BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX
Petitioner, )
v. ) INFORMAL DECISION
AUDITING
DIVISION OF THE STATE ) Appeal No. 87-0546
TAX COMMISSION
OF UTAH, )
Respondent. )
_____________________________________
STATEMENT OF CASE
An
Informal Hearing was held on XXXXX.
James E. Harward, Hearing Officer, heard the matter for the Utah State
Tax Commission. XXXXX, attorney,
represented Petitioner. XXXXX,
Assistant Attorney General, and XXXXX and XXXXX represented Respondent. Petitioner sold a XXXXX automobile to XXXXX
in XXXXX. XXXXX signed a nonresident
affidavit, Petitioner did not collect sales tax from XXXXX, and Respondent
subsequently assessed a sales tax and a 100% fraud penalty against
Petitioner. Because Respondent had the
burden of proving fraud, Respondent proceeded first with its argument. XXXXX testified that the dealer file shows
an automobile agreement with XXXXX address and Utah driver's license Nos. It is marked through with the word void in
another automobile agreement with the XXXXX addresses also in the dealer
file. XXXXX testified that the fact
that XXXXX had a Utah address would have put the dealer on notice that the
nonresident affidavit may not be correct.
XXXXX argued that filling out a new automobile agreement form was an
overt act to attempt to legitimize the nonresident affidavit. Petitioner argued that leaving the first
automobile agreement in the file with the XXXXX address shows that Petitioner
had no intent to defraud the state of sales tax. Petitioner indicated that the people associated with the first
contract with the XXXXX address are no longer available and that no information
has been presented regarding how the contractors prepare it.
FINDINGS
Tax
Commission Rule R873-01V designates as a resident "[a]ny person, except a
tourist temporarily within the state, or a student covered under Rule R873-04V,
who owns, leases, or rents a residence . . . ." Therefore, XXXXX are residents within the meaning of Tax
Commission Rule R873-01V, because they are not tourists temporarily within this
state or students covered under another rule.
XXXXX submitted an affidavit in which he stated that he is a resident of
and domiciled in the city of XXXXX, and is employed by his family's nursery in
XXXXX, and he owns a second home in XXXXX, which he uses while on business or
for vacation purposes. Because XXXXX use the XXXXX home for business and for
vacation purposes, they could not be considered tourists. Therefore, the Utah State Tax Commission
finds that XXXXX are Utah residents within the meaning of Tax Commission Rule
R873-01V which requires any person qualifying as a resident who operates a
vehicle in Utah to register the vehicle in Utah. Any person who qualifies as a resident under this rule and is
required to register a vehicle in Utah under this rule is also required to pay
sales tax on the in state purchase of the vehicle. Although the first automobile agreement form located in the
dealer's file with the XXXXX address should have put Petitioner on notice that
XXXXX may have been Utah residents, the Commission finds the Petitioner acted
negligently but not fraudulently in accepting the nonresident affidavit filled
out by XXXXX. The Commission finds that
the XXXXX home is indeed their second home or vacation home and that Petitioner
in good faith believed the XXXXX to be residents of XXXXX since they reside and
work there. However, Petitioner failed
to understand that if purchasers are Utah residents pursuant to Tax Commission
Rule R873-01V, dealers are to collect sales tax from the purchaser.
DECISION AND ORDER
Based
on the foregoing, it is the Decision and Order of the Utah State Tax Commission
to uphold the tax and a 10% negligence penalty. Interest is ordered to be adjusted if necessary to reflect the
reduced penalty amount. Respondent is ordered to recompute the tax, penalty and
interest amount and to refund any balance to Petitioners.
DATED
this 26 day of October, 1987.
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