97-1705

INCOME

Signed 2/20/98

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

COMPANY A, )

Petitioner, ) DECISION

v. )

COLLECTION DIVISION OF THE ) Appeal No. 97-1705

UTAH STATE TAX COMMISSION, :

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

Respondent. ) Tax Type: Withholding 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 February 3, 1998. 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.. Present and representing Respondent were Ms. Vickie Christoffersen and Ms. Laurie Allred, from the Collection Division.

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

FINDINGS

The sales and withholding tax returns of Petitioner were not timely filed for the fourth quarter of 1995, the first, second, third and fourth quarter of 1996, and the first and second quarter of 1997. As of the date of the hearing, the sales and withholding tax returns had not yet been filed for the third or fourth quarters of 1997. All of the other sales and withholding tax returns were filed late and payment has been made for the amount of sales and withholding tax plus the interest. Petitioner has requested a waiver of the penalty for the third and fourth quarters of 1996. The penalties had previously been waived for the fourth quarter of 1995 and the first quarter of 1996.

Petitioner asserts that in either late 1996 or early 1997, the records were taken to a bookkeeper who did not timely prepare the returns. Petitioner represented that between 30 and 50 telephone calls were placed to the bookkeeper to try to get the returns or to have the information returned so that another bookkeeper could be retained to prepare the proper returns. The first bookkeeper refused to return the information, and Petitioner represents it was necessary to reconstruct all of the information which had been provided to the bookkeeper. Petitioner therefore asserts that its records were unavailable for the preparation of its returns, which meets the reasonable cause standard established by the Commission.

Petitioner is incorrect in its assertion of reasonable cause. While there may have been a problem which occurred after the returns were already late, there is no evidence that Petitioner was making a good faith effort to timely file its returns. By the time Petitioner took the records to the first bookkeeper, there was already a substantial pattern of delinquency with at least three and maybe four quarters of both sales tax returns and withholding tax returns which had not been timely prepared and filed, and for which payment had not been made. Further, even after Petitioner got the returns prepared for the prior quarters, it did not follow through and has not timely prepared or filed the returns due from that time forward. Accordingly, Petitioner has not demonstrated any timely compliance or substantial efforts to timely comply with the tax laws of the State of Utah.

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 not exist to waive the penalty associated with the sales and withholding tax returns for the third or fourth quarter of 1996, or any portion of 1997. 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 20 day of February, 1998.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

G. BLAINE DAVIS

Administrative Law Judge

The agency has reviewed this case and the undersigned concur in this decision.

DATED this 20 day of February, 1998.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Richard B. McKeown

Chairman Commissioner

Joe B. Pacheco Pam Hendrickson

Commissioner Commissioner