97-0512
Withholding
____________________________________
COMPANY A, :
:
Petitioner, : ORDER
:
v. : Appeal No. 97-0512
:
AUDITING
DIVISION OF THE : Account No. #####
UTAH STATE TAX COMMISSION, :
:
Respondent. : Tax Type: Withholding
_____________________________________
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. An Informal
Hearing was held in this matter or June 16, 1997. The matter had originally been scheduled for a Status Conference
but upon the approval of the parties, the Status Conference was converted to
the Informal Hearing. Jane Phan,
Administrative Law Judge, heard the matter for and on behalf of the
Commission. Present and representing
Petitioner by telephone conference call was PETITIONER REP. Present and representing Respondent were
Frank Hales and Dan Engh.
Petitioner
is appealing only the penalty portion of the audit assessment for the audit
period of January 1, 1995 through December 31, 1995. The penalty assessed had been a 10% negligence penalty for
failure to reconcile withholding tax.
Petitioner's
representative explained that Petitioner had
turned over all the records to a payroll service in May or June of 1995,
with the understanding that the service would withhold and remit the proper
amounts and file the required reports.
Petitioner's representative explained that they made this arrangement
because they felt the payroll service would do a better job than Petitioner
could. However, when preparing the
reconciliation, the payroll service did not include amounts withheld during the
partial quarter prior to when the payroll service was retained. Petitioner's representative explained
that since they had contracted with
someone who supposedly was smarter than Petitioner in this area, the negligence
penalty should be waived.
Respondent
explained that the responsibility to reconcile
the withholding account, and make sure the proper amount of withholding
was remitted to the Tax Commission, remained with Petitioner. For this reason Respondent asked that the
penalty be upheld.
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
Based
upon the information presented at the hearing, and the records of the Tax
Commission, the Commission finds on the grounds of first time error and
reliance on a tax preparer that sufficient cause has been shown to waive the
10% negligence penalty relating to the withholding tax reconciliation for the
period from January 1, 1995 to December 31, 1995. It is so ordered.
DATED
this 25 day of JUNE, 1997.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
_____________________________
Jane Phan
Administrative Law Judge
The
agency has reviewed this case and the undersigned concur in this decision.
DATED this 25 day of JUNE,
1997.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Richard
B. McKeown
Chairman Commissioner
Joe B.
Pacheco Alice
Shearer
Commissioner Commissioner
^^