BEFORE THE UTAH STATE TAX COMMISSION
) FINDINGS OF FACT,
) CONCLUSIONS OF LAW,
v. ) AND FINAL DECISION
AUDITING DIVISION OF THE ) Appeal No. 89-0504
UTAH STATE TAX COMMISSION, )
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
Joe B. Pacheco G. Blaine Davis