88-2228 - Sales






Petitioners, :






: Account No. XXXXX

: Audit Period: XXXXX

Respondent. : to XXXXX



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:


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.


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.


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.


R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner