BEFORE THE UTAH STATE TAX COMMISSION
Petitioners : FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
AUDITING DIVISION OF THE : Appeal No. 89-1379
UTAH STATE TAX COMMISSION :
: Account Nos. XXXXX
Respondent : and 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 Petitioners was XXXXX. Present and representing the Respondent was XXXXX, Assistant Utah Attorney General.
Based upon the testimony and evidence presented at the hearing, the Tax Commission hereby makes its:
FINDINGS OF FACT
1. The tax in question is income tax.
2. The period in question is XXXXX.
3. During XXXXX, Petitioner XXXXX retired from federal employment in Florida. She and her husband moved from Florida and established residency in Utah in XXXXX. Florida imposes no state income tax.
4. In connection with her retirement, XXXXX elected a pension option referred to as an "alternative annuity with lump sum payment." Pursuant to this election, she received a lump sum payment of $$$$$ during XXXXX.
5. The Petitioners filed a joint XXXXX federal income tax return on which they reported $$$$$ in federal taxable income. As required by federal income tax law, that sum included $$$$$ as the taxable portion of XXXXX's lump sum payment.
6. The Petitioners also filed a joint XXXXX Utah resident income tax return on which they reported state taxable income of $$$$$.
7. The Petitioners paid the state income tax liability established by their XXXXX return, then filed a request for refund of the amount of tax attributable to the lump sum payment received by XXXXX.
CONCLUSIONS OF LAW
Utah Code Ann. §59-10-112 defines "state taxable income" as an individual's federal taxable income after any modifications, subtractions, and adjustments provided in §59-19-114.
Utah Code Ann. §59-10-111 defines "federal taxable income" as taxable income as currently defined in Section 63, Internal Revenue Code of 1986.
DECISION AND ORDER
For purposes of determining Utah income tax liability, Utah Code Ann. §59-10-112 provides that an individual's state taxable income is the same as his federal taxable income, with the modifications, subtractions, and adjustments set forth in Utah Code Ann. §59-19-114. In this case, the Petitioners concede that the lump sum payment in question was properly included in their XXXXX federal taxable income. The only remaining issue is whether Utah Code Ann. §59-19-114 excludes such lump sum payments from state taxable income. The Petitioners have identified no such exclusion.
The Petitioners point out that if the lump sum payment had been paid more promptly, so that it was received by Petitioners during XXXXX while they resided in Florida, it would not have been subject to Utah income tax. Because Florida has no state income tax, it would not have been subject to state income tax at all. However, the fact remains that the payment was not made until XXXXX, after Petitioners had established residency in Utah. The payment is therefore subject to Utah income tax law.
As the payment was properly included in Petitioner's federal taxable income and no provision excludes it from state taxable income, the Tax Commission hereby denies the Petitioners' request for refund of the Utah state income tax paid by Petitioners arising from the lump sum distribution in question. It is so ordered.
DATED this 27th day of November, 1990.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis