BEFORE THE UTAH STATE TAX COMMISSION
PETITIONER, ) ORDER
Petitioner, ) Appeal No. 01-1164
v. ) Account No. #####
AUDITING DIVISION OF ) Tax Type: Income Tax
THE UTAH STATE TAX )
COMMISSION, ) Tax Year: 1997
Respondent. ) Judge: Davis
G. Blaine Davis, Administrative Law Judge
For Petitioner: PETITIONER
For Respondent: Mr. Brent Taylor, 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 January 31, 2002.
Petitioner was living in Utah and working for COMPANY A. He was then hired by a subdivision of COMPANY A to work in COUNTRY, and lived there for more than two years. His family was with him in COUNTRY.
Petitioner's employment in COUNTRY ended in late 1996, and he returned to Utah. During 1997, while Petitioner was living in Utah, he was paid a bonus which was for his services while he was in COUNTRY. The bonus was approximately $$$$$, and approximately $$$$$ of that was ultimately included on his federal income tax return.
Petitioner allegedly called Customer Service individuals and represented that he was not a resident or domiciled in Utah, and they told him the bonus money should then be deducted from his federal income to arrive at his state income. Petitioner made that deduction, and also included with his return a statement informing the Tax Commission what he had done and how the calculation was made.
Respondent audited the return and included within the State of Utah, all of the income from the federal income tax return of Petitioner, including the bonus monies paid for services he had performed in COUNTRY.
Petitioner was domiciled in Utah before he left to be employed in COUNTRY, and he returned and has been domiciled in Utah continuously since 1997.
In 1995, while Petitioner was in Utah on vacation, he and his wife purchased a home, but rented it out until they ultimately returned to Utah. While Petitioner was in COUNTRY, his paychecks were deposited directly to his bank account at COMPANY B in Utah.
Utah Code Ann. §59-10-111 provides:
"Federal taxable income" means taxable income as currently defined in Section 63, Internal Revenue Code of 1986.
Utah Code Ann. §59-10-112, provides:
"State taxable income" in the case of a resident individual means his federal taxable income (as defined by Section 59-10-111) with the modifications, subtractions, and adjustments provided in Section 59-10-114. The state taxable income of a resident individual who is the beneficiary of an estate or trust shall be modified by the adjustments provided in Section 59-10-209.
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 by verbal declarations.
Utah Code Ann. §59-10-116, defines the income requirements of non-residents, and 2(c) exempts salaries, wages, commissions and compensation for personal services rendered outside this state.
Petitioner relied upon the advice which was given to him which was consistent with Utah Code Ann. §59-10-116(2)(c ) which would have exempted the income received by Petitioner if he had truly been a non-resident, and if the income had been received during the year when he was not a resident.
However, Petitioner was a domicile of this state, even though he was out of the state for employment purposes. He never abandoned Utah as his domicile, and he never established a domicile in another state. Therefore, as a domicile of the state of Utah, his income is governed by Utah Code Ann. §59-10-112, and is the income from his federal income tax return. Accordingly, for 1997, that income included the bonus which he received and is required to be included on his 1997 Utah Individual Income Tax Return.
DECISION AND ORDER
Based upon the foregoing, the Commission determines that the audit assessment made by Respondent is correct, and the bonus received by Petitioner was includable in his income in Utah for that year. The Petition for Redetermination 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 25th day of February , 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 25th day of February , 2002.
Pam Hendrickson R. Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc B. Johnson