Signed 11/18/98

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

COMPANY , )

: ORDER

Petitioner, :

: Appeal No. 98-1000

v. : Account No. #####

COLLECTION DIVISION OF : Tax Type: Sales Tax

THE UTAH STATE TAX )

COMMISSION, : Presiding: McKeown

Respondent. :

_____________________________________

Presiding:

Richard B. McKeown, Chairman

Appearances:

For Petitioner: PETITIONER REP, C.P.A., by telephone

For Respondent: Vickie Christofferson, Collections Division

STATEMENT OF THE CASE

This matter came before the Utah State Tax Commission for an Initial Hearing pursuant to the provisions of Utah Code Ann. §59-1-502.5, on October 13, 1998.

This matter presents itself pursuant to Petitioner's Petition for Redetermination regarding waiver of penalties, interest and the restoration of the vender discount.

On or about the 26th day of February, 1998, INDIVIDUAL, office manager for COMPANY A, called their bank regarding the sales tax due for January, 1998. Based on confusion related to calendar dates, INDIVIDUAL, apparently, told the bank operator to have the distribution made on March 31, 1998. NAME subsequently received the tax commission bill and noted that she had been marked as a late filer and that penalty, interest and the vender discount had all been added to the outstanding balance. Upon receipt, INDIVIDUAL paid the vender discount and interest but sought waiver of the penalty. The Collection Division noted that since September, 1995 there had been several delinquencies, on which waiver had been requested and granted by the Tax Commission, and which were reflected on documentation provided by the Collection Division at the Initial Hearing.

APPLICABLE LAW

The Tax Commission is granted authority to waive, reduce or compromise penalties and interest upon a showing of reasonable cause. Utah Code Ann. §59-1-401(10).

Negligence is generally recognized to be the omission to do something which a reasonably prudent and careful person would do, or the doing of something which the reasonably prudent and careful person would not do. In a tax setting, the Utah Supreme Court has found that a negligence penalty is appropriate when the taxpayer fails to make a reasonable investigation into statutes and rules to determine if tax is due. Hales Sand & Gravel, Inc. v. State Tax Comm'n, 842 P.2d 887, 895 (Utah 1992). The Court further states that an error based on the good faith interpretation of an arguable point of law does not rise to the level of negligence. Id. Likewise, the Commission finds that an error based on a justifiable or honest mistake, when compared to the reasonable actions of other taxpayers, also does not rise to the level of negligence.

DECISION AND ORDER

Based upon the facts and circumstances of this case the Tax Commission orders as follows:

1. An ambiguity exists in the record, in that there is no specific reference to the code section under which the penalty is assessed. For purposes of this decision we assume that the penalty is assessed pursuant to Utah Code Ann. §59-1-401(1). Even if this penalty is assessed pursuant to section (5) the order remains the same.

2. The Collection Division has acted entirely within its scope of responsibility in assessing the penalty and interest and in denying the vender discount. The facts and circumstances of this matter would, under all conventional interpretation, dictate that result.

3. The Tax Commission, however, has authority granted by statute that does not reside with the Collection Division. That authority permits the Commission to waive penalty and interest under circumstances it believes are warranted by the facts.

4. Utilizing that authority, the Commission finds that the specific facts of this case constitute a unique situation and based on the fact that this was a justifiable mistake, the Commission orders that the penalty is waived but denies waiver of the interest or restoration of the vendor discount. This waiver should not be construed as creating a new policy or direction, but rather as the application of Commission authority to a unique set of facts.

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 appeal rights in this matter.

DATED this 18 day of November, 1998.

____________________________________

Richard B. McKeown

Chairman

BY ORDER OF THE UTAH STATE TAX COMMISSION.

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

DATED this 18 day of November, 1998.

R. Bruce Johnson

Commissioner

Joe B. Pacheco Pam Hendrickson

Commissioner Commissioner