BEFORE THE UTAH STATE TAX COMMISSION
_____________________________________
XXXXX
:
Petitioner : FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
v. : AND FINAL DECISION
:
AUDITING
DIVISION OF THE : Appeal No. 89-1028
UTAH STATE TAX COMMISSION :
: Account
No. XXXXX
Respondent :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission pursuant to the Petitioner's
Petition for Redetermination filed XXXXX arising from a sales tax deficiency
assessed by the Auditing Division of the Utah State Tax Commission.
On
XXXXX, a prehearing conference was held.
Paul F. Iwasaki, Presiding Officer, conducted the prehearing
conference. Present by telephone and
representing the Petitioner were XXXXX and XXXXX. Present and representing the Respondent was XXXXX, Assistant Utah
Attorney General.
At
the prehearing conference it was agreed to by the parties that the Tax
Commission may render its decision based upon the stipulated facts and written
memoranda submitted by the parties.
Based
upon the stipulated facts and memoranda submitted by the parties, the Tax
Commission hereby makes its:
FINDINGS OF FACT
1.
The tax in question is use tax.
2.
The audit period in question is XXXXX.
3.
The parties, by way of written stipulation, stipulated to the operative facts
in this case. That document entitled
"Stipulation of Facts was filed with the Commission on XXXXX. Those facts are incorporated by reference
into this decision and are attached hereto.
CONCLUSIONS OF LAW
Each
vendor shall pay or collect and remit the sales taxes imposed by Title 59,
Chapter 12, Utah Code Ann., if within the state the vendor directly or by any
agent or other representatives: (i) has or utilizes an office, distribution
house, sales house, warehouse, service enterprise, or other place of business;
. . . (iv) regularly engages in the delivery of property in the state other
than by common carrier or United States Mail . . . . (Utah Code Ann.
§59-12-107(5)(a), 1987).
Taxpayers
selling tangible personal property or services to exempt customers are required
to keep records verifying the nontaxable status of such sales. Records shall include: sales invoices
showing the name and identity of the customer, and exemption certificates for
exempt sales of tangible personal
property or services if the exemption is
shown on the exemption certificate forms or if the sale is to a government
agency, and the total sale is $100 or less.
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. (Utah State Tax Commission
Administrative Rule R865-23S).
DECISION AND ORDER
In
the present case, the issue to be determined by the Commission is whether or
not the sales made by the Petitioner at its refineries located in Illinois and
California to Utah customers is subject to use tax.
With
respect to the Illinois sales, the Petitioner argued that the purchases were
subject to Illinois sales tax however, in this case, were exempt because the
purchasers had provided exemption certificates to the Petitioner. While such
exemption certificates may have been provided, the Tax Commission, without
further proof, is unable to substantiate such claims. Because claims that items of tangible personal property were
purchased for resale are easily made, and because such claims are difficult to
disprove, the Tax Commission has promulgated an Administrative Rule which
requires that adequate records be maintained concerning such sales. Absent such records, a transaction is
presumed to be a taxable transaction.
In
the present case, the Petitioner was unable to provide the necessary records to
verify the tax exempt status of the Illinois sales in question. Therefore, the Petitioner must bear the consequences
and is liable for the use tax on such sales.
With
respect to the California sales, the Petitioner argued that the sales were not
subject to California sales tax because the tangible personal property sold was
delivered to a point outside the state of California.
Under
this argument, the Petitioner seems to be alleging that because the sale took
place in California, and because California exempted such a transaction from
sales tax because the property was to be delivered outside of California, such
transaction is not subject to Utah use tax.
The
Tax Commission finds the Petitioner's argument to be without merit. The Petitioner's theory is illogical and
circular. It would allow for exemption
from sales tax from the state in which the property was purchased on the basis
that it was destined for delivery out of state, and then would allow for an
exemption from use tax in the state in which the goods were delivered simply
because it was originally exempt from sales tax as an out of state sale. Clearly,
such an arrangement is not appropriate.
In
its final argument, Petitioner claims that the imposition of the use tax under
the circumstances in this case constitutes an unconstitutional burden upon
interstate commerce and is thus prohibited by Article I, Section 8, of the
United States Constitution.
As
an administrative agency and not a judicial body established under the
Constitution of the State of Utah, the Tax Commission is not empowered nor
authorized to determine the legality or constitutionality of legislative
enactments. Therefore, the state
statutes in question which relates to the imposition of use tax are presumed to
be constitutional and valid.
Based
upon the foregoing, the Tax Commission affirms the determination of the
auditing Division. Because, however, of
the inordinate delay in resolving this matter, interest, if applicable, is to
be calculated from the date of the liability to XXXXX. It is so ordered.
DATED
this 20th day of August, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco S.
Blaine Willes
Commissioner Commissioner