01-1866
Income Tax
Signed 8/6/03
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
PETITIONER, )
) ORDER
Petitioner, )
) Appeal No. 01-1866
v. ) Account No. #######
)
AUDITING DIVISION OF ) Tax Type:
Income Tax
THE UTAH STATE TAX ) Tax Year: 1994-1996
COMMISSION, )
)
Respondent. ) Judge: Davis
_____________________________________
Presiding:
G. Blaine Davis, Administrative Law Judge
Appearances:
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 driver’s license, but he also obtained an COUNTRY
driver’s license, but never drove while in CITY. When Petitioner returned to Utah, he renewed his driver’s
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 wife’s sister’s 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.
APPLICABLE LAW
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. §59-10-103, 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 driver’s license and continued to
use that license to obtain a driver’s license in CITY. Whenever he was in the United States each
summer on vacation, he would use his Utah driver’s license as his legal
authority to drive within the United States.
In addition, Petitioner renewed that driver’s 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 driver’s
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
Appeals
Division
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
Commissioner Commissioner