96-007
Response
January 11, 1996
Request
XXXXX
Customer
Service Division
Utah
State Tax Commission
RE:
Advisory Opinion - Income Tax Prepayment Requirements
Dear
XXXXX,
We
received a request from the Technical Research Unit to clarify the Commission's
position regarding penalties associated with individual income tax filing
extensions. Specifically, the issue is
this: Is a taxpayer required to make prepayment of taxes to secure an extension
and avoid the extension penalty if the taxpayer had no Utah tax liability for
the previous year?
We
find as follows:
Sections
59-10-515 and 59-1-401(4)(a) discuss extensions and extension penalties. The Commission interprets that section to
mean that the taxpayer requesting an extension must make the required prepayment. To avoid the extension period penalty of 2%
per month, the prepayment must be 90% of the total tax reported on the income
tax return when it is filed
or
100% of the total amount that the taxpayer paid the previous year.
If
a taxpayer had no Utah tax liability for the previous year, the taxpayer need
not make a prepayment in order to satisfy these requirements (100% of $ 0.00 is
$ 0.00). Therefore, a taxpayer who had
no Utah tax liability for the previous year is entitled to an extension without
prepayment and without the extension penalty.
For
the Commission,
Alice
Shearer
Commissioner