87-0489 - Sales





            Petitioner,                                                         :           INFORMAL DECISION

AUDITING DIVISION OF THE                                :           Appeal No. 87-0489

STATE TAX COMMISSION OF UTAH,                  )

            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 and in behalf of the Tax Commission.  XXXXX appeared.  XXXXX appeared representing the Respondent.


            In XXXXX, the sister to the Petitioner, XXXXX, came to Utah during a separation from her husband.  On the way her automobile broke down.  She went to the XXXXX in XXXXX, Utah and attempted to purchase a XXXXX automobile.  Because of her financial condition she was unable to qualify for the financing.  Therefore, a co-signer was sought.  The Petitioner agreed to co-sign for the automobile.  The Petitioner's sister, XXXXX, then purchased the automobile and moved to XXXXX where she worked for a period of time before moving back to XXXXX.  During the course of approximately a year, the automobile was in and out of Utah on numerous occasions due to the death of the Petitioner's mother and the repossession of the automobile by the XXXXX Finance Company.  The Petitioner ultimately ended up with the vehicle by making up the back payments and taking possession of the vehicle and then placing it up for sale.  In XXXXX, the Petitioner refinanced the vehicle to make up the back payments and pay off XXXXX.  At that time, it was licensed and registered in the state of Utah.  The Respondent argued that the Petitioner was an owner, as evidenced by the conditional sale contract which listed XXXXX as a co-buyer.  Further the registration of the vehicle in XXXXX indicated the Petitioner as a co-owner.  Furthermore, the vehicle was used extensively in Utah after its purchase.  Not only by the Petitioner's sister but also by the Petitioner after being repossessed.


            The Petitioner argues that since he was a co-signer only on the subject automobile he should not be responsible for the payment of the sales tax in that the Petitioner's sister qualified for the out-of-state non-resident exemption from sales tax.  However, the form of the transaction indicates that the Petitioner was in fact an owner or co-buyer of the automobile.  The Commission would be persuaded by the argument that if the Petitioner were in fact a co-signer only then the sales tax would not be due.  The Sales and Use Tax Act of the state of Utah provides for tax on the purchase or the amount paid or charged for any retail sales of tangible personal property made within the state.  An exemption is made for a sale to a non-resident of the state of Utah. It appears from the paperwork that the sale was made jointly to a non-resident and to a resident; the Tax Commission finds additional facts persuasive in finding that the Petitioner is responsible for the payment of the sales tax. Those additional facts are that the Petitioner was listed as an owner on the title and on the registration of the vehicle and the vehicle was used extensively in Utah after the purchase and after being repossessed by XXXXX.  In addition, the Tax Commission finds that after the taking of the vehicle in XXXXX the Petitioner would have been subject to the use tax provisions of the Sales and Use Tax Act and would have been responsible for paying the tax anyway.  Therefore, the Commission affirms the assessment of the tax but finds that no penalty should be assessed and interest should be calculated commencing on the first day of XXXXX.  It is so ordered.

            DATED this 20 day of October, 1987.


R. H. Hansen                                                                G. Blaine Davis

Chairman                                                                      Commissioner

Joe B. Pacheco                                                            Roger O. Tew

Commissioner                                                               Commissioner