BEFORE THE STATE TAX COMMISSION OF UTAH
Petitioner ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW
v. ) AND FINAL DECISION
AUDITING DIVISION OF THE )
STATE TAX COMMISSION OF UTAH, : Appeal No. 85 0779
STATEMENT OF CASE
This is an appeal to Formal Hearing from an informal decision rendered on XXXXX. The informal decision affirmed a deficiency assessment including tax, interest and a 100% fraud penalty, on the purchase of an Audi 5000S and a XXXXX Motorhome. A Formal Hearing was held on XXXXX, in the offices of the Utah State Tax Commission. G. Blaine Davis, Commissioner, represented the Tax Commission. XXXXX, Attorney at Law, represented the Petitioner. XXXXX, Assistant Attorney General, represented the Respondent.
FINDINGS OF FACT
On XXXXX, Petitioner purchased a XXXXX 23 ft. motorhome from XXXXX in XXXXX, Utah for a total price of $$$$$, including a service contract and various fees (Exhibit 1). The bill of sale listed the buyer as XXXXX, XXXXX, XXXXX, Montana, and listed the phone number as XXXXX, the phone number was of XXXXX Utah, (Exhibit 12). On XXXXX, Petitioner executed a nonresident affidavit for the purchase of the motorhome (Exhibit 2). Petitioner certified that he was a nonresident of Utah residing in XXXXX, Montana with current employment in XXXXX, Montana, and that he would not use the vehicle in Utah other than to transport it to the borders of the state. On XXXXX, Petitioner purchased a XXXXX Audi 5000S from XXXXX in XXXXX, Utah. The purchaser's name on the bill of sale is XXXXX, XXXXX, Utah, and the phone number is XXXXX (Exhibit 3). Petitioner executed a nonresident affidavit for the purchase of the Audi 5000S on XXXXX, in the name of XXXXX. Petitioner certified that he was a nonresident of Utah residing in XXXXX, Montana, and that he was employed in XXXXX, Montana. Petitioner further certified that he would not use the vehicle in Utah except as necessary to transport it to the border. (Exhibit 4). XXXXX of XXXXX indicated in a letter dated XXXXX, that Petitioner represented to XXXXX that he lived in XXXXX, Montana, that he filled out the nonresident affidavit reflecting this fact, but that the bill of sale has a Utah address on it (Exhibit 3). Petitioner registered the subject vehicles in Montana, a state with no sales tax. The owner of the motorhome is listed as XXXXX, in XXXXX, Utah, and the owner of the Audi is listed as XXXXX, XXXXX, XXXXX, Montana (Exhibit 6). For the motorhome, Respondent determined a tax base of $$$$$, and assessed a sales tax of $$$$$ (at 5.75%); assessed a 100% penalty of $$$$$; and assessed interest of $$$$$ (1% per month from XXXXX to XXXXX) for a total amount due of $$$$$ (Exhibit 5). For the Audi, Respondent determined a tax base of $$$$$; assessed a sales and use tax of $$$$$ (at 5.75%); assessed a 100% penalty of $$$$$; and interest of $$$$$ (1% per month from XXXXX to XXXXX) for a total amount due of $$$$$ (Exhibit 5).
Petitioner filed a Utah resident long form individual income tax return for the tax years XXXXX and XXXXX under the name of XXXXX, XXXXX, Utah (Exhibit 9 and 10). Petitioner had a valid Utah driver's license under the name of XXXXX, XXXXX, XXXXX, Utah and registered a vehicle under the same name and address (Exhibit 11). The Petitioner was listed in the U.S. West Direct telephone directory for XXXXX and XXXXX under the name of XXXXX, XXXXX, XXXXX, Utah (Exhibit 12). Petitioner executed an undated motorhome partnership affidavit stating that as of XXXXX, Petitioner held a 25% ownership interest in the motorhome, Petitioner's mother (XXXXX) held a 60% ownership interest, and XXXXX held a 15% ownership interest (Exhibit 8). The affidavit states that XXXXX and XXXXX reside in XXXXX, Montana, and that XXXXX resides in XXXXX, Utah. Approximately 23% of the total miles logged on the motorhome before its sale on XXXXX, were logged in Utah (Exhibit 7). Petitioner proffered the testimony of XXXXX and XXXXX, neither of whom were present at the hearing. The proffer was in essence that XXXXX and XXXXX would testify to the statements as set forth in the Petition for Redetermination dated XXXXX.
The Petition for Redetermination is incorporated herein by reference as evidence of Petitioner's proffered testimony. Petitioner further asserted that at most he should be assessed a 25% tax on the purchase of the motor home, which 25% represents his partnership interest in the motor home. Subsequent to the hearing, Petitioner submitted a photocopy of a check in the amount of $$$$$ which was payable to XXXXX and to Petitioner stated was used for the cash down payment on the purchase of a motor home (Exhibit 14).
CONCLUSIONS OF LAW
Motor Vehicle Registration Regulation Number A12‑05‑1 (renumbered to R873‑0lV) states:
Definition of a resident ‑ The term "resident" for the purpose of registration and operation of motor vehicles shall include, but not be limited to the following:
(1) Every person who is a legal resident of this state, and the fact that such person leaves the state temporarily shall not be sufficient to terminate his residence in this state.
(2) Any person who engages in intrastate business and operates in such business any motor vehicle, trailer or semi‑trailer within this state, or any person maintaining such vehicles in this state as the home state of such vehicles.
(3) Any person, except an actual tourist, or a student as provided in regulation No. A12‑05‑4, who owns, leases, or rents a place of residence or place of business within this state, or occupies or permits to be occupied, either a place of residence or place of business, either in person or by immediate members of said person's family.
(4) Any person who engages in a trade, profession or occupation or accepts gainful employment in this state.
(5) Any person who allows his motor vehicle to be kept or used by a resident of this state.
(6) Any person who declares himself to be a resident of Utah for purposes of obtaining privileges not ordinarily extended to guests of this state.
(7) Any person who places his children in public schools without payment of non‑resident tuition or fees.
Any person qualified as a resident under the above provisions, shall immediately make application for a Utah registration of his motor vehicle/s.
The Tax Commission concludes that Petitioner was a resident of Utah at the time of the purchase of the subject vehicles pursuant to Regulation A12‑05‑1. Petitioner, in his individual capacity as XXXXX, was a resident of the State of Utah pursuant to subsection (1). The "motor home partnership" was also a resident of Utah for motor vehicle registration purposes pursuant to subsection (5) since the partnership allowed the motor home to be used by XXXXX, a resident of Utah. Neither the purchase of the Audi nor the purchase of the motor home qualified as an exempt sale pursuant to Utah Code Ann. 59‑15‑6(i) (1953). Both vehicles are of a type required to be registered in Utah, neither sale was to a bona fide nonresident of Utah, but both vehicles were subsequently used in Utah. Tax was properly assessed on the sale of both vehicles. The Tax Commission finds no basis on which to limit the assessment to tax only 25% of the motor home. Interest was also properly assessed since the tax was not timely remitted to the state. Respondent had the burden of proof to establish fraud in this matter. Fraud may not be presumed or imputed; however, since direct evidence of fraud is seldom available, the taxing authority may meet its burden of proof through circumstantial evidence. Stone v. Commissioner, 56 T.C. 213, 224 (1971). (Intent may be inferred from circumstantial evidence.) Powell v. Granquist, 252 F.2d 56 (9th Cir. 1958)). Respondent has met the burden of proof to establish fraud both in the XXXXX, purchase of the motor home and the XXXXX purchase of the Audi 5000S. The representation to XXXXX that Petitioner was a nonresident of Utah while the bill of sale had at least a partial Utah address; the fact that no documentation of the partnership predates the purchase of the motor home; the repeated, consistent patterns of Petitioner in failing to list the partnership on the documentation; the fact that Montana does not have a sales tax; the fact that Petitioner did not re‑license the Audi in Utah until XXXXX due to "financial reasons" (Petition for Redetermination); and the fact that Petitioner registered the motor home in Montana in the name of XXXXX using a XXXXX, Utah address; the fact that the misrepresentations were made twice in the same month; sufficiently establish that the Petitioner fraudulently intended to evade the payment of sales tax to the State of Utah.
Based on the foregoing, it is the final decision of the Utah State Tax Commission that the informal decision, dated XXXXX, be affirmed. The Auditing Division's deficiency assessments, interest and 100% fraud penalties on the purchase of both the Audi 5000S and the motor home are sustained. Petitioner's Petition for Redetermination is hereby denied.
DATED this 11 day of December, 1987.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Joe Pacheco
Roger O. Tew G. Blaine Davis
NOTICE: It is hereby given that you have 30 days from the date of mailing of this decision to appeal to the Tax Court or the Supreme Court of the State of Utah.