Form St 07-25 - Sales Tax - 2007 Page 7
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11ROT/UT for November 2000, totaling $446,508.28, is in dispute. The basis for this
assessment is mainly disallowed trade-in deductions. Hence, the sole issue to be decided
is whether Taxpayer wilfully failed to pay the tax due on transactions for which the trade-
in deduction was disallowed.
The Department argues Taxpayer was wilfull in his filing of the returns and
payment of the taxes because he had a duty to know what his responsibilities were by
making reasonable inquires of the Department or his CPA, and the failure to do so was
tantamount to a “reckless disregard” (Tr. p. 55) of his obligations.
Taxpayer counters
that he was not wilfull because: 1) the tax due was not collected; 2) only certain trade-in
deductions were disallowed; 3) he did not actually prepare or recall reviewing the 556’s
that had disallowed transactions; 4) the Corporation ceased to exist before issuance of the
assessment; 5) he was unaware that certain leased trade-ins did not qualify for
deductions; and 6) he acted as “a normal person would” (Tr. p.57) under the
circumstances because it would have been impractical for a CPA to have reviewed the
voluminous number of 556’s. On this last point, Taxpayer further argues that he cannot
be deemed wilfull because his CPA did not know how to account for leased trade-ins on
the 556’s; however, Taxpayer could not have known this since he never asked the CPA’s
advice on the transactions at issue.
The Department is correct in its assertion that Taxpayer was wilfull and all of
Taxpayer’s arguments seem to ignore the rule stated in Wright, supra, with regard to
wilfullness. This rule requires an evaluation as to whether the responsible officer should
have: 1) known that there was a risk that the tax was not being collected/paid and 2) been
able to easily exact whether such tax was to be collected/paid.
Taxpayer has a B.S. degree in management. He was not only the founder and
owner of the business but its manager. The usual responsibilities of management include
both the training and review of one’s employees to ensure proper and accurate work
performance. It is essential that a manager know that his employees are performing their
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