BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX and
XXXXX,
:
Petitioner, :
: FINDINGS
OF FACT,
v. : CONCLUSIONS OF LAW
: AND FINAL
DECISION
AUDITING
DIVISION OF THE :
UTAH STATE TAX COMMISSION, : Appeal
No. 86 1515
Respondent. :
_____________________________________
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.
FINAL DECISION
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.
ABSENT
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner