BEFORE THE UTAH STATE TAX COMMISSION
: FINDINGS OF FACT,
Petitioner, ) CONCLUSIONS OF LAW,
: AND FINAL DECISION
AUDITING DIVISION OF THE ) Appeal No. 89‑0376
UTAH STATE TAX COMMISSION :
) Account XXXXX
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Joseph G. Linford, 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 of the Auditing Division of the Utah State Tax Commission.
Based upon the evidence and testimony 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 XXXXX.
3. On the date in question, a XXXXX Ford Bronco was sold by Petitioner to XXXXX, who traded in a XXXXX Ford Bronco toward the purchase of the new vehicle. At the time of purchase, Petitioner and XXXXX completed a nonresident affidavit and, consequently, no Utah sales tax was paid by Mr. XXXXX. Mr. XXXXX subsequently registered the new vehicle and paid taxes on it in XXXXX. The nonresident affidavit was not completely filled out since question number six, inquiring whether the purchaser had been a resident of Utah within the past 60 days, question number seven, requiring an explanation if the answer to question six is "yes," and question number 12, inquiring as to the purchaser's driver's license number and state, were not completed.
4. Mr. XXXXX, at the time of this purchase, was between jobs. He had just left employment in XXXXX and had established a new home in XXXXX where his next job awaited him. He represented to Petitioner that he had come to Utah from XXXXX in order to purchase a vehicle in Utah, since he felt he could purchase a vehicle at less cost in Utah than in XXXXX. Mr. XXXXX was staying with his sister at a XXXXX, Utah, address. Petitioner states that Mr. XXXXX gave the impression that he would be in Utah only for a few days, and only for the purpose of purchasing a vehicle for use in XXXXX.
5. The address given, both on the purchase agreement and the odometer statement for the new vehicle, is a XXXXX, Utah, address, presumably that of Mr. XXXXX's sister. The purchase order also shows Utah residence and business phone numbers. Utah driver's license records indicate that Mr. XXXXX was issued a Utah driver's license on XXXXX, and lists the same XXXXX address.
6. Respondent's witness, Mr. XXXXX, testified that Mr. XXXXX filed part‑year resident Utah income tax returns for both the years XXXXX and XXXXX Those returns were not admitted into evidence, however, because of their confidential nature.
7. Tax Commission bulletins, which Petitioner acknowledged receiving, were issued to Petitioner almost a year before the transaction in question. These bulletins indicated that a new affidavit was to be used thereafter and that the previous affidavit form would not be valid. The affidavit form used in this case, however, was the previous form and was not the required current form. Both the previous and the current nonresident affidavit forms contain instructions for their completion, with which Petitioner did not fully comply.
CONCLUSIONS OF LAW
1. Utah Code Ann. '59‑12‑104(9) exempts from sales tax...sales of vehicles of a type required to be registered under the motor vehicle laws of this state which are made to bona fide nonresidents of this state and are not thereafter registered or used in this state except as necessary to transport them to the borders of this state. . .
2. Utah Administrative Rule R873‑22‑lM(B) (3‑6), (C) states that the term "resident" means, but is not limited to:
3. any person, except a tourist temporarily within his state, or a student, covered under Rule R873‑22‑4M, who owns, leases, or rents a residence or a place of business within this state, or occupies or permits to be occupied a Utah residence or place of business;
4. Any person engaging in a trade, profession, or occupation or accepting gainful employment in this state;
5. any person allowing a vehicle, boat, boat trailer or outboard motor, to be kept or used by a resident of this state, and
6. any person declaring himself to be a resident of Utah to obtain privileges not ordinarily extended to nonresidents, such as going to school or placing children in school without paying nonresident tuition or fees, maintaining a Utah driver's license, etc.
C. Any person qualifying as a resident under the above definitions, does not qualify as a nonresident for purposes of the exemption from sales tax under Utah Code Ann. '59‑12‑104.
3. Utah Administrative Rule R865‑19‑23S(E) provides:
The burden of proving that a sale is for resale or otherwise exempt is upon the person who makes the sale. If any agent of the Tax Commission requests the vendor to produce a valid exemption certificate or other similar acceptable evidence to support the vendor's claim that a sale is for resale or otherwise exempt, and the vendor is unable to comply, the sale will be considered taxable and the tax shall be payable by the vendor.
4. Utah Code Ann '59‑1‑401(3)(a,b) provides as follows:
The penalty for underpayment of tax is as follows:
(a) If any underpayment of tax is due to negligence, the Penalty is 10% of the underpayment.
(b) If any underpayment of tax is due to intentional disregard of law or rule, the penalty is 15% of the underpayment.
5. The Tax Commission finds that the imposition of the tax and interest is appropriate in this case. Petitioner was aware of the Tax Commission's rules, polices and procedures, and had been given bulletins which Petitioner acknowledged receiving and which informed Petitioner of the proper procedures. Specific instructions not followed by Petitioner were also included on both the past and the current nonresident affidavit forms. Petitioner failed to complete the nonresident affidavit in this case, rendering it invalid, and the evidence clearly shows that for purposes of the exemption, Mr. XXXXX was not considered a nonresident of the state. He may have been occupying a residence in Utah and he had obtained a Utah driver's license. The Commission finds, however, that these factors indicate Petitioner's negligence, but do not amount to an intentional disregard of law or rule. Therefore, the penalty should be reduced to a 10% negligence penalty.
DECISION AND ORDER
Based upon the foregoing, it is the decision and order of the Utah State Tax Commission that the imposition of the tax and interest is sustained. The penalty is reduced to a 10% negligence penalty, and interest shall be adjusted to account for the penalty reduction. It is so ordered.
DATED this 12 day of February, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis
NOTICE: You have twenty (20) days after the date of the final order to file a request for reconsideration or thirty (30) days after the date of final order to file in Supreme Court a petition for judicial review. Utah Code Ann. ''63‑46b‑13(1), 63‑46b‑14(2)(a).