BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX,
Petitioner, :
v. : INFORMAL DECISION
:
AUDITING
DIVISION OF THE : Appeal No. 86 2041
STATE TAX
COMMISSION OF UTAH, )
Respondent. :
_____________________________________
STATEMENT OF CASE
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.
DECISION AND ORDER
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.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B. Pacheco G.
Blaine Davis
Commissioner Commissioner