Income Tax

Signed 1/28/03







Petitioner, ) Appeal No. 02-0675


v. ) Account No. #####


AUDITING DIVISION ) Tax Type: Income Tax


COMMISSION, ) Tax Year: 1998


Respondent. ) Judge: Davis




G. Blaine Davis, Administrative Law Judge




For Respondent: Mr. Laron Lind, Assistant Attorney General

Mr. Brent Taylor, from the Auditing Division

Ms. Becky McKenzie, from the Auditing Division




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 13, 2003.

Petitioner filed a 1998 Part-Year Resident Return claiming an equitable adjustment in the amount of $$$$$. The equitable adjustment was disallowed by Respondent and a Statutory Notice of Audit Change reflecting that adjustment was issued on April 8, 2002.

Petitioner contends that he is entitled to an equitable adjustment pursuant to United States Public Law 101-322(49 U.S.C. 11502). That section reads as follows:

"(a) No part of the compensation paid by a rail carrier providing transportation subject to the jurisdiction of the board under this part to an employee who performs regularly assigned duties as such an employee on a railroad in more than one state shall be subject to the income tax laws of any state or subdivision of that state, other than the state or subdivision thereof of the employee's residence.

(b) A rail carrier withholding pay from an employee under subsection (a) of this section shall file income tax information returns and other reports only with the state and subdivision of residence of the employee." (Emphasis added.)


Petitioner was issued a W-2 form from COMPANY reporting Utah wages of $$$$$. This same W-2 form reported wages of $$$$$$ being earned in STATE. Petitioner contends that an equitable adjustment of $$$$$, which is the total wages reported for both Utah and STATE, can be claimed on the Utah return pursuant to United States Public Law 101-322.

Respondent contends that Petitioner is not entitled to an equitable adjustment on the Utah return, and that such a deduction is not supported by United States Public Law 101-322.

Petitioner was a part year resident of Utah during 1998. During 1998, Petitioner was transferred to STATE. Respondent contends that the income earned by Petitioner, while a resident of Utah, is Utah source income and must be taxed on the Petitioner's part year resident return.

Petitioner further contends that part of the income was paid to him for moving expenses to move to the State of STATE, and was therefore not paid to him for services performed in Utah. Petitioner contends this amount was approximately $$$$$, but there is no such separate amount reported on the W-2 form of Petitioner by his employer.

Petitioner did take a moving expense deduction on his federal return, which accordingly reduced his Utah income, by $$$$$. He claims the balance between that amount and $$$$$ was the amount he saved by doing the move himself and not having a moving company make a move, but nevertheless claims the full amount is deductible. Petitioner does not cite any legal authority for his proposed deduction.


Utah Code Ann. 59-10-112 provides as follows:

"State taxable income" in the case of a resident individual means his federal taxable income (as defined by 59-10-111) with the modifications, subtractions, and adjustments provided in 59-10-114."



In this matter, Petitioner has not been taxed by Utah on the portion of his income which was paid to him for his employment in the STATE. Nevertheless, the full amount of income he was paid for his services in Utah, including any payments made to him for other purposes, is includable in his Utah income unless it is deductible pursuant to some legal provision. Petitioner has been given a deduction for the $$$$$ which he represented he paid for moving expenses. Nevertheless, any other income paid to him in Utah for moving expenses is not deductible unless it was actually expended for moving expenses. Petitioner has failed to meet his burden of proof that the equitable adjustment shown on his income tax return is legal or allowable by Utah State Law.


Based upon the foregoing, the Commission hereby determines that the equitable adjustment taken by Petitioner on his Utah State Income Tax Return is not appropriate. The Statutory Notice of Audit Change issued by Respondent is hereby sustained, and the Petition for Redetermination is 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 28th day of January , 2003.




G. Blaine Davis

Administrative Law Judge




The Commission has reviewed this case and the undersigned concur in this decision.

DATED this 28th day of January , 2003.





Pam Hendrickson R. Bruce Johnson

Commission Chair Commissioner





Palmer DePaulis Marc B. Johnson

Commissioner Commissioner