BEFORE THE UTAH STATE TAX COMMISSION
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
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
Joe B. Pacheco G. Blaine Davis