BEFORE THE STATE TAX COMMISSION OF UTAH
v. : INFORMAL DECISION
COLLECTION DIVISION OF THE : Appeal No. 86 1817
STATE TAX COMMISSION OF UTAH, ) Acct. No. XXXXX
STATEMENT OF CASE
This is an appeal to the Utah State Tax Commission from a decision of the Collection Division of the Utah State Tax Commission to assess penalty and interest on sales and use tax account No. XXXXX for a transaction during XXXXX. An Informal Hearing was held on XXXXX, in the offices of the Utah State Tax Commission. James E. Harward, Hearing Officer, heard the matter for the Commission. XXXXX represented himself. XXXXX represented the Respondent.
On XXXXX, Petitioner purchased a used XXXXX from XXXXX. Petitioner signed the sales invoice, claiming the "machine to be used at above address [XXXXX] specifically for farm and produce production." Because Petitioner claimed an agricultural exemption, Petitioner did not pay sales tax on the purchase of the XXXXX.
Respondent determined that Petitioner was not entitled to the agricultural exemption, and assessed a tax of $$$$$, a 100% fraud penalty of $$$$$, and interest of $$$$$ as of XXXXX. Petitioner requested a waiver of the 100% civil fraud penalty.
Petitioner did not use the XXXXX "primarily and directly in farming operations...." See, Utah Code Ann. §59-15-6(3) (1953), which sets forth the exemptions from Utah sales tax. Although the XXXXX may have been used initially to clear Petitioner's property in XXXXX County, the XXXXX was primarily used for Petitioner's excavating business. Therefore, the XXXXX does not qualify for an agricultural exemption.
Petitioner is not the first to rely, to his detriment, upon representations by XXXXX that sales tax may be avoided if an agricultural exemption is claimed. Petitioner was negligent in relying on the assertions of XXXXX. Petitioner should have checked to see if the agricultural exemption would apply in his case before claiming exemption on the invoice. Petitioner is subject to a 10% negligence penalty pursuant to Utah Code Ann. §59-15-8 (1953). However, Petitioner's actions do not rise to the level of fraud since he relied upon the assertions of XXXXX and since XXXXX has made the same representations to others as part of its sales pitch.
DECISION AND ORDER
It is the Decision and Order of the Utah State Tax Commission that the penalty in this matter shall be reduced from the 100% fraud penalty to the 10% negligence penalty.
The Collection Division of the Utah State Tax Commission is ordered to adjust its records with this decision.
DATED this 11 day of March, 1987.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis