BEFORE THE STATE TAX COMMISSION OF UTAH
XXXXX and XXXXX,
: FINDINGS OF FACT,
v. : CONCLUSIONS OF LAW
: AND FINAL DECISION
AUDITING DIVISION OF THE :
UTAH STATE TAX COMMISSION, : Appeal No. 86 1515
STATEMENT OF CASE
This is an appeal to a formal hearing from an informal decision rendered by the Utah State Tax Commission on XXXXX, which decision affirmed the assessment of sales tax, interest, and imposed a 10% penalty on the purchase of a XXXXX. A formal hearing was held on XXXXX in the offices of the Utah State Tax Commission. G. Blaine Davis, Commissioner, and David J. Angerhofer, Hearing Officer, heard the matter for the Tax Commission. XXXXX, Attorney at Law, represented the Petitioner. XXXXX, Audit Supervisor, represented the Respondent. Petitioner admitted that the sales tax was owed but stated that Petitioner was not the person to be assessed and suggests that the tax, penalty and interest should be imposed on the seller, XXXXX. Petitioner stated that the seller, XXXXX, had the burden of collecting the tax and Petitioner was not negligent because she relied on the salesman at XXXXX to advise her regarding whether tax was due on the purchase.
FINDINGS OF FACT
On XXXXX, Petitioner purchased the subject vehicle from XXXXX in XXXXX, Utah. Petitioner executed a nonresident affidavit on XXXXX. This affidavit indicated that Petitioner was a nonresident of Utah residing at XXXXX, Oregon. Petitioner penciled in a qualifying statement saying "as of XXXXX" which would be a month and a half after the purchase. Petitioner stated that she had been a resident of Utah within the past 60 days and explained on the reverse side of the affidavit that she sold her home in XXXXX, Utah on XXXXX "closing to be on or before XXXXX" at which time we will immediately leave Utah to reside permanently in Oregon."
Petitioner testified at the hearing that she had never been in Oregon prior to the purchase of the vehicle but that the dealer told her he would research the question of whether the sale was tax exempt. The Petitioner testified she told the salesman that if she had to pay sales tax in Utah she might as well wait and purchase a vehicle after she moved to Oregon. Therefore, it appears that the salesman and the dealer may have knowingly violated the law by failing to collect the sales tax in order to prevent losing the sale of the vehicle. The affidavit, as amended by the Petitioner, clearly indicates that Petitioner did not qualify as a non-resident and XXXXX clearly had a duty to collect the sales tax on the transaction. Petitioner never questioned anyone about the affidavit and left for Oregon the first week of XXXXX. Petitioner returned to Utah in the latter part of XXXXX. The subject vehicle was not registered in Utah until XXXXX.
CONCLUSIONS OF LAW
It was not reasonable for Petitioner to change the language of the affidavit and then execute the affidavit believing that it had full legal affect. If Petitioner had questions concerning the affidavit, Petitioner should have contacted the Tax Commission. On the face of the affidavit under a section headed NOTE TO DEALERS AND PURCHASERS, the following instruction is found: "Direct any questions about this affidavit to the Tax Commission (530-6268 or 530-6290)."
XXXXX was responsible for the collection of sales tax on the sale of the subject vehicle pursuant to Utah Code Ann. §59-12-107 (1953). XXXXX was only relieved of the duty to collect sales tax if XXXXX received a valid nonresident affidavit which had been properly executed. On the face of the nonresident affidavit under the caption SELLER is found the following statement: "I hereby certify: that as the selling dealer I am responsible for complete review of this affidavit and will charge tax when evident by purchaser's answers that the exemption does not apply." It is patently obvious from the face of the affidavit that, evident by the purchaser's answers, the exemption does not apply. XXXXX was not relieved of the responsibility to collect sales tax and was negligent when it accepted this invalid nonresident affidavit and XXXXX has now caused penalty and interest to be imposed upon its customer apparently to avoid losing the sale.
The Petitioner has urged the Commission to impose the tax, penalty and interest on XXXXX, which the Commission has power to do. However, if XXXXX had properly collected the sales tax on the sale of the vehicle then Petitioner would have been required to pay the sales tax. Sustaining the assessment of sales tax on Petitioner only requires her to pay the amount she should have properly paid at the time of the purchase, together with interest for the use of the money.
Regarding the penalty, Petitioner made full disclosure of her situation to XXXXX and she reasonably relied on the dealer to know whether the sales tax was required to be collected. Therefore, if the penalty is to be imposed, it should be against the dealer and not the Petitioner. The Commission has carefully and seriously considered imposing the tax, penalty and interest on XXXXX because the dealer was far more negligent than the Petitioner. The dealer apparently knowingly failed to properly collect the required sales tax. Because of the apparent violation, the Commission has also considered issuing an Order to Show Cause to the XXXXX to require them to show cause why their sales tax license should not be revoked.
XXXXX was never made as party to this proceeding by either the Petitioner or Respondent. Therefore, the Commission concludes that no finding or assessment should be made against the dealer since they have not been given notice of this proceeding and have not had an opportunity to be heard. Further, if the tax and interest were imposed on both the Petitioner and the dealer, then the State of Utah would collect twice for a single sale of one vehicle.
Based on the foregoing, the Utah State Tax Commission hereby affirms the tax and interest assessed against Petitioner since the tax should have been paid by her at the time she purchased the vehicle. The penalty assessed against Petitioner is waived.
A copy of this decision will also be mailed to XXXXX and to the Motor Vehicle Business Administration to be placed in the dealer's file so that if other violations of the sales tax laws are made by XXXXX an order may be issued to require them to show cause why their sales tax license should not be revoked for such violations.
DATED this 10 day of March, 1988.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis