97-1375
Individual Income
____________________________________
PETITIONER, :
:
Petitioner, : ORDER
:
v. : Appeal No. 97-1375
:
AUDITING
DIVISION OF THE :
UTAH STATE TAX COMMISSION, :
STATE OF UTAH, :
:
Respondent. : Tax Type: Individual Income
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a status conference
pursuant to the provisions of Utah Code Ann. §59-1-502.5 on December 16,
1997. Val Oveson, Commissioner, heard the matter for and on behalf of the
Commission. Present was the Petitioner
NAME. Present and representing
Respondent were Frank Hale, Assistant Director of the Audit Division and Brent
Taylor, Audit Manager.
After
advising the parties of the nature and purpose of a status conference, both
parties agreed to convert the status conference to an initial hearing. Both
parties were prepared to present their case to the Commission.
The
facts of the case are as follows:
1.
Petitioner filed a state tax return on April 15, 1995 for the tax year 1996.
Petitioner claimed a deduction on the return for 100% of the federal income tax
rather than only ½ as proscribed in Utah Code Annotated §59-10-114(2)(b) which
states,"There shall be subtracted from federal taxable income one-half of
the net amount of any income tax paid or payable to the United States after all
allowable credits..."
2.
According to the practice of Respondent when the Internal Revenue Service sends
them the tapes containing the information on individuals for the 1996 year,
they match the tape with the Utah returns.
When the match was done, Respondent discovered Petitioner's error and
sent a notice requesting payment of the additional tax and interest. This assessment notice was sent to
Petitioner on May 28, 1997. On August
21, 1997 Respondent sent an audit change notice demanding payment.
3.
On September 10, 1997 Petitioner paid Respondent the tax of $$$$$ plus the
$$$$$ of interest assessed. At the same
time Petitioner requested a waiver of the interest which was subsequently
denied by Respondent.
4.
On October 14, 1997 Petitioner appealed the denial of the waiver of interest to
the Commission.
Petitioner’s
justification for the waiver is as follows:
1.
Tax Commission failed to notify Petitioner of the error on a timely basis. The interest is unjustified since the
Respondent caused the delay in notification.
2.
Petitioner's employment was terminated on March 31, 1996 and therefore it works
a hardship to pay the interest.
Petitioner is living off personal savings.
ANALYSIS
After
Petitioner and Respondent had presented their cases Commissioner Oveson
indicated to Petitioner that it was the policy of the Commission not to waive
interest unless the error that caused the interest to accrue was the fault of
the Commission, referring to Commission employee’s. It is also the policy of the Commission to pay interest on the
same basis that it is charged with the exception of the 90 day processing
period where as provided by statute.
The standard for payment of interest is, "who had the use of the
funds." In the instant case
Petitioner had the use of the funds and could have been earning interest on the
money. The State should have had the money, had no error been made. The error in the instant case was that of
the Petitioner, deducting 100% of the federal tax instead of ½ of the federal
tax. Had the Commission owed Petitioner
a refund, interest would have been paid at the same rate after the 90 day
processing period.
Commissioner
Oveson issued a bench ruling in favor of Respondent. It was explained to the parties that the three other
Commissioners would have to concur with Commissioner Oveson in the ruling at a
later date as the case was presented to them by Commissioner Oveson. At that point Petitioner expressed a strong
desire for Commissioner Oveson to present both sides to the other Commissioners
and hoped that they would show compassion toward him.
The
discussion then moved to a lively but friendly discussion of property tax and
the general role of government and taxes in our society. All parties enjoyed the discussion and left
amicably.
At
a later date, Commissioner Oveson presented the issues of the case to the other
three Commissioners and did his best to address the concerns of
Petitioner. After a complete discussion
of the facts of the case, the other three Commissioner concurred with
Commissioner Oveson’s bench ruling in favor of Respondent.
DECISION AND ORDER
Based
upon the foregoing, the Tax Commission finds in favor of Respondent and denies
the waiver of the $$$$$ in interest. It is so ordered.
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 24 day of March, 1997.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Richard
B. McKeown
Chairman Commissioner
Joe B.
Pacheco Pam
Hendrickson
Commissioner Commissioner
^^