BEFORE THE UTAH STATE TAX COMMISSION
: FINDINGS OF FACT,
v. : CONCLUSIONS OF LAW
: AND FINAL DECISION
AUDITING DIVISION OF THE :
UTAH STATE TAX COMMISSION, : Appeal No. 90-0143
: Account No. XXXXX
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. G. Blaine Davis, Administrative Law Judge, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX. Present and representing the Respondent were XXXXX, Assistant Attorney General, and XXXXX of the Auditing Division.
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 income tax.
2. The period in question is the XXXXX tax return of Petitioner.
3. The Petitioner is a retiree from XXXXX, and for the year XXXXX he was an annuitant, receiving payments from an annuity which was purchased for him when XXXXX was acquired.
4. The Petitioner presently receives Social Security, but did not receive Social Security for the year XXXXX.
5. The Petitioner originally filed his income tax return and paid tax on all of income shown thereon.
6. On XXXXX, Petitioner filed an amended return for the XXXXX year, and claimed an exemption from state income tax for all of his annuity income on the grounds that the legislature had exempted the retirement pay of state employees, and therefore pursuant to the constitution he was entitled to be treated equally with state employees, and also to be treated equally with federal employees in accordance with the principals and standards set forth in Davis vs. Michigan, 49 U.S. 803, 103 L.Ed.2nd 891, 109 S.Ct. 1500. The amended return claimed a refund based on the substantially reduced income.
7. The Petitioner takes the position that although his case is not based directly on Davis vs. Michigan, supra, the principals there are still applicable to his circumstance, and that to not allow him an exemption for his retirement income is unlawfully discriminatory against him. Therefore, Petitioner asserts, the law exempting retirement pay of state employees as passed by the legislature was discriminatory and illegal.
8. Petitioner further asserts that, "Under the Erisa Law the United States Congress specifies that discrimination under retirement is unlawful and void."
9. Petitioner also claims the Legislature had a conflict of interest in passing the exemption for state employees because, in his opinion, the exemption benefitted many legislators who may have been school teachers or other state employees.
10. The Tax Commission sent to the Petitioner the amount of refund shown on his amended XXXXX income tax return.
11. At a later date, the Auditing Division reviewed his amended return and disallowed the exemption from income for the retirement income. On XXXXX, Petitioner paid under protest the assessment from the Auditing Division.
CONCLUSIONS OF LAW
State law imposes an income tax on state taxable income which is interpreted to be the federal taxable income, pursuant to sections59-10-111 and59-10-112, U.C.A. Section 59-10-114, U.C.A., provides for a retirement income deduction.
The deduction which Petitioner took on his amended return exceeded that deduction which is allowed by the statute. Petitioner is not legally permitted to file the return as he wishes the statute existed, and the disallowance by the Auditing Division was correct.
DECISION AND ORDER
The principals set forth in Davis vs. Michigan, supra, are not applicable to private pensioners who did not receive their pensions from the United States Government. The decision in that case was limited to the specific facts set forth in the case. It was based upon the applicable federal statute and not upon a constitutional provision. It, therefore, does not apply to Petitioner and his pension or annuity income.
Further, the Erisa law does not prohibit the different treatment of pension income which has been argued by Petitioner. That law does not have any impact on the way that states tax retirement income.
This Commission is without jurisdiction to make a determination that the legislature had a conflict of interest in passing the exemption for state employees, but even if it had jurisdiction to make such a determination, there was no evidence presented which would support such a determination.
Based upon the foregoing, the Petition for Redetermination of the Petitioner is hereby denied and the additional audit assessment imposed by the Auditing Division is affirmed. It is so ordered.
DATED this 6 day of December, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes