BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX, )
Petitioner, )
) FINDINGS
OF FACT,
) CONCLUSIONS
OF LAW,
v. ) AND FINAL DECISION
AUDITING
DIVISION OF THE ) Appeal No. 89-0504
UTAH STATE TAX
COMMISSION, )
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, attorney at law. Present and
representing the Respondent was XXXXX, Assistant Attorney General.
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 tax.
2. The date in question is XXXXX.
3. On XXXXX, the Petitioner purchased a motor
home from XXXXX. No sales tax was paid
on that transaction because the Petitioner represented himself to be a resident
of Wyoming.
4. Because of financing considerations, the Petitioner's
wife was listed as a co-purchaser and registered as co-owner of the motor home.
5. The Petitioner is a resident of XXXXX,
Wyoming. He lives on a ranch which he owns and did so on the date in question.
6. The Petitioner's wife is a resident of
XXXXX, Utah. She is a school teacher for the XXXXX. She lives in a home in
XXXXX which is owned by the Petitioner.
7. The Petitioner also owns property in XXXXX,
Utah, on which his son lives.
8. At the time the Petitioner purchased the
motor home in question, he signed a non-resident affidavit. The affidavit listed the Petitioner's phone
as being the phone number of his wife's home in XXXXX. An attempt to obliterate that telephone
number was done prior to the hearing by persons unknown.
9. A non-resident affidavit was not signed by
the Petitioner's wife.
10. After the purchase, the motor home was taken
to Wyoming and registered there. Sales
tax was also paid to the state of Wyoming by the Petitioner.
11. In addition to the sales tax deficiency, the
Auditing Division also assessed a 100% penalty alleging that the Petitioner
acted fraudulently and with the intent to evade the payment of the tax due.
CONCLUSIONS OF LAW
Sales
of vehicles of a type required to be registered under the motor vehicle laws of
this state which are made to bona fide non-residents of this state and are not
thereafter registered to use in this 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 this state must register it immediately. For the purposes of vehicle registration,
the term "resident" means, ... any person, except a tourist temporarily
within the state, or a student, covered under the rule R873-22m-4, who owns,
leases, or rents a residence or a place of business within the state, or
occupies or permits to be occupied a Utah residence or place of business.
(Utah
State Tax Commission Administrative Rule R873-22l-m(B)(3), formerly rule
R873-OlV).
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 this 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.
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 non-residents 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.
In
determining the requirements of a "bona fide resident" one must look
to Utah State Tax Commission Administrative Rule R873-22l-M(B) which defines
"resident" for motor vehicle registration and non-resident status
purposes. There, the term
"resident" means:... (3) any person ... who owns, leases, or rents a
residence or a place of business within this state, or occupies or permits to
be occupied a Utah resident or place of business.
Applying
the statute and rule to the present case, it is undisputed that the Petitioner
owns at least one residence within Utah, that being, the home owned by him in
XXXXX and occupied by his wife.
Therefore, by the terms of the rule, he 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
non-resident of Utah for purpose of the sales tax exemption on the purchase of
the motor home in question and is liable for the payment of the sales tax due.
The
Petitioner also argued that the imposition of the 100% fraud penalty was inappropriate
because there was no showing that the Petitioner acted fraudulently and with
the intent to evade the payment of the sales tax. Petitioner argued that the
non-resident affidavit was completed by the dealer and that the Petitioner
simply signed the affidavit without reading it. Additionally, the Petitioner
pointed out that the information contained on the affidavit was correct and any
changes made to it were done without the knowledge of the Petitioner after the
Petitioner had signed it.
The
Tax Commission agrees with the Petitioner that the facts do not support a
showing by preponderance of the evidence of any action of fraud with the intent
to evade the sales tax on the part of the Petitioner. The Tax Commission does find, however, that the Petitioner acted
negligently in signing the affidavit without having first read it and that the
underpayment of the sales tax was due to such negligence. Certainly, the reasonably prudent purchaser
would have read such an affidavit before signing it.
The
affidavit, among other things, contains a specific provision which the
purchaser affirmed to be true when he signs the document: 1) that he does not qualify as a resident
under the provision of rule R873-OlV which is printed on the reverse side of
the document; and 2) that he has read both sides of the affidavit.
Here
the Petitioner affirmed by his signature that he had read the affidavit and
after so doing did not qualify as a resident under the rules. If the Petitioner actually signed the
document without having first read it, then he does so at his own peril and is
responsible for the consequences.
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; however, the Tax Commission further finds that the appropriate
penalty to be imposed is not the 100% fraud penalty, but rather the appropriate
penalty is the 10% negligence penalty as provided for by Utah Code Ann.
§59-1-401(3)(A). It is so ordered.
DATED
this 6th day of September, 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