BEFORE THE UTAH STATE TAX COMMISSION
) Appeal No. 01-1866
v. ) Account No. #######
AUDITING DIVISION OF ) Tax Type: Income Tax
THE UTAH STATE TAX ) Tax Year: 1994-1996
Respondent. ) Judge: Davis
G. Blaine Davis, Administrative Law Judge
For Petitioner: Petitioner
For Respondent: Mr. Laron Lind, Assistant Attorney General
Ms. Angie Hillas, from the Auditing Division
Ms. Amy Gillettte, 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 17, 2002.
The issue in this proceeding is whether Petitioner was domiciled in the State of Utah during the years 1994, 1995, and 1996, and whether or not he was required to file Utah Individual Income Tax Returns for those years.
Petitioner was originally from the State of STATE, and his wife was originally from STATE. They were married in 1974 while he was living in STATE and she was living in STATE.
Petitioner was a partner in the accounting firm of COMPANY A, and in 1977 he was asked to move to Utah. Petitioner and his wife lived in Utah from 1977 to 1984, and they filed Utah Resident Income Tax Returns during those years.
In 1984, Petitioner was transferred to STATE, where he remained through June of 1988. Petitioner was then asked to return to Utah, and remained here from June 1988 through August 1993. Petitioner also filed resident income tax returns in Utah during those years.
In August of 1993, Petitioner was transferred to CITY where he remained for a period of approximately four years, returning to Utah in approximately August or September of 1997. His assignment in CITY ended in June of 1997.
In June or July of 1994, Petitioner returned to Utah while on vacation, and during that time he and his wife purchased two building lots in ADDRESS in CITY, State of Utah. Petitioner maintains the lots were purchased as an investment, and one was later sold at a profit. However, Petitioner built a home on the other lot. Construction commenced on that home in late summer of 1995, and the wife of Petitioner returned to Utah in 1996 and she moved into the new home in August of 1996.
While Petitioner was stationed in CITY, his furniture remained in storage in the State of Utah, although the essential items they needed to live were taken with them to CITY. Those items were shipped back to Utah in 1997.
While Petitioner was in CITY, he kept his Utah driverís license, but he also obtained an COUNTRY driverís license, but never drove while in CITY. When Petitioner returned to Utah, he renewed his driverís license, which had also been renewed in June of 1995 while he was in CITY.
Petitioner did not vote while he was in CITY, and he used his wifeís sisterís address in CITY, Utah for a mailing address.
Petitioner could not have a bank account in CITY, so he kept his same bank account at BANK in CITY Utah, while he was gone. His paycheck was deposited in that account, although some money was also placed in an account with his company in CITY.
While Petitioner was in CITY, he also owned a condominium in CITY, Utah which was rented to tenants.
Petitioner had his mail sent to a CITY post office box, or to the office in STATE or CITY and they would forward his mail to him.
While in CITY, Petitioner had his family with him, but they returned to Utah sooner than he did, and moved into the new residence in August 1996. At the time his family moved in, they registered a motor vehicle in Utah.
Petitioner was in CITY on a renewable work visa, and he had to get a visa in order to leave CITY and again to reenter when he returned to the United States on vacation.
Respondent has imposed a 10% late filing penalty and a 10% late payment penalty for failing to file and for paying late.
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.
Pursuant to Utah Code Ann. ß59-10-103, Petitioner was a resident individual in this state, and therefore required to file income taxes in this state, only if he was either domiciled in this state or spent an aggregate of 183 or more days of the taxable year in this state. There is no evidence which would indicate that Petitioner was in the state for 183 or more days per year in any of the years at issue. Therefore, the only basis for requiring Petitioner to file an income tax is if he is domiciled in this state.
Petitioner was clearly domiciled in this state prior to his transfer to CITY. Therefore, pursuant to Rule R865-9I-2, the question is whether Petitioner abandoned his domicile in Utah and whether he subsequently established a new domicile elsewhere. Petitioner has argued that he sold his home in Utah and moved away and had no intentions of returning at the time he left. However, a full review of the facts does not indicate that Petitioner even abandoned his Utah domicile. When Petitioner was transferred out of the State of Utah, he did not give up his Utah driverís license and continued to use that license to obtain a driverís license in CITY. Whenever he was in the United States each summer on vacation, he would use his Utah driverís license as his legal authority to drive within the United States. In addition, Petitioner renewed that driverís license in June 1995, approximately two years after he went to CITY. Petitioner had investments in the State of Utah, including real property owned in CITY, Utah, his furniture was in storage in Utah, and his United States banking was performed through a bank located in the State of Utah. In addition, approximately nine or 10 months after he went to CITY, he was back in Utah, and purchased two vacant lots within COUNTY, one of which was sold, and one of which was the property on which he constructed a home for his wife and family to return and then for him to join them. One year after the purchase of those lots, construction was commenced on one of the lots, and it was completed within a year.
In addition to the abandonment of an existing domicile, Rule R865-9I-2 imposes a second requirement is the intention and establishment of a new domicile. In this matter, it is clear that Petitioner did not intend to establish a domicile in CITY. His assignment was to be for a period of three years, and he knew when he left it would be of limited duration. He did not have any intention of remaining there permanently or becoming domiciled in CITY. There was no evidence presented that he paid income taxes to the COUNTRY government while he was in CITY or that his visa was to be a permanent visa. Even though he obtained an COUNTRY driverís license, he testified he never drove because he had a driver furnished to him. The evidence does not indicate that Petitioner intended to establish his domicile in CITY, nor in any other state of the United States. Based upon the facts and testimony presented, the Commission finds that Petitioner did not abandon his Utah domicile nor did he ever establish a domicile in any other location.
Petitioner has requested a waiver of the penalties and interest. The Commission finds that although Petitioner was domiciled in Utah, his belief that he was not a domicile of Utah or not required to file an income tax return in Utah was a reasonable belief with some basis in the law. Therefore, the Commission determines that the penalties imposed upon Petitioner should be waived or abated. However, the interest should not be waived.
DECISION AND ORDER
Based upon the foregoing, the Commission determines that Petitioner remained domiciled in Utah during 1994, 1995 and 1996. The audit assessment imposed upon Petitioner was appropriate, except that the penalties imposed thereon should be waived and abated, and they are hereby removed. The Petition for Redetermination is hereby denied. It is so ordered.
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 6th day of August , 2003.
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 6th day of August , 2003.
Pam Hendrickson R. Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc B. Johnson