BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX )
:
Petitioner, ) FINDINGS OF FACT
: CONCLUSIONS
OF LAW,
v. ) AND FINAL DECISION
:
AUDITING
DIVISION OF THE ) Appeal No. 89-0180
UTAH STATE TAX
COMMISSION :
) Account
No. XXXXX
Respondent. :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Paul F. Iwasaki, Presiding
Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was
XXXXX. Present and representing the
Respondent were XXXXX, Assistant Attorney General, and XXXXX, Auditing
Division.
Based
upon the testimony and evidence presented at the hearing, the Tax Commission
hereby makes its:
FINDINGS OF FACT
1. The tax in question is sales tax.
2. The period in question is XXXXX.
3. On XXXXX, the Petitioner purchased a XXXXX
Cadillac Coupe DeVille from XXXXX, in XXXXX, Utah.
4. At the time of the purchase, the Petitioner
completed a non-resident affidavit form and signed that form representing that
she had not been a Utah resident or lived in Utah within the past 60 days.
5. The sale price of the vehicle, including the
extended service contract, was $$$$$.
The Utah sales tax on that amount calculated at a six percent rate was
$$$$$.
6. After purchasing the vehicle, the Petitioner
registered the vehicle in Wyoming and paid Wyoming sales tax on the
vehicle. The sales price on which the
Wyoming sales tax rate of four percent was applied was $$$$$. The amount of sales tax paid was $$$$$.
7. The Petitioner is employed by XXXXX (XXXXX)
in XXXXX, Utah. The Petitioner works
four, ten hour days per week for XXXXX.
During that time she resides in XXXXX, Utah.
8. The remaining three days a week is spent by
the Petitioner at her home in XXXXX, Wyoming, where she operates a rental
business.
9. The Petitioner does not own a home in Utah,
however, she owns a home in Wyoming.
10. The Petitioner filed a Utah resident income
tax return for the tax year XXXXX.
11. The Auditing Division assessed a sales tax
deficiency in the amount of $$$$$. The
Division also assessed a 100% penalty alleging the Petitioner committed fraud
with the intent to evade payment of the sales tax.
CONCLUSIONS OF LAW
Sales
of vehicles of a type required to be registered under the motor vehicle laws of
the state which are made to bona fide non-residents of the state and are not
thereafter registered to use in the state except as necessary to transport them
to the borders of the state are exempt from sales tax. (Utah Code Ann. §59-12-104(9).)
Any
person qualifying as a resident, who operates a vehicle or allows the operation
of a vehicle, in the state, must register it immediately. For purposes of vehicle registration, the
term "resident" means, ...any person engaging in a trade, profession,
or occupation or accepting gainful employment in this state.,. (Utah State Tax
Commission Administrative Rule R873-22M-1(b)(3), formerly Rule R873-OlV.)
If
the underpayment of tax is due to fraud with intent to evade the tax, the
penalty is the greater of $500 or 100% of the underpayment. (Utah Code Ann. §59-1-401(3)(d).)
DECISION AND ORDER
In
the present case, the issue to be decided by the Commission is whether or not the
Petitioner was a bona fide non-resident of the state within the meaning of Utah
Code Ann. §59-12-104(9), and as defined by Utah State Tax Commission
Administrative Rule R873-22l-M. In
determining the requirements of a "bona fide non-resident" one must
look to Utah State Tax Commission Administrative Rule R873-22l-M(b)(4), which
defines "resident" for motor vehicle registration and non-resident
status purposes. There, the term
"resident" means: ...(4) any person engaging in a trade, profession,
or occupation or accepting gainful employment in this state.
Applying
the statute and rule to the present case, it is undisputed that the Petitioner
was gainfully employed within the state of Utah, having been so since
1984. Therefore, by the express terms
of the rule, she is to be considered a resident of Utah for purposes of
determining the applicability of the sales tax exemption.
The
Tax Commission, therefore, finds that the Petitioner was not a bona fide
nonresident of Utah for purposes of a sales tax exemption on the purchase of
the vehicle in question and is liable for the payment of the sales tax due.
Having
so decided, the Commission turns to the issue of whether or not the Petitioner
committed fraud with the intent to evade the tax, thus requiring the imposition
of a 100% penalty.
The Petitioner testified that she interpreted
question number six on the affidavit, which stated "Have you been a
resident of Utah or lived in Utah within the past 60 days?" as asking if
she had lived in Utah for 60 consecutive days.
Under that interpretation, the Petitioner believed that the question
could have been answered in the negative.
The
Tax Commission does not accept the Petitioner's explanation as to why she
signed the affidavit representing herself to be a bona fide non-resident. Question number six is clear and unambiguous
in its terms. Only an unreasonably
tortured interpretation of the straight forward question could have resulted in
the kind of meaning the Petitioner ascribed to it. Additionally, the Petitioner
has filed resident Utah income tax returns which show that she considers
herself to be a resident of Utah for income tax purposes.
The
Commission's finding is further supported by the fact that when the vehicle was
registered and sales tax paid on the vehicle in Wyoming, the sales price upon
which the tax was calculated was over $$$$$ less than the amount actually paid
by the Petitioner when she purchased the vehicle. That fact, combined with the fact that the four percent Wyoming
sales tax rate is two percent less than what would have been charged in XXXXX
County, leads to the conclusion that the Petitioner attempted to pay less money
in sales tax than the amount for which she was actually liable. Given those facts, the Tax Commission finds
that sufficient evidence exists to support a finding that Petitioner acted with
the intent to evade payment of the tax due, but do not rise to the level
required to sustain a finding of fraud.
Based
upon the foregoing, the Tax Commission affirms the determination of the
Auditing Division in its assessment of a sales tax deficiency against the
Petitioner, but, finds that the penalty imposed should be 50% of the tax due.
It is so ordered.
DATED
this 4th 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