Memorandum of Understanding agreeing to the amended audit assessment with interest. He said he had not reviewed the audit or the Memorandum of Understanding and asserted that because he was the Chief Financial Officer it should have been reviewed by him. However, the Memorandum of Understanding was signed by Petitioner's Director of Finance.

Petitioner's representative said that he had Petitioner pay the tax as it was his thinking that if the tax was paid the interest would be waived. He acknowledged, however, that no one from the Collection Division or the Tax Commission had agreed, either verbally or in writing, to this arrangement.

Respondent's representative requested that the assessment of interest be upheld. She stated that no employee from the Collection Division had agreed to waive interest if Petitioner paid the tax assessment. She explained that interest is waived only in the event Tax Commission employee error resulted in the interest assessment.

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 Amended Audit Report and Third Statutory Notice dated XXXXX became final by the Tax Commission's Order of Approval. Petitioner did not appeal the Order of Approval within the statutory period. The Commission will not reopen the audit or reconsider the amount of the tax assessment. The Amended Audit also included the interest at issue and, in addition, Petitioner has not presented sufficient reasonable cause for waiver of the interest.

Based upon the information presented at the hearing, and the records of the Tax Commission, the Commission sustains the Amended Audit Assessment, as it pertains to both tax and interest, for the period of 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 5 day of July, 1996.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner