96-0649
Income Tax
Signed 7/11/96
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
XXXXX,
Petitioners, : ORDER
:
v. : Appeal No. 96-0649
:
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 were XXXXX. Present and representing Respondent was
XXXXX.
Petitioners
are appealing the assessment of interest in the amount of $$$$$ relating to the
late payment and filing of income tax for the XXXXX tax year. The Collection Division Waiver Unit has already waived the penalties
assessed in this matter.
Petitioners
explained that their individual income tax income came from a business which they
owned. The had been relying on a
bookkeeper in the business to keep accurate records, but shortly before the
XXXXX return was due, they discovered some errors. Instead of filing an inaccurate return, they had a new employee
try to correct the errors. However, the
new employee did not work out either and the Petitioner's ended up taking the
matter to a CPA, who was finally able to file and prepare the return in
XXXXX. This same CPA had also
discovered an error on Petitioner's XXXXX return, which would have entitled
Petitioner to a refund of $$$$$. A
refund request for XXXXX was submitted in XXXXX, after the three year statute
of limitations had expired. The refund
request was not processed because of the untimely filing.
It
was Petitioner's position that since the Tax Commission had this extra XXXXX
from XXXXX for equity reasons, it should off set the $$$$$ owed in interest for
XXXXX.
Respondent's
representative explained that Petitioners had filed their XXXXX income tax
return and paid the tax in XXXXX, a year and a half late. For this reason the assessment of penalty
and interest had been appropriate. It
was her opinion that the penalty should not have been waived. She explained that the law allows three
years for filing a refund request. Petitioners
failed to do so for XXXXX and lost the right to claim the refund. Respondent explained that Commission can not
offset the refund claim for XXXXX by the interest owed for XXXXX.
Respondent
explained that interest is assessed based on the time value of money. It is waived only in the event an error on
the part of the Tax Commission or a Tax Commission employee caused the late
filing or late payment.
APPLICABLE LAW
If
a refund is due because the amount of tax deducted and withheld from wages
exceeds the actual tax due, no refund or credit may be made or allowed unless
the taxpayer files a tax return claiming the refund within three years from the
due date of the return, or within two years from the date the tax was paid. In any other instances where a refund is
due, no credit or refund may be allowed unless a tax return claiming the refund
is filed within three years from the time the tax was paid. (Utah Code Ann. §59-10-529 (7).)
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
Collection Division has been generous in waiving the penalties. The Tax Commission is required to enforce
the laws as set out by the Utah
Legislature, and the Legislature has made it clear that taxpayers have to claim
a refund within a three year period of time.
Petitioners failed to timely request a refund for XXXXX taxes, so no
offset can be allowed against the interest assessed for XXXXX taxes. Petitioners filed their return and paid
their tax obligation over XXXXX years late.
Further, Respondent is correct in that interest is generally waived only
in the event Tax Commission error caused the late filing or payment. There was no indication of Tax Commission
error.
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 interest of $$$$$ relating to income tax for 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 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
^^