97-0112

INCOME

Signed 10/10/97

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

PETITIONER, )

:

Petitioner, ) DECISION

:

v. )

:

AUDITING DIVISION OF THE ) Appeal No. 97-0112

UTAH STATE TAX COMMISSION, :

STATE OF UTAH, ) Account No. #####

:

Respondent. ) Tax Type: Income Tax

_____________________________________

IMPORTANT NOTICE: On October 7, 1997 the Utah Supreme Court, in Evans and Sutherland Computer Corp v. Utah State Tax Commission, invalidated the informal adjudicative process by disallowing trial de novo to the District Court. Therefore, your appeal is now being processed as a formal adjudicative proceeding. Under this process, you are entitled to an additional right. Utah Law allows for an Initial Hearing before the matter is heard on the record in a formal proceeding. Therefore, the hearing held in this matter will constitute the Initial Hearing. Please note in the body of the decision your right to, and the method of request for, a formal hearing.

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 adjudicative proceedings. The matter was set for a Status Conference on September 18, 1997, but pursuant to the stipulation of both parties, the matter was therein converted to an Informal Hearing. Based upon the decision above-referenced, the Commission herewith converted this matter to an Initial Hearing. G. Blaine Davis, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present on the telephone and representing Petitioner was PETITIONERS REP., C.P.A., together with PETITIONERS REP.. Present and representing Respondent were Mr. Dan Engh and Mr. Brent Taylor, of the Auditing Division.

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

FINDINGS

Petitioner was originally from California, and went to Brigham Young University as a student. During 1988, she was employed part-time, and she timely filed a resident individual income tax return and received a tax refund for the year 1988. Thereafter, Petitioner returned to California and went on a mission, and later got married.

In 1992, the Utah State Tax Commission received information from the Internal Revenue Service reflecting the total income of Petitioner for 1988, including both California and Utah income. Because Petitioner had filed a resident income tax return in Utah, Respondent made an adjustment to include all of the income of Petitioner. The standard notices were sent, but the forwarding notice which Petitioner had left when she returned to California expired long before the notices were sent by Respondent, so she never received notices of any proposed changes.

In 1997, Petitioner received a phone call from a collection agency representing the State Tax Commission. She immediately contacted the Tax Commission, and during the process has paid some amounts to the Commission. After determining what had occurred, adjustments have been made to the assessment made against her to remove her California income and tax her Utah income as only a part-year resident. However, penalties and interest have been imposed upon her. Further, Respondent represented that Petitioner was entitled to an additional adjustment for the federal tax deduction on her state return, based upon information received regarding the federal income tax actually paid.

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 does exist to waive the penalties associated with the 1988 income tax return of Petitioner, but sufficient cause does not exist to waive the interest associated with that return. It is so ordered.

This Decision does not limit a party's right to a Formal Hearing. Any party to this case may file 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 10 day of OCTOBER, 1997.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Richard B. McKeown

Chairman Commissioner

Joe B. Pacheco Pam Hendrickson

Commissioner Commissioner

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