96-0540

Income Tax

Signed 7/11/96

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX,

Petitioner, : ORDER

:

v. : Appeal No. 96-0540

:

COLLECTION DIVISION OF THE : Account No. XXXXX

UTAH STATE TAX COMMISSION, :

:

Respondent. : Tax Type: Income 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 is appealing the assessment of penalties totaling $$$$$ and interest of approximately $$$$$ relating to the late payment and filing of her individual income tax for the XXXXX tax year.

Petitioner explained that she divorced in XXXXX. Arising from the divorce was a legal battle over a company that she and her ex husband had run. Because of the legal proceedings Petitioner was unable to obtain the necessary financial information to timely file a XXXXX return. She said her tax preparer told her it was possible to obtain a longer extension than the XXXXX deadline by filing a request with the IRS. Petitioner did not make a prepayment, other than the withholding from her wages.

Respondent's representative reminded Petitioner that an extension is an extension to file, not an extension to pay. Petitioner should have made a prepayment of 100% of the prior years liability, or 90% of the XXXXX liability. She pointed out that Petitioner had a penalty from the prior year for not making the required prepayment. She asked if Petitioner could provide a copy of the application that Petitioner's accountant had filed with the IRS for an additional extension of time. If Petitioner could provide this application, Respondent recommended reducing the penalty to the XXXXX per month underpayment penalty. This would reduce the penalty to $$$$$.

Petitioner provided a copy of the application which indicated that it had been received by the IRS on XXXXX. The copy was signed by Petitioner's tax preparer and indicated that the application had been approved by the IRS, although there appeared to be no signature from the IRS director.

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 extension is an extension to file, not an extension to pay. Petitioner should have made the required prepayment. However, sufficient circumstances were presented to reduce the penalty to a XXXXX underpayment penalty.

Based upon the information presented at the hearing, and the records of the Tax Commission, the Commission finds sufficient cause been shown to reduce the penalty relating to Petitioner's individual income tax for XXXXX from $$$$$. Sufficient cause was not shown for waiver or reduction of the interest.

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 11 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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