96-2209

Income Tax

Signed 3/28/97

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

PETITIONER, :

Petitioners, : ORDER

v. : Appeal Nos. 96-2209; 96-2210;

: 96-2363

COLLECTION DIVISION OF THE : Account Nos. #####

UTAH STATE TAX COMMISSION, : and #####

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 February 26, 1997. Gail S. Reich, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner was PETITIONERS REP., Esq. Present and representing Respondent were RESPONDENT REP. andRESPONDENT REP..

The cases have been consolidated based on identical issues.

Appeal 96-2210 involves Blaine Bitner for 1992 and 1994 income tax. A late filing penalty of $$$$$ and a late payment penalty of $$$$$ was imposed for the 1992 income tax which was due April 15, 1993 and was filed and paid July 9, 1996. A late filing penalty of $$$$$ and a late payment penalty of $$$$$ was imposed for the 1994 income tax year, being due April 15, 1995 and being filed and paid on July 9, 1996.

Appeal Nos. 96-2209 and 96-2363 involve PETITIONER. A late filing penalty of $$$$$ and a late payment penalty of $$$$$ was imposed for 1992 income tax year, and a late filing penalty of $$$$$ and a late payment penalty of $$$$$ was imposed for the 1994 income tax year, and late penalties were imposed for 1995 in the amount of $$$$$. The Petitioners are requesting a waiver of penalty only. The interest has been paid. The Petitioners indicate that the S Corporation for which they were officers and/or directors was in bankruptcy during the years in issue. Income was generated for the years in issue, but Petitioners indicate that they did not have the money to hire accountants and prepare the K- 1's until 1995. As soon as the K-1s became available to them they were able to file, the time frame resulting in the filing and payment on July 9, 1996. The Division argues that the records were not unobtainable but within the possession of the Petitioners and that the officers and directors had an obligation to maintain the records prepared in a timely fashion.

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 Commission has reviewed the entire matter and the positions of both the Petitioners and the Respondent. 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 for the periods in issue.

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 28 day of MARCH, 1997.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Richard B. McKeown

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner