96-0124

Withholding

Signed 7/1/96

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX,

Petitioner, : ORDER

:

v. : Appeal No. 96-0124

:

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. Present and representing Respondent was XXXXX.

Petitioner's representatives are appealing the assessment of penalties totaling $$$$$ and interest of approximately $$$$$ relating to the late payment and filing of withholding tax for the third quarter of XXXXX and the first through fourth quarters of XXXXX.

Petitioner's representatives explained that Petitioner died in XXXXX. They took exception to the amount of the penalties and interest which they considered to be outlandish and asked that they be waived because of financial hardship. They explained that there were no funds from Petitioner's law practice which could be used to pay the penalties and interest and that Petitioner left no estate. They stated that XXXXX, Petitioner's widow, does not have the money to pay the penalties and interest as she was having difficulty in meeting her living expenses and if she had to pay the assessment, she would have to miss some meals.

Petitioner's representatives asserted that in addition to financial hardship the penalties and interest should be waived due to Petitioner's illness. They explained that Petitioner was ill for a long period of time prior to his death and was not able to take care of his business. They provided a letter, dated XXXXX, from a psychiatrist at XXXXX. The psychiatrist explained that Petitioner had been suffering from depression which had worsened during the past ten years leaving him unable to function to the best of his ability. He was hospitalized briefly in XXXXX for depression. Also sometime in XXXXX Petitioner had surgery to remove a XXXXX. He lost XXXXX during the surgery.

Respondent's representative requested that the penalties and interest against Petitioner be upheld. She explained that the assessment was against Petitioner's estate, not Petitioner's widow, XXXXX. The Collection Division considered the amount to be owed by XXXXX, not XXXXX, and was not asking that she pay the penalties and interest. Respondent's representative explained that the only collection efforts would be against XXXXX estate.

Respondent's representative pointed out that Petitioner was well enough to keep his law practice going until he died in XXXXX. After the periods at issue, the third quarter of XXXXX and all of XXXXX, Petitioner had paid and filed timely. However, he paid the taxes for the periods at issue two years late. She explained that the situation did not qualify for waiver for death or serious illness because the death or illness must occur on or immediately prior to the due date of the return. Interest is waived only in the event an error on the part of the Tax Commission caused the late filing or payment.

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 reviewing the information presented, the Commission is sympathetic to XXXXX situation. However, financial hardship is not grounds for waiver of penalties or interest and XXXXX is not responsible for payment of this debt. Further, the Collection Division has presented assurance that it will not require payment of the penalties and interest from XXXXX, instead any collection will go against Petitioner's estate and payment would be collected only in the event funds were discovered in his estate. Should funds be discovered and collection efforts commence, the Commission requests that the Respondent consider an offer in compromise.

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 of $$$$$ or the interest of approximately $$$$$ relating to withholding tax for the third quarter of XXXXX and the first through fourth quarters 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 1 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

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