Income Tax

Signed 8/14/01









v. ) Appeal No. 00-1182



THE UTAH STATE TAX ) Tax Type: Income


) Judge: Phan

Respondent. )




Marc B. Johnson, Commissioner

Jane Phan, Administrative Law Judge



For Petitioner: PETITIONER REP, Esq.




For Respondent: Susan Barnum, Assistant Attorney General

Dan Engh, Manager, Income Tax Auditing

Angie Hillas, Senior Auditor




This matter came before the Utah State Tax Commission for a Formal Hearing on June 26, 2001.

Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:


1. Petitioners are appealing the audit assessment of Utah individual income tax and interest for the years 1997 and 1998. The Statutory Notices of Audit Assessment were issued on August 25, 2000 and August 30, 2000, respectively. For 1997 the additional income tax assessed was $$$$$ with interest accruing thereon. For 1998 the additional income tax assessed was $$$$$ with interest accruing thereon. No penalties were assessed.

2. For both of the tax years at issue, Petitioners filed a joint federal return. The address listed on the returns was ADDRESS, CITY, Utah. For both years, PETITIONER filed a Utah Individual Income Tax Return as "married filing separate," on which she claimed only the income she had earned during the year. A schedule was filed with each Utah return explaining that PETITIONER 2 was a nonresident and had no income attributable to Utah sources and that PETITIONER was filing separately pursuant to instructions in the TC-40. For both 1997 and 1998 PETITIONER 2 filed a STATE Nonresident and Part-Year Resident Return on which he claimed all the income he had received during the year. PETITIONER had retained a Certified Public Accountant in Utah to prepare the tax returns and it was the CPA who used the Utah address on the federal return and the Non-Resident STATE tax form.

3. While there is no dispute that PETITIONER was a Utah resident during 1997 and 1998, it is PETITIONER 2's position that he was not a resident of, nor domiciled in, Utah during these years. Both PETITIONERS had been long time residents of Utah prior to 1996 and had lived with their children at ADDRESS, CITY. In 1996, PETITIONER 2, who worked as an engineer for a candy company in Utah, received a more lucrative job offer from a candy company in STATE. Originally Petitioners thought the whole family would move to STATE, but eventually Petitioners concluded that PETITIONER 2 would move to STATE and PETITIONER would remain in the Utah residence with the two minor children who were still in high school during the audit years.

4. PETITIONER 2 intended to establish a domicile for himself in STATE and did, in fact, establish a domicile there. As part of his compensation package the company leased an apartment for him and provided him with a automobile. The apartment was comfortable, he points out nearly as large as Petitioners' CITY residence. Immediately upon moving he found a doctor in STATE because he had some ongoing health problems. Within a few months he had obtained a STATE drivers license and registered to vote in STATE. The automobile was registered in STATE by his employer. He had doctors in STATE. He opened bank accounts. He purchased furniture and household items and went about the business of establishing a new domicile in STATE. Petitioner testified that he intended to stay in STATE at least until he retired and even then he would not necessarily return to Utah. He also indicated that the low altitude and clean air of the small town in which he lived in STATE was good for his medical condition.

5. PETITIONER 2 provided financial support to his family in Utah. PETITIONER worked less than part time during the audit years and did not earn sufficient funds to support herself and children and maintain the Utah residence. PETITIONER 2 returned to Utah to visit his family two or three times a year during the audit period and spent approximately 25 days per year in Utah. PETITIONER and the children were provided health insurance through PETITIONER 2's employer. PETITIONER 2 continued to be a joint owner of the CITY residence, as he had been for many years prior to the audit period. Vehicles were registered in PETITIONER 2's name or jointly in his name and other family members throughout the audit period but the testimony was that these vehicles were mainly for use of PETITIONER and their two children. PETITIONER 2's name continued to appear in the Utah phone book.

6. PETITIONER 2 had sufficiently severed his ties to Utah to abandon his Utah domicile.


A tax is imposed on the state taxable income of every resident individual for each taxable year. (Utah Code Ann. '59-10-104).

Resident individual is defined in Utah Code Ann. '59-10-103(1)(j) as follows:


A "resident individual" is either:

(i) an individual who is domiciled in this state for any period of time during the taxable year; or

(ii) an individual who is not domiciled in this state but maintains a permanent place of abode in this state and spends in the aggregate 183 or more days of the taxable year in this state.


For purposes of determining whether an individual is domiciled in this state the Commission has defined "domicile" in Utah Administrative Rule R865-9I-2(D) as follows:

the place where an individual has a true, fixed, permanent home and principal establishment, and to which place he has (whenever he is absent) the intention of returning. It is the place in which a person has voluntarily fixed the habitation of himself and family, not for a mere special or temporary purpose, but with the present intention of making a permanent home. After domicile has been established, two things are necessary to create a new domicile: first, an abandonment of the old domicile; and second, the intention and establishment of a new domicile. The mere intention to abandon a domicile once established is not of itself sufficient to create a new domicile; for before a person can be said to have changed his or her domicile, a new domicile must be shown.



The issue in this appeal is whether PETITIONER 2 was, in fact, a "resident individual" in the State of Utah for the purposes of Utah Code Ann. '59-10-103(1)(j) for the years 1997 and 1998. This is an issue of fact. PETITIONER 2 spent significantly less than 183 days per year in Utah during the audit period. A resident individual, in the alternative, is one who is "domiciled" in the State of Utah. PETITIONER 2 was clearly a resident and domiciled in Utah prior to 1996. In order to show that he was no longer domiciled in Utah during the audit period he must show: 1) that he abandoned his Utah domicile; and 2) that he intended to, and did in fact, establish a new domicile in STATE.

At the center of the issue is the question of whether a person can have a domicile other than where that person's spouse and family reside. Clearly in the facts before us, PETITIONER 2 has met the intent and the establishment in fact prong of the domicile test. He is domiciled in STATE. Respondent, argues however, that because PETITIONER 2 did not abandon his family which remained in Utah he has not abandoned Utah. Petitioner did continue to visit and support his family during the audit period and he remained a joint owner on the Utah residence and automobiles. However, the Commission disagrees with Respondent's position. The Commission has concluded in prior appeals that one spouse can have a domicile in a different state from the other spouse. The Commission notes that Utah Admin. Rule R865-9I-2(D), which defines domicile, indicates that domicile, "is the place in which a person has voluntarily fixed the habitation of himself and family" However, the facts in the appeal are not typical of the norm. Typically one spouse would intend to have the same habitation as the other spouse and any children living at home and that is what the rule is referencing. In the appeal at hand Petitioner had voluntarily fixed his habitation in one state and his family had voluntarily fixed their habitation in another state. The Commission concludes that PETITIONER 2 had a separate tax domicile from the other members of his family. Clearly, the statutes and the rules both contemplate that there could be a resident and a non-resident spouse for tax purposes. See Utah Code Ann. 59-10-119 and Utah Admin. Rule R865-9I-6.


1. For the period at issue, since the Commission has found that PETITIONER 2 was not domiciled in Utah, he was not a resident of Utah for the purposes of Utah Code Ann. '59-10-103(1)(j).

2. During the audit period PETITIONER 2 is not liable for Utah individual income tax pursuant to Utah Code Ann. '59-10-104, and the audit should be abated.


Based upon the foregoing, the Tax Commission abates the audit assessment against Petitioners of Utah individual income tax and the interest accrued thereon for the audit periods of 1997 and 1998. It is so ordered.

DATED this 14th day of August, 2001.



Jane Phan

Administrative Law Judge






The Commission has reviewed this case and the undersigned concur in this decision.

DATED this 14th day of August, 2001.



Pam Hendrickson R. Bruce Johnson

Commission Chair Commissioner






Palmer DePaulis Marc B. Johnson

Commissioner Commissioner