86-2041 - Sales





Petitioner, :





Respondent. :



This matter came before the Utah State Tax Commission for an Informal Hearing on XXXXX. James E. Harward, Hearing Officer, heard the matter for the Tax Commission. XXXXX appeared representing XXXXX. XXXXX and XXXXX appeared representing the Respondent.

The Petitioner presented evidence that the purchaser of a XXXXX represented himself to be a resident of the State of Oregon. Based on that representation the Petitioner had the purchaser sign a nonresident affidavit and did not collect sales tax on the transaction.

Respondent assessed the tax, penalty and interest against Petitioner on the grounds that Petitioner had been put on notice that the purchaser was not a bonafide nonresident of the State of Utah for sales tax purposes because the credit application which was made part of the dealer file and completed and submitted by the Petitioner to XXXXX financing showed a Utah address for ten months prior to the sale of the vehicle. The resident address on the credit application was different than the information contained in the non-resident affidavit which would make the affidavit questionable.


The Tax Commission after reviewing facts and evidence find the following facts to be relevant in arriving at its conclusion:

1. All sales of tangible personal property within the State of Utah are subject to sales tax.

2. Only certain transactions involving items of tangible personal property are exempt from sales tax.

3. The sale of motor vehicle of the type normally registered under the law of the State of Utah to a bonafide nonresident is exempt from the sales tax provisions of the Utah Code.

4. If anyone who owns property in the state, works in the state, or lives in the state even though maintaining a residence in another state is required to register his or her vehicle in the State of Utah.

5. The purchaser, XXXXX, was domiciled in the State of Utah and was employed by a Utah company. This information was clearly available to the Petitioner and was made a part of the transaction placed in the dealer file. The transaction between the Petitioner and the purchaser was subject to sales tax. Since Petitioner did not collect sales tax on the transaction, the discrepancy was either not noticed or ignored.

6. The Petitioner was put on notice that the purchaser was not a bonafide nonresident of the State of Utah because of the Utah address and the Utah employer listed on the credit application. This information that contradicted the nonresident affidavit was part of the transaction for the sale of the automobile. Petitioner has presented no evidence that would indicate the procedures followed for the subject transaction would make it impossible to identify the discrepancy so that sales tax would be collected.

7. The Petitioner was "responsible for complete review of" the affidavit. "If the affidavit is questionable," the Petitioner is to contact the Tax Commission for clarification. The Petitioner, however, did not contact the Tax Commission nor did it collect the sales tax even though it was obvious that the nonresident affidavit was at best questionable and at worst fraudulent.

Based upon these findings, the Tax Commission affirms the assessment made by the Respondent. The Tax Commission notes further that Regulation S23 requires that "the burden of proving that a sale is resale or otherwise exempt shall be upon the person who makes the sale. In any case, upon request of any member or agent of the Tax Commission fails to produce a valid exemption certificate or other similar, acceptable evidence in support of vendor's claim that sale is for resale or otherwise exempt, the sale shall be considered taxable and tax shall be payable by the vendor." The nonresident affidavit is not valid because the other records of the transaction indicate that the affiant was working and living in Utah at the time of the transaction. No evidence was presented that would show that the transaction as it took place would have made it difficult to check the nonresident affidavit with the credit application thus making it unlikely for the Petitioner to be put on notice of the problems with the nonresident affidavit. The Commission assumes that through the exercise of reasonable diligence, the Petitioner should have noticed the discrepancy. Therefore, the Petitioner is unable to produce a valid exemption certificate or nonresident affidavit. The Tax Commission further finds that the Petitioner was negligent in this transaction and affirms the negligence penalty. The interest is also affirmed.

DATED this 8 day January, 1988.


R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner