96-0541

Income Tax

Signed 7/1/96

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX,

Petitioner, : INFORMAL DECISION

:

v. :

:

COLLECTION DIVISION OF THE : Appeal No. 96-0541

UTAH STATE TAX COMMISSION, :

: Account No. XXXXX

:

Respondent. : Tax Type: Income Tax

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission pursuant to the Administrative Procedures Act and the rules of the Utah State Tax Commission for informal proceedings. An Informal Hearing was held on XXXXX. Jane Phan, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner by telephone conference call was XXXXX. Present and representing Respondent was XXXXX.

Based upon the evidence in the file and presented at the Informal Hearing, the Commission makes its:

FINDINGS

Petitioner is appealing the assessment of $$$$$ in penalties relating to the late filing and payment of income taxes for the XXXXX tax year. Petitioner stated that he is not appealing the interest, acknowledging that the taxes were paid late.

Petitioner explained that he and his former business partner had used the services of the same certified public accountant. However, when he became involved in litigation against his business partner, the accountant informed Petitioner in XXXXX that it would be better if he did not represent them both. He had verbally agreed to file an extension for Petitioner, but in a certified letter had informed Petitioner he could no longer represent him. When the accountant did not contact Petitioner about making a prepayment, Petitioner thought the accountant had filed the extension and that Petitioner had no liability requiring a prepayment. Petitioner stated that after he retained another accountant he discovered that the first accountant had not filed an extension.

Petitioner stated that he did file and pay as soon as possible and the IRS had waived the penalties.

Respondent's representative explained that the Tax Commission's reasonable cause guidelines for waiver of penalties and interest are different than the guidelines followed by the IRS. She explained that an extension for Utah individual income taxes is an extension to file, not an extension to pay. A prepayment is necessary to avoid penalties. The prepayment must be 90% of the current year's liability or 100% of the prior year's liability. She would consider that an extension had been filed and reduced the penalty to the XXXXX per month underpayment penalty based on the unpaid tax portion. This would be a reduction of penalty from $$$$$. She would not recommend waiver of interest explaining that interest was generally waived only in the event the late filing or payment resulted from Tax Commission error.

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 Tax Commission finds sufficient cause has been shown to reduce the penalties associated with Petitioner's income tax for XXXXX to $$$$$. Sufficient cause was not shown for waiver of the interest. It is so ordered.

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

NOTICE: You have twenty (20) days after the date of a final order to file a Request for Reconsideration with the Commission. If you do not file a Request for Reconsideration with the Commission, you have thirty (30) days after the date of a final order to file a Petition for Judicial Review by trial de novo in district court. (Utah Administrative Rule R861-1A-5(P) and Utah Code Ann. §63-46b-13 et. seq.)

^