Utah Admin. Code R861-1A-42 - Waiver of Penalty and Interest for Reasonable Cause Pursuant to Utah Code Ann. Section 59-1-401
(1) Procedure.
(a) A taxpayer may request a waiver of
penalties or interest for reasonable cause under Section
59-1-401 if the following
conditions are met:
(i) the taxpayer provides
a signed statement, with appropriate supporting documentation, requesting a
waiver;
(ii) the total tax owed for
the period has been paid;
(iii) the
tax liability is based on a return the taxpayer filed with the commission, and
not on an estimate provided by the taxpayer or the commission;
(iv) the taxpayer has not previously received
a waiver review for the same period; and
(v) the taxpayer demonstrates that there is
reasonable cause for waiver of the penalty or interest.
(b) Upon receipt of a waiver request, the
commission shall:
(i) review the
request;
(ii) notify the taxpayer
if additional documentation is needed to consider the waiver request;
and
(iii) review the account
history for prior waiver requests, taxpayer deficiencies, and historical
support for the reason given.
(c) Each request for waiver is judged on its
individual merits.
(d) If the
request for waiver of penalty or interest is denied, the taxpayer has a right
to appeal. Procedures for filing appeals are found in Title 63G, Chapter 4,
Administrative Procedures Act, and commission rules.
(e) If a taxpayer first requests a waiver of
penalties or interest in an appeal to the commission, the taxpayer is not
required to meet Subsections (1)(a)(i) through (iv).
(2) Reasonable Cause for Waiver of Interest.
Grounds for waiving interest are more stringent than for penalty. To be granted
a waiver of interest, the taxpayer must prove that the commission gave the
taxpayer erroneous information or took inappropriate action that contributed to
the error.
(3) Reasonable Cause for
Waiver of Penalty. The following clearly documented circumstances may
constitute reasonable cause for a waiver of penalty:
(a) Timely Mailing or Electronic Submission:
(i) The taxpayer mailed or electronically
submits the return and payment to the commission by the due date and it was not
timely delivered or electronically transmitted to the commission through no
fault of the taxpayer.
(ii) In
cases where the taxpayer cannot document a delivery or electronic transmission
error, the penalties may be waived if the taxpayer:
(A) has an excellent history of
compliance;
(B) proves that
sufficient funds were in the bank as of the date of payment, and if applicable,
the check was written in numerical order; and
(C) presents documentation showing that the
return and payment was mailed or electronically submitted timely.
(b) Wrong Filing Place:
The return or payment was filed on time, but was delivered to the wrong office
or agency.
(c) Death or Serious
Illness:
(i) The death or serious illness of a
taxpayer or a member of the taxpayer's immediate family caused the
delay.
(ii) With respect to a
business, trust, or estate, the death or illness must have been of the
individual, or the immediate family of the individual, who had sole authority
to file the return.
(iii) The death
or illness must have occurred on or immediately before the due date of the
return.
(d) Unavoidable
Absence: The person having sole responsibility to file the return was absent
from the state due to circumstances beyond their control.
(e) Disaster Relief:
(i) A delay in reporting, filing, or paying
was due either to a governmentally declared disaster or to a natural disaster,
such as fire or accident, that results in the destruction of records or
disruption of business.
(ii) For
purposes of this Subsection (3)(e), "governmentally declared disaster" means a
disaster declared by:
(A) a state;
(B) the District of Columbia;
(C) a possession or territory of the United
States; or
(D) the United States
government.
(iii) If
delinquency or delay is due to a federally declared disaster, federal relief
guidelines shall be followed.
(iv)
In the absence of federal guidelines, and for other listed disasters, the
taxpayer must demonstrate the matter was corrected within a reasonable time,
given the circumstances.
(f) Reliance on Erroneous Tax Commission
Information:
(i) Underpayments and late
filings or payments were attributable to incorrect advice obtained from the
commission, unless the taxpayer gave the commission inaccurate or insufficient
information.
(ii) Proof of
erroneous information may be based on written communication provided by the
commission or, if the taxpayer clearly documents, verbal communication. Clear
documentation of verbal communication should include the dates, times, and
names of commission employees who provided the erroneous information.
(iii) A failure to comply will also be
excused if it is demonstrated that the taxpayer requested the necessary tax
forms and instructions timely, and the commission failed to timely provide the
forms and instructions requested.
(g) Tax Commission Office Visit: The taxpayer
proves that before expiration of the time for filing the return or making the
payment, the taxpayer visited a commission office for information or help in
preparing the return and a commission employee was not available for
consultation.
(h) Unobtainable
Records: For reasons beyond the taxpayer's control, the taxpayer was unable to
obtain records to determine the amount of tax due.
(i) Reliance on Competent Tax Advisor: The
taxpayer:
(i) furnishes all necessary and
relevant information to a competent tax advisor, and the tax advisor:
(A) incorrectly advises the
taxpayer;
(B) fails to timely file
a return on behalf of the taxpayer; or
(C) fails to make a payment on behalf of the
taxpayer; and
(ii)
demonstrates that the taxpayer exercised ordinary business care, prudence, and
diligence in determining whether to seek further advice.
(j) First Time Filer:
(i) It is the first return required to be
filed and the taxes were filed and paid within a reasonable time after the due
date.
(ii) The commission may also
consider waiving penalties on the first return after a filing period change if
the return is filed and tax is paid within a reasonable time after the due
date.
(k) Bank Error:
(i) The taxpayer's bank has made an error in
returning a check, making a deposit or transferring money.
(ii) A letter from the bank verifying its
error is required.
(l)
Compliance History:
(i) The commission will
consider the taxpayer's recent history for payment, filing, and delinquencies
in determining whether a penalty may be waived.
(ii) The commission will also consider
whether other tax returns or reports are overdue on the date the waiver is
requested.
(m) Employee
Embezzlement: The taxpayer shows that failure to pay was due to employee
embezzlement of the tax funds and the taxpayer was unable to obtain replacement
funds from any other source.
(n)
Recent Tax Law Change: The taxpayer's failure to file and pay was due to a
recent change in tax law that the taxpayer could not reasonably be expected to
be aware of.
(4) Other
Considerations for Determining Reasonable Cause.
(a) The commission allows for equitable
considerations in determining whether reasonable cause exists to waive a
penalty. Equitable considerations include:
(i)
whether the commission had to take legal means to collect the taxes;
(ii) if the error is caught and corrected by
the taxpayer;
(iii) the length of
time between the event cited and the filing date;
(iv) typographical or other written errors;
and
(v) other factors the
commission deems appropriate.
(b) Other clearly supported extraordinary and
unanticipated reasons for late filing or payment, which demonstrate reasonable
cause and the inability to comply, may justify a waiver of the
penalty.
(c) In most cases,
ignorance of the law, carelessness, or forgetfulness does not constitute
reasonable cause for waiver. Nonetheless, other supporting circumstances may
indicate that reasonable cause for waiver exists.
(d) Intentional disregard, evasion, or fraud
does not constitute reasonable cause for waiver under any
circumstance.
Notes
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