98-1164
____________________________________
PETITIONER, :
: ORDER
Petitioners, :
: Appeal No.
98-1164
v. :
: Account
No. #####
AUDITING
DIVISION OF THE :
UTAH STATE TAX COMMISSION, : Tax
Type: Income
:
Respondent. : Presiding: Phan
_____________________________________
Presiding:
Jane Phan, Administrative Law Judge
Appearances:
For
Petitioner:
For
Respondent: Beckie
McKenzie
Brian Nelson
STATEMENT OF THE CASE
This
matter came before the Commission for an Initial Hearing on May 4, 1999,
pursuant to the provisions of Utah Code Ann. §59-1-502.5.
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).
DISCUSSION
Petitioners
are appealing approximately $$$$$ in interest assessed for late payment of
income tax for the years 1994 and 1995.
Petitioners and Respondent are in agreement as to the actual tax
liability for 1994 and 1995. No
penalties were assessed for either of these periods.
Petitioners'
representative acknowledged that he had made an error but he felt that there
was also an error on the part of a Tax Commission employee that contributed to
the length of time it took to clear the matter up. Petitioners' representative had prior dealings with this same
employee and felt that he was difficult to work with and unsatisfactory. He asked that half of the interest be
waived.
The
returns originally filed by Petitioners for the tax years 1994 and 1995 had
been incorrect. For 1995 Petitioners
filed a Utah individual income tax return claiming a different amount for the
federal taxable income, than they had claimed on their federal return for that
year. The error was eventually picked
up by the Tax Commission and EMPLOYEE, an employee of the Auditing Division
notified Petitioners of the discrepancy.
In
looking over copies of letters EMPLOYEE sent to Petitioners, the chronology of
events as reported by PETITIONER at the hearing, the number of amended federal
returns, and the discrepancies between the federal taxable income as reported
on the Utah returns, Idaho returns and federal returns the Commission finds
that the action of the Division and its employees were reasonable and did not
amount to employee error. Petitioners
filed incorrect individual income tax returns for the 1994 and 1995 tax year. These returns indicated less Utah tax
liability than was actually owed by Petitioners. Interest has been assessed on the difference from the time the
taxes were due, until payment was made by Petitioner.
DECISION AND ORDER
Interest
is assessed to compensate for the time value of money. The State of Utah was denied use of the
additional tax funds from the time the returns were originally due in April of
1995 and 1996, until the additional funds were paid by Petitioners. Interest is generally waived only when an
error on the part of a Tax Commission employee caused the late payment or late
filing. In this case the errors on the
returns originated from Petitioners.
Based
upon the foregoing, the Commission finds that sufficient cause has not been
shown to justify a waiver of the interest associated with Petitioner's 1994 and
1995 Utah individual income tax. 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 appeal rights in this
matter.
DATED
this 26TH day of May, 1999.
____________________________________
Jane Phan
Administrative Law
Judge
BY ORDER OF THE UTAH STATE TAX COMMISSION:
The Commission has reviewed this case and the
undersigned concur in this decision.
DATED
this 26th day of May, 1999.
Richard B.
McKeown Pam
Hendrickson
Chairman Commissioner
R. Bruce
Johnson
Commissioner
^^