BEFORE THE UTAH STATE TAX COMMISSION
PETITIONERS, ) ORDER
Petitioners, ) Appeal No. 01-0896
v. ) Account No. #####
AUDITING DIVISION OF ) Tax Type: Income Tax
THE UTAH STATE TAX )
COMMISSION, ) Tax Year: 1999
Respondent. ) Judge: Davis
G. Blaine Davis, Administrative Law Judge
For Petitioner: PETITIONER REP
For Respondent: Mr. Dan Engh, from the Auditing Division
Ms. Angie Hillas, from the Auditing Division
STATEMENT OF THE CASE
This matter came before the Utah State Tax Commission for an Initial Hearing pursuant to the provisions of Utah Code Ann. '59-1-502.5 on December 11, 2001.
Petitioner, PETITIONER was born in Salt Lake City, Utah and attended high school at SCHOOL in CITY. In addition, PETITIONER attended SCHOOL 2 very briefly, and then also attended SCHOOL 3 in 1993, 1995, 1996, 1997, and 1998. No background was provided by either party on the Petitioner PETITIONER 2, although it is evident she was in Utah with her husband during the time at issue in this proceeding (1999).
During 1999, Petitioners, who are married to each other, resided in Utah from January 1 until April 21, and again from August 26 through December 31. From April 22, 1999 through August 26, 1999, they were residing in STATE. Information on Petitioner PETITIONER 2 was not presented; although it is evident she was in Utah with her husband during the time period at issue in this proceeding, which is 1999. During the four months they were in STATE, PETITIONER 2 experienced her second miscarriage and decided to return to Utah.
Petitioner, PETITIONER has represented that he moved to STATE to establish residency so that he could attend dental school in STATE as a resident and be eligible for resident tuition. While Petitioners lived in STATE they did work for a company based in CITY, Utah. While they were in STATE, they bought a motor vehicle and licensed the motor vehicle in STATE. PETITIONER obtained an STATE drivers license. PETITIONER 2 did not obtain an STATE drivers license, but continued to drive on her Utah drivers license. PETITIONER registered to vote in STATE, but PETITIONER 2 did not register to vote there.
Petitioners filed their 1999 Federal income tax return showing an address of ADDRESS, CITY, Utah #####. Petitioners represented they used the Utah address of the parents of PETITIONER because they had moved 10 times in the previous four (4) years. PETITIONER filed applications and was accepted at several dental schools, and ultimately elected to attend dental school at the medical college of SCHOOL 4, which is not in STATE.
Petitioners did file an STATE income tax return and pay STATE income taxes on the income earned in that state.
In January 2000, Petitioner PETITIONER purchased a Utah resident hunting and fishing license.
Respondent determined from a computer match that Petitioners had filed their federal income tax return showing a Utah address, but in Utah they only filed a part-year resident return. Therefore, Respondent reviewed the matter and determined that Petitioners were domiciled in Utah and should have paid income tax in this state on their full income, minus the credit for state taxes paid to the State of STATE. Petitioners have challenged that assessment made by the Auditing Division, and allege they were residents of Alabama for the year 1999.
Petitioners received numerous W-2 forms and 1099B forms, all of which were addressed to them at ADDRESS in CITY, Utah #####. In addition, those W-2 forms and 1099B forms were all from Utah based companies, or companies that have operations within the State of Utah.
1. A resident individual means an individual who is either domiciled in this state for any period of time during the taxable year, or 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. (Utah Code Ann. §59-10-103(1)(j).)
2. "Domicile" means 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 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 domicile, a new domicile must be shown. Utah Administrative Code R865-9I.2.d.
3. A person's intentions are determined by his or her actions, and not be verbal declarations.
The Tax Commission is granted the authority to waive, reduce, or compromise penalties and interest upon a showing of reasonable cause. Utah Code Ann. §59-1-401(10).
There is no question that Petitioners spent several months in STATE, and they registered to vote, purchased an automobile, and registered that automobile in the State of STATE. However, if the representations of the time periods in Utah are correct, Petitioners were in the State of Utah an aggregate of 183 or more days during the year 1999. In addition, to establish a domicile in STATE, they would have to show an abandonment of the old domicile and a clear intention to establish a new domicile. In this matter, it appears they never abandoned their Utah domicile, and that Utah continued to be the place to which they intended to return. It further appears that the parties were in STATE for a special purpose of trying to obtain residency to attend dental school and only pay resident tuition instead of out-of-state tuition. However, they rapidly made a decision to move to STATE 2, and there is no evidence that they have maintained any ties with the State of STATE or that they ever intend to return to STATE. Further, there is no evidence that they intended to return to STATE once PETITIONER graduates from dental school. Therefore, the conclusion is inescapable that they were in STATE only for a special purpose of attending dental school, and did not have an intention to make that their permanent home. Further, the evidence indicates they intended to maintain Utah as the place to which they would return.
The audit made by the Auditing Division did not give credit to Petitioners for the taxes which they paid to the State of STATE, and the audit assessment should be adjusted to allow for the state tax credit for such taxes.
DECISION AND ORDER
Based upon the foregoing, the Commission sustains the audit assessment made against Petitioners by Respondent, except that Respondent is ordered to make an adjustment to that assessment to give Petitioners credit for the state taxes paid to the State of STATE in accordance with the allowable provisions of Utah law. With the exception of modifying the assessment for the state taxes paid to STATE, the audit assessment of Respondent is affirmed, and the Petition for Redetermination of Petitioners is hereby denied.
This decision does not limit a party's right to a Formal Hearing. However, this Decision and Order will become the Final Decision and Order of the Commission unless any party to this case files a written request within thirty (30) days of the date of this decision to proceed to a Formal Hearing. Such a request shall be mailed to the address listed below and must include the Petitioner's name, address, and appeal number:
Utah State Tax Commission
210 North 1950 West
Salt Lake City, Utah 84134
Failure to request a Formal Hearing will preclude any further appeal rights in this matter.
DATED this 10th day of January, 2002.
G. Blaine Davis
Administrative Law Judge
BY ORDER OF THE UTAH STATE TAX COMMISSION.
The Commission has reviewed this case and the undersigned concur in this decision.
DATED this 10th day of January, 2002.
Pam Hendrickson R. Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc B. Johnson