BEFORE THE STATE TAX COMMISSION OF UTAH
v. : INFORMAL DECISION
AUDITING DIVISION OF THE : Appeal No. 87-1073
STATE TAX COMMISSION OF UTAH, ) Account No. XXXXX
STATEMENT OF CASE
This is an appeal to the Utah State Tax Commission from a sales tax deficiency assessed against Petitioner as a result of Petitioner's tax free purchase of three vehicles, a trailer, and a boat in the name of XXXXX. An Informal Hearing was held on XXXXX, in the offices of the Utah State Tax Commission. David J. Angerhofer, Hearing Officer, heard the matter for the Commission. XXXXX represented himself. XXXXX represented the Respondent.
Petitioner stated that he started XXXXX in XXXXX to engage in the business of the commercial Leasing of vehicles. Petitioner asserted that he bought a XXXXX with the intention of leasing it and represented to the Division of Motor Vehicles that the vehicle was for lease, not for purchase. The XXXXX was acquired on XXXXX. Petitioner stated that the XXXXX, purchase of the XXXXX and XXXXX; the XXXXX purchase of a XXXXX; and the XXXXX purchase of a XXXXX were all with the intent of leasing these items. Petitioner stated that he has paid the tax, a 10% penalty and interest and requests a waiver of the 100% penalty.
Respondent asserted that the 100% fraud penalty should be imposed in this matter and noted that when Petitioner set up the leasing company he had no particular customers in mind, he had no perspective lessee in mind when he purchased the XXXXX, and that this car was never leased. This vehicle had from XXXXX to XXXXX miles on the odometer when it was purchased but had approximately XXXXX miles as of the date of the hearing. Respondent noted that neither of the other two vehicles nor the boat was ever leased.
The Tax Commission finds that Petitioner's efforts to lease the vehicles and boat were minimal and did not represent a good faith effort to actively operate a leasing company. Petitioner's activities constitute intentional disregard of law or rule and subject Petitioner to a 15% penalty assessment pursuant to Utah Code Ann. §59-1-401(3)(b) (1953).
Respondent had the burden of proof to establish fraud in this matter. The Tax Commission finds insufficient evidence to establish fraud pursuant to subsection (3)(d) or intent to evade the tax pursuant to subsection (3)(c).
DECISION AND ORDER
Based on the foregoing, it is the Decision and Order of the Utah State Tax Commission that Petitioner's request for waiver of the fraud penalty on sales and use tax account No. XXXXX for the tax free purchase of three vehicles, a trailer, and a boat in the name of XXXXX be granted. A 15% penalty is assessed in lieu of the 100% fraud penalty.
The Auditing Division of the Utah State Tax Commission is hereby ordered to adjust its records in accordance with this decision.
DATED this 8 day of January, 1988.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis