BEFORE THE UTAH STATE TAX COMMISSION
PETITIONER ) FINDINGS OF FACT,
) CONCLUSIONS OF LAW,
Petitioner, ) AND FINAL DECISION
v. ) Appeal No. 02-0222
) Account No. #####
AUDITING DIVISION OF )
THE UTAH STATE TAX ) Tax Type: Sales
) Judge: Chapman
Kerry R. Chapman, Administrative Law Judge
For Petitioner: PETITIONER (by telephone)
For Respondent: Laron Lind, Assistant Attorney General
Rod Boogaard, from Auditing Division
STATEMENT OF THE CASE
This matter came before the Utah State Tax Commission for a Formal Hearing on June 11, 2002. Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:
FINDINGS OF FACT
1. Petitioner is appealing a sales and use tax audit deficiency as stated in the Statutory Notice of Deficiency dated November 23, 2001.
2. The audit period at issue is February 1, 2000 through February 29, 2000.
3. The audit deficiency assessment arose from the Petitioner’s claim of a sales tax exemption on the purchase of a trailer from COMPANY, a Utah business. Petitioner claimed the exemption by completing and signing Form TC-583, the Nonresident Affidavit for Sales Tax Exemption, on February 17, 2000.
4. Upon auditing the claim, the Respondent determined that Petitioner was, for purposes of the exemption, a resident of Utah at the time of purchase and, thus, ineligible, for the exemption. Respondent presents documents to show that the Petitioner and his wife both became employed in Utah during 2000 and that they filed a joint 2000 Utah income tax return indicating that they were full-time Utah residents during 2000. Evidence is also presented to show that Petitioner’s wife was issued a Utah driver’s license on November 9, 1999.
5. Petitioner submitted a contract dated December 23, 1999, between PETITIONER or PETITIONER’S WIFE and COMPANY for the purchase of the trailer. Two addresses for the Petitioner are listed on the contract. A Utah address for the Petitioners was typed on the contract. An STATE address is hand-written beside the Utah address. Respondent presents a loan document dated January 10, 2000, which shows that Petitioner borrowed money from an STATE credit union, with the trailer offered as security to secure the loan. Respondent also provides a second contract between PETITIONER or PETITIONER’S WIFE and COMPANY dated February 2, 2000, for the same trailer. In this contract, only the STATE address is present.
6. Petitioner testifies that he did not decide to move to Utah until some time in January 2000 and finished his work in STATE the first week of February 2000. He states that these events occurred after the date of the earlier contract to purchase the trailer and, thus, was a nonresident at the time the trailer was purchased. He states that his wife came to Utah in November 1999, to care for an ill parent and that their children transferred from STATE to schools in Utah in December 1999, prior to the Christmas break. He claims that he purchased the trailer while visiting his family in Utah during Christmas in 1999. The trailer, ordered to specification, was not available for delivery when the contract was signed in December 1999. Petitioner states that he intended to remove the trailer to STATE upon its completion and delivery in 2000.
7. Petitioner further testifies that he decided to move to Utah before taking delivery of the trailer in February 2000. As delivery of the trailer occurred after Petitioner had decided to become a Utah resident, the trailer was never removed from Utah to STATE. Nevertheless, the Petitioner registered the trailer in STATE.
1. Under Utah Code Ann. §59-12-103(1)(a), a tax is imposed on the purchaser for amounts paid or charged on retail sales of tangible personal property made within the state.
2. However, Utah Code Ann. §59-12-104(9), exempts from sales tax:
sales of vehicles of a type required to be registered under the motor vehicle laws of this state which are made to bona fide nonresidents of this state and are not afterwards registered or used in this state except as necessary to transport them to the borders of the state.
3. Utah Administrative Rule R865-19S-98 (“Rule 98”) provides some guidance in administrating the exemption described in Section 59-12-104(9). Section (B) of Rule 98 clarifies that a person is disqualified from receiving the exemption if he is a resident of the state or allows the purchased vehicle to be kept or used by a resident of the state.
4. Section (C) of Rule 98 clarifies that a nonresident owner does not qualify for the exemption if his use of the vehicle in Utah is other than “infrequent, occasional, and nonbusiness in nature.”
Two requirements must be met before the purchase of a vehicle is exempt under Section 59-12-104(9): (1) the purchaser must be a bona fide nonresident; and (2) the vehicle may neither be registered nor used in Utah except as necessary to transport the vehicle to the borders of the state. Although the Petitioner registered the trailer in STATE, the trailer was never removed from Utah to STATE after its purchase. Petitioner testified that the trailer has been used recreationally in Utah since its purchase. Accordingly, the vehicle has been used in Utah other than to transport the vehicle to the borders of the state. While Rule 98 allows some leeway for a vehicle registered and kept in another state to occasionally be brought into Utah or for a vehicle, under certain circumstances, to remain in Utah a short period prior to its removal, such circumstances do not exist here. In addition, it is the actions of the purchaser, not his original intent, that determine whether this requirement is satisfied. In this case, since its purchase, the trailer has remained and been used in Utah other than to transport it to the border. Accordingly, the second requirement of the statute has not been satisfied, and the exemption is not available in this case.
We have found that the Petitioner does not qualify for the exemption based on the second requirement of the exemption. Accordingly, we do not need to determine if he met the first requirement; i.e., was a bona fide nonresident. Even though Petitioner could not remember when he gave notice at his job in STATE or permanently arrived in Utah, the facts we know strongly suggest that the first requirement was not satisfied either. The Petitioner’s wife had been issued a Utah driver’s license and his children had transferred to Utah schools prior to the purchase of the trailer. The facts we do have strongly suggest that Petitioner’s wife was a resident of Utah for purposes of this exemption when she signed the first contract. The facts also strongly suggest that Petitioner was a resident when he signed the second contract. In either case, the trailer appears to have been purchased by at least one resident of Utah, and thus, is disqualified from the exemption.
DECISION AND ORDER
Based upon the foregoing, the Tax Commission confirms the Respondent’s audit assessment and that the Petitioner was not entitled to an exemption on the purchase of the trailer. Although the registration of the trailer is not at issue in this appeal, the Commission takes this opportunity to inform the Petitioner that the trailer should not have been registered in STATE under the circumstances, but in Utah. Tax Commission records do not indicate that the trailer is currently registered in Utah, and we are informing the Motor Vehicle Division of this fact so it may investigate. We encourage the Petitioner to correct any illegal registration that may still exist. It is so ordered.
DATED this 16th day of August , 2002.
Kerry R. Chapman
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 16th day of August , 2002.
Pam Hendrickson R. Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc B. Johnson