96-2070

Withholding Tax

Signed 10/9/96

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

:

Petitioner, : INFORMAL DECISION

:

v. :

:

AUDITING DIVISION OF THE : Appeal No. XXXXX

UTAH STATE TAX COMMISSION, :

: Account No. XXXXX

:

Respondent. : Tax Type: Withholding 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. This matter had originally been scheduled for a Status Conference on XXXXX, but upon approval of the parties the Status Conference was converted to an Informal Hearing in this matter. Jane Phan, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner were XXXXX and XXXXX. Present and representing Respondent were XXXXX and 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 interest in the amount of $$$$$ relating to the withholding tax for the MMDDYY to MMDDYY period. Petitioner had submitted the year end reconciliation with copies of W-2's on MMDDYY. Petitioner indicated an overpayment of $$$$$ and requested a refund of this amount. A Tax Commission employee thought Petitioner was incorrect, that Petitioner was entitled to a much larger refund, and after a cursory review of the account issued Petitioner a refund check in the amount of $$$$$. Of this amount, $$$$$ was interest.

When Petitioner received the check he contacted the Tax Commission and explained that the Tax Commission was in error, the refund should have been only $$$$$. At this point Petitioner was told to hold on to the refund check while the account was audited for further reconciliation. The audit revealed that Petitioner had been correct, or nearly correct, the amount of the refund should have been $$$$$. Respondent issued a Statutory Notice requesting that Petitioner repay the refund issued to Petitioner in error along with interest of $$$$$. The remainder of the interest appealed, $$$$$, had originally been paid to Petitioner in the incorrect refund check.

Petitioner's representatives explained that because it was not their error they should not be penalized with the interest. They have repaid the overpaid refund and do not dispute the amount of the tax liability.

Respondent pointed out that a penalty had not been assessed and the interest was based on the statutory rate. They told Petitioner that they would be receiving a refund for the overpaid tax liability.

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, because of Tax Commission employee error, to reduce the interest relating to Petitioner's 19YY withholding from $$$$$ to $$$$$, the amount that was paid to Petitioner in error in the refund check. It is so ordered.

DATED this 9th day of October, 1996.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Richard B. McKeown

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.)

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