by Scott Smith, Executive Director of the Utah State Tax Commission

In many ways the goals of the Taxpayers Association and the Auditing Division of the Utah State Tax Commission go hand in hand.  The Taxpayers Association pushes to ensure that taxes are low and fair.  The Auditing Division strives to make sure all taxpayers pay their fair share of taxes based on the laws as enacted by the legislature.  Keeping in mind that the Auditing Division does not create tax law, but only administers the laws as enacted, if everyone pays their fair share then taxes can remain as low as possible. 

Most taxpayers will agree that funding of essential state services is in the best interest of the State, and each taxpayer.  But no one wants to pay more than their fair share, and that is one of the reasons the Auditing Division exists.  The Auditing Division through its audit function ensures that the tax laws are equitably administered and that taxpayers are educated on how to report properly going into the future.  Unfortunately, the error rates found in our audits indicate that there are disagreements on how the tax law should be applied or a lack of understanding of the laws, and so the audit function is necessary to achieve fairness in the application of the law. 

The Auditing Division understands that an audit can be disrupting to a business and use valuable resources in the process.  For that reason, the Auditing Division has worked diligently over the past several years to refine our audit selection process.  Far fewer taxpayers are selected for audit where there are no changes to the returns as filed, and the processes we have established have allowed us to look at data before a taxpayer is even contacted and eliminate many audits where there would be no adjustments.  Those taxpayers who are contacted are generally those where the taxpayer and the Auditing Division disagree on the interpretation of the law or the application of a credit and where and assessment is likely.  The Division works hard with the taxpayer to resolve any issues as quickly as possible.  Where there are disagreements on how the law should be interpreted, a legislative fix may be necessary to clarify the law. 

Confidentiality requirements prohibit the Auditing Division and the Tax Commission from discussing specific taxpayer information or audits with the Taxpayers Association, so issues and concerns about application of the law would need to come from the Taxpayer working with the Taxpayers Association.  As issues have come from the Taxpayers Association to the Tax Commission, the two organizations have worked together to recommend changes to the Legislature to come up with a clarification of the law so errors do not continue.  Keep in mind that in most cases those fixes are policy issues that must be addressed by the Legislature.  Occasionally misinterpretations can be handled through the rulemaking process at the Tax Commission.  In those cases, the Tax Commission welcomes public input, and has worked with the Taxpayers Association in the past. 

As the Tax Commission works together with the Taxpayers Association to make sure the law is well understood and administrable, taxes will be available to fund essential state services and can remain as low as possible to fund those services.  As all taxpayers pay their fair share, taxes can remain low and fair as the Taxpayer Association goals indicate.  Both organizations have worked well together in making sure the tax law is fair and administrable and able to meet the policy goals of the legislature.  In that way, the goals of both organizations are met.  The Tax Commission and the Auditing Division appreciate the great working relationship we have with the Taxpayers Association and look forward to continued cooperation.