BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, : FINDINGS OF FACT
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
AUDITING DIVISION OF THE : Appeal No. 89-1254
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. Alan Hennebold, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX. 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 period in question is XXXXX.
3. The Petitioner resides at XXXXX, Utah, where he is in business as a heating and air conditioning contractor. He has filed resident Utah income tax returns for the past several years. The Petitioner holds a valid Utah driver's license.
4. During the summer of XXXXX, Petitioner's neighbor, XXXXX, advised Petitioner he could obtain XXXXX automobiles at favorable prices. The Petitioner agreed to purchase a vehicle from XXXXX. In exchange for the automobile, the Petitioner installed $$$$$ worth of heating and air conditioning equipment in XXXXX's residence and paid XXXXX $$$$$ by cash and check.
5. By XXXXX, the Petitioner's automobile had not been delivered. The Petitioner pressured XXXXX to deliver the car. XXXXX ultimately told the Petitioner that the car could be picked up at XXXXX.
6. The Petitioner went to XXXXX to take delivery of the vehicle. In doing so, he executed a non-resident affidavit stating that he was a resident of XXXXX, Idaho, that he was retired, had not been a resident of Utah within the past sixty days, and that he possessed an Idaho driver's license. On the basis of the non-resident affidavit, no sales tax was charged on the transaction. In fact, the Petitioner paid no money to XXXXX for the automobile. The Petitioner contends he has no knowledge of any arrangement made between Mr. XXXXX and XXXXX. The purchase order signed by XXXXX, Petitioner's wife, indicates a purchase price for the vehicle in question of $$$$$.
7. The Petitioner ultimately obtained title to the automobile from Mr. XXXXX. He registered the vehicle in Idaho and paid sales tax to that state on a purchase price of $$$$$. The Petitioner cannot explain the discrepancy between the purchase price of $$$$$ reported to Idaho, the purchase price of $$$$$ testified to in these proceedings, and the purchase price of $$$$$ reported on the purchase order.
8. In reviewing the foregoing facts, Tax Commission staff assessed sales tax of $$$$$ against Petitioner, based on the purchase price of $$$$$ indicated in the XXXXX purchase order. Penalty computed at 50% of the tax due, in the amount of $$$$$, was assessed against the Petitioner on the grounds he had intentionally attempted to evade sales tax. Associated interest was also assessed against the Petitioner.
CONCLUSIONS OF LAW
Utah Code Section 59-12-104(9) exempts from sales tax the purchase of vehicles to bona fide non-residents of this state if such vehicles are not thereafter registered or used in Utah except as necessary to transport them out of Utah.
Rule R873-22M-1 (Utah Administrative Code 1990-91) defines "resident" as, among other things, every person who is a legal resident of this state, every person employed in the state, and every person declaring himself to be a resident of the state.
DECISION AND ORDER
It is clear from the record that Petitioner entered into a transaction to purchase the vehicle in question with an individual of questionable honesty. In fact, that individual's activities have resulted in his incarceration by federal authorities. Nevertheless, the fact remains that the Petitioner purchased the vehicle in question for his use in Utah, as a resident of Utah. Utah sales tax was therefore due on the transaction.
There is some dispute as to the amount of the purchase price of the vehicle. According to the Petitioner, the purchase price was $$$$$. However, he has no verification of that price. In fact, in registering the automobile in Idaho, he reported a purchase price of $$$$$. The only written documentation of the automobile's purchase price is the purchase order itself, at $$$$$. Based upon the Petitioner's inability to establish a lower purchase price, his inconsistent statements regarding purchase price, and the available documentary evidence, the Tax Commission concludes that the Petitioner purchased the vehicle in question for $$$$$. The Tax Commission further concludes that Commission staff properly assessed sales tax of $$$$$ and a 50% penalty of $$$$$ against the Petitioner. The determination of the Audit Division is therefore affirmed. It is so ordered.
DATED this 5th day of September, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes*