97-1270

CORPORATE FRANCHISE

Signed 11/13/97

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

COMPANY C, )

:

Petitioner, ) DECISION

:

v. )

:

COLLECTION DIVISION OF THE ) Appeal No. 97-1270

UTAH STATE TAX COMMISSION, :

) Account No. #####

:

Respondent. ) Tax Type: Corporate Franchise

Tax

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission pursuant to the provisions of Utah Code Ann. '59-1-502.5 An Initial Hearing was held on November 4, 1997. Jane Phan, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner was PETITIONERS REP., President of COMPANY C. Present and representing Respondent was Vickie Christoffersen.

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

FINDINGS

Petitioner is appealing a penalty in the amount $$$$$ and interest of approximately $$$$$ assessed for the late filing and payment of its corporate franchise tax for the 1996 tax year. A portion of the penalty, in the amount of $$$$$, was a prepayment penalty. The remainder of the penalty was a late filing penalty. Respondent pointed out that Petitioner had over payed the penalty and interest by $$$$$ and was entitled to a refund of this amount.

Petitioner's representative explained that during the period in question COMPANY C, was essentially a one person operation and she was that person. She was a general contractor and built homes using sub-contractors. She explained that she was upset and depressed about the death of her son which occurred in June of 1996. She stated that she had incurred substantial expenses for his medical care and funeral. Further, she had not planned on the corporation earning any income in 1996. The taxes were paid only two weeks late, on April 29, 1997. Petitioner acknowledged that financial difficulty contributed to the late payment.

Respondent's representative recommended waiving the $$$$$ prepayment penalty as first time error because it was the first time the corporation had earned enough income to be required to prepay. However, she did not recommend waiver of the late filing penalty because the death occurred nearly one year prior to the date the taxes were required to be filed, Petitioner had filed and paid late for the prior year and Petitioner's reason for paying late in the subject year was financial hardship.

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

Penalties are imposed by the Utah Legislature to encourage compliance with filing and payment requirements. The Tax Commission has established certain uniform criteria for when these penalties can be waived. Although, the circumstances surrounding the late payment are very unfortunate they do not meet the reasonable cause criteria. Financial hardship is never grounds for waiver of penalties and this was not a first time error. The death of Petitioner's child occurred substantially prior to the due date of the return at issue.

Based on the forgoing the Tax Commission finds sufficient cause does not exist to waive the late payment penalty of $$$$$ or the interest associated with Petitioner's corporate franchise tax for 1996. However sufficient cause was shown for waiver of the $$$$$ prepayment penalty. In addition Respondent is to refund to Petitioner the $$$$$ overpayment. 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, UT 84134

Failure to request a Formal Hearing will preclude any further appeal rights in this matter.

DATED this 13 day of NOVEMBER, 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 13 day of NOVEMBER, 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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