96-0108

Withholding

Signed 4/4/96

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX,

Petitioner, ) ORDER

v. ) Appeal No. 96-0108

COLLECTION DIVISION OF THE ) Account No. XXXXX

UTAH STATE TAX COMMISSION, :

)

Respondent. : Tax Type: Withholding 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. Present and representing Petitioner was XXXXX, Tax Accountant. Present and representing Respondent was XXXXX.

Petitioner is appealing the assessment of penalties and interest related to its late payment of withholding tax for the periods of XXXXX and XXXXX. The penalties assessed were as follows: for XXXXX a $$$$$ late payment penalty, a $$$$$ late filing penalty and a $$$$$ lien fee; for XXXXX penalties of $$$$$; for XXXXX penalties of $$$$$; for XXXXX penalties of $$$$$; for XXXXX a late payment penalty of $$$$$, a late filing penalty of $$$$$ and lien fee of $$$$$; for XXXXX a $$$$$ late payment penalty and a $$$$$ late filing penalty; and for XXXXX a $$$$$ late payment penalty and a $$$$$ late filing penalty.

Petitioner's representative stated that Petitioner was only required to file quarterly but had voluntarily been making some payments monthly for cash flow reasons. She pointed out that the penalties had been assessed based on monthly filing. Petitioner maintains that had the penalties been based on quarterly filing they would be much less. Petitioner's representative stated that although the tax account was closed at the end of XXXXX, Petitioner has been making payments toward its back tax liability. She stated that Tax Commission employees have not been very fast or diligent in responding to requests for information from Petitioner. She said that an example of this occurred recently when the Tax Commission sent back as a refund a payment from Petitioner. Knowing that Petitioner had not paid the liability in full, she sent the refund back and contacted the Tax Commission that they had made an error. She pointed out that Petitioner has paid a large amount of the penalties and interest, the total owed at the end of XXXXX was $$$$$ and the current balance owed is $$$$$. For these reasons Petitioner requested that the remaining penalties and interest be waived.

At the hearing Respondent's representative stated that because most of the penalties were based on a percentage of the delinquent tax, the total amount of the penalties would not be significantly different if they were assessed for quarterly or for monthly filers. Respondent's representative stated that financial hardship is not considered reasonable cause for waiver of penalties and interest and the underling tax liability was trust money that had been withheld by Petitioner.

She also explained that the account history indicated that Petitioner had actually been required to file monthly. The records indicated that in XXXXX the Tax Commission had switched Petitioner from a quarterly filer to a monthly filer because Petitioner was then in Bankruptcy. Respondent thought that the Tax Commission would have notified Petitioner of that change by letter and stated that if a copy of this letter were available she would provide it to the Petitioner and to the Appeals Division. However, Respondent's representative was unable to obtain a copy. She was told that the letter would have been computer generated and no hard copies were kept by the Tax Commission.

Petitioner's representative stated that she did not think Petitioner had ever received notice requiring Petitioner to file monthly. It was her understanding that Petitioner was required to file only quarterly. She stated that for XXXXX the payment was made in XXXXX, prior to when a quarterly payment and filing would be required.

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

After review of the information provided it is clear that Petitioner had a pattern of late payment and late filings. For most of the periods at issue the filing and payment were not made until XXXXX, significantly late. For XXXXX the records indicate the return was filed XXXXX which may have been timely for filing quarterly, but payment for the XXXXX tax liability was not made until XXXXX. The Commission certainly strives to have employees respond timely and diligently to taxpayer's questions and Tax commission employees should have responded to Petitioner about paying the remaining liability and unfiled returns. However, there is no indication that Tax Commission employees were the cause of Petitioner's late filing and late payments. As for the fact that Petitioner has been paying towards the liability, as it is legally required to do, is not considered reasonable cause for waiver of the penalties and interest.

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 relating to Petitioner's withholding tax for the periods of XXXXX and 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 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