BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX
:
Petitioners, :
: FINDINGS
OF FACT,
v. : CONCLUSIONS OF LAW
: AND FINAL
DECISION
AUDITING
DIVISION OF THE :
UTAH STATE TAX COMMISSION, : Appeal
No. 88-2228
: Account
No. XXXXX
: Audit
Period: XXXXX
Respondent. : to XXXXX
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Joseph G. Linford,
Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing the Petitioners
were XXXXX, Attorney, and XXXXX.
Present and representing the Respondent were XXXXX, Assistant Attorney
General, and XXXXX of the Auditing Division of the Utah State Tax Commission.
Based
upon the evidence and testimony in the record and presented at the hearing, the
Tax Commission hereby makes its:
FINDINGS OF FACT
1. The tax in question is sales and use tax.
2. The period in question is the audit period
XXXXX, to XXXXX.
3. On or about XXXXX, Petitioners purchased
from XXXXX a new XXXXX foot XXXXX boat.
Petitioner, XXXXX, testified that this $$$$$ price included sales tax
and registration charges. XXXXX stated
that XXXXX was aware that the boat was for Petitioners' personal use. A boat cover at a cost of $$$$$ was later
purchased.
4. XXXXX, the person with whom XXXXX dealt at
XXXXX, testified that both parties knew the $$$$$ purchase price did not
include sales tax.
5. The purchase agreement filled out at the
time of sale indicates the $$$$$ price and the $$$$$ price for the boat
cover. The boat cover price was added
to the document sometime after the sale.
There is no amount written on the line for sales tax and to the side of
that line is written the word "wholesale". This document is dated XXXXX, with a delivery date of XXXXX. The boat was thereafter registered in
Petitioners' name.
6. Petitioners paid for the boat in two
separate installments as evidenced by two receipts, the first dated XXXXX, for
$$$$$ and the second dated XXXXX, for $$$$$. Neither of these show any payment for sales tax, but the XXXXX,
receipt shows a $$$$$ charge for the registration of the boat and trailer. The XXXXX, receipt has the word "wholesale"
written upon it.
7. Some months after the sale, the issue of the
sales tax resurfaced when XXXXX contacted XXXXX and requested that Petitioners
pay the sales tax amount or supply an exemption certificate. XXXXX initially refused but then did
complete the exemption certificate dated XXXXX. XXXXX testified that he read
this document "carefully" when he filled it out and that he intended
to check the box that is in fact checked on that document, which indicates the
boat was purchased for resale. The
exemption number listed by XXXXX on this document is XXXXX, which is the exemption
number for XXXXX business, XXXXX. The
checked paragraph includes the following language:
I certify that I am a dealer in tangible
personal property or services and
that the tangible personal property or services purchased by me from the
above vendor are for resale. If I use
or consume any tangible
personal property or services which I purchase tax-free for resale I will report and pay sales tax on
my cost thereof direct to the
State Tax Commission on my next regular sales and use tax return.
8. XXXXX in his testimony acknowledged printing
his name on the signature line but did not consider that to be his
signature. The name of the business
indicated is XXXXX. No sales or use tax return has been filed by XXXXX for the
years XXXXX through XXXXX.
9. A Statutory Notice of Deficiency dated
XXXXX, was mailed from Respondent to Petitioners. This notified Petitioners that they were liable for the sales tax
on the purchase of the boat, plus a 50% penalty for intent to evade the tax,
and interest.
CONCLUSIONS OF LAW
1. Utah Code Ann. §59-12-107(6) provides:
If any sale of tangible personal property or
any other taxable item or service
under SubSection 59-12-103(1), is made by a wholesaler to a retailer, the
wholesaler is not responsible for the collection or payment of the tax imposed on the sale if the
retailer represents that the
personal property is purchased by the retailer for resale and the personal
property thereafter is not resold.
Instead, the retailer is solely
liable for the tax.
Since
the exemption certificate in this case does indicate that the purchase was for
resale, this section places the liability for the tax upon Petitioners.
2. Utah Code Ann. §59-1-402(3)(c) provides that
the penalty for underpayment of tax with intent to evade the tax is the greater
of $$$$$ per period or 50% of the tax amount due.
3. The evidence clearly shows that no sales tax
was paid by Petitioners and that such tax was not included as part of the
purchase price of the boat. The
indications of a wholesale transaction on both the purchase order and one of
the payment receipts show that the sale of the boat was made to Petitioners on
a wholesale, tax exempt basis.
4. XXXXX completed an exemption certificate,
and placed his name on the signature line.
His contention that the printing of his name does not constitute his
signature, because he did not sign it in long hand, is unpersuasive. The law generally recognizes that such would
constitute a signature for the validation of an instrument such as the
exemption certificate. See, e.g., Utah Code Ann. §§68-3-12(r), 70A-1-201(39)
and 70A-3-401(2). XXXXX completion of
the exemption certificate, including the printing of his name on the signature
line, authenticates and validates that instrument so that the liability for the
tax is placed upon Petitioners. This
also indicates his intention to evade the tax by representing that the purchase
was for resale.
5. Petitioners' assertion that the sales price
included the tax is also unpersuasive.
XXXXX testified that it was his understanding that the sales price
included tax and registration. However,
one of the receipts for payment includes a charge for registration, which
Petitioners paid. It is difficult to
believe that Petitioners would regard the sales price as including tax and
registration charges, and yet would pay the registration charge but not the
tax. Both Petitioners and XXXXX were
aware of the sales tax requirement but Petitioners took several steps to avoid
it.
6. The evidence clearly shows that Petitioners
are liable for the sales tax on the transaction in question. Petitioners have not met their burden of
showing that there was no intent on their part to evade that tax, and the
evidence strongly indicates otherwise.
The Tax Commission finds that the imposition of the tax, the 50% intent
to evade penalty, and the interest is appropriate in this case.
DECISION AND ORDER
Based
upon the foregoing, it is the decision and order of the Utah State Tax
Commission that the tax, 50% penalty, and interest imposed upon the Petitioners
pursuant to the Statutory Notice of Deficiency are sustained. It is so ordered.
DATED
this 20 day of December, 1990.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B. Pacheco G.
Blaine Davis
Commissioner Commissioner