BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX,
:
Petitioner, :
: FINDINGS
OF FACT,
v. : CONCLUSIONS OF LAW
: AND FINAL
DECISION
:
COLLECTION
DIVISION OF THE : Appeal No. 86 0956
STATE TAX
COMMISSION OF UTAH, ) Acct. No. XXXXX
:
Respondent. :
_____________________________________
STATEMENT OF CASE
This
is an appeal to a Formal Hearing from an Informal Decision of the Utah State
Tax Commission to affirm the assessment of penalty and interest on sales and
use tax account No. XXXXX. A Formal
Hearing was held on XXXXX, in the offices of the Utah State Tax
Commission. David J. Angerhofer,
Hearing Officer, heard the matter for the Commission. XXXXX represented the Petitioner. XXXXX and XXXXX represented the Respondent.
FINDINGS OF FACT
On
XXXXX, Petitioner purchased a used XXXXX S/N XXXXX from XXXXX for $$$$$. No sales tax was charged or paid. See,
Exhibit 2, Invoice No. XXXXX. Page 2 of
Exhibit 2 includes a statement of use signed by XXXXX:
XXXXX
will use XXXXX S/N XXXXX specifically for commercial crop production and farm
use only.
On
XXXXX, Respondent sent Petitioner a notice of deficiency which indicated the
amount of tax, penalty and interest which was due. Respondent assessed a tax of $$$$$ on the purchase of $$$$$ (a
tax rate of 5 3/4%). Respondent further
assessed a 100% civil fraud penalty $$$$$ and interest at 12% per annum from
XXXXX to XXXXX of $$$$$ for a total due of $$$$$ as of XXXXX.
On
XXXXX, Petitioner purchased a XXXXX S/N XXXXX from XXXXX for $$$$$. No sales tax was assessed or paid. Exhibit 1, Invoice No. XXXXX, states on the
face that the "machine is to be used specifically for commercial crop and
produce production only."
On
XXXXX, Respondent sent Petitioner a notice of deficiency which assessed a sales
tax of $$$$$ on the purchase price of $$$$$ (tax rate of 5 3/4%). Respondent assessed a 100% civil fraud
penalty of $$$$$ and interest at 12% per annum from XXXXX to XXXXX of $$$$$ for
a total due of $$$$$.
The
primary use of the equipment was for construction purposes. Petitioner used
equipment on a farm approximately 10% of the time during the period in
question.
CONCLUSIONS OF LAW
The
agricultural exemption from the Utah Sales Tax is set forth in Utah Code Ann. §
59-15-6(3) (1953):
The gross receipts
from sales of tangible personal property to be used or consumed primarily
and directly in farming operations are exempted from the taxes imposed by
this chapter.
Id. (Emphasis
added.)
Utah
sales tax regulation A12-02-S49(d) elaborates on the agricultural exemption:
Farm
machinery, equipment, and supplies used directly and primarily in
farming operations are exempt from sales tax subject to the following
provisions . . . . (2) The exemption applies only to sales of tangible personal
property used or consumed primarily and directly in commercial farming
operations as evidenced by the finding of a federal Farm Income and Expenses
Statement (Schedule F) or similar evidence that the farm is operated as a
commercial venture.
Id.
(Emphasis added.)
Petitioner
did not use the equipment primarily and directly in farming operations. Any use of the equipment on the farm was a
de minimus use only.
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.
Grandquist, 252 F.2d 56 (9th Cir. 1958)).
Respondent has met this burden of proof.
FINAL DECISION
It
is the Decision and Order of the Utah State Tax Commission that Petitioner's
request for waiver of the fraud penalty be denied.
The
assessment of penalty and interest by the Collection Division of the Utah State
Tax Commission is hereby affirmed.
DATED
this 24 day of June, 1987.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
ABSENT
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner