BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
AUDITING DIVISION OF THE : Appeal No. 90-1571
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. Joseph G. Linford, 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 of the Utah State Tax Commission.
Based upon the evidence and testimony in the record and 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 the audit period XXXXX.
3. On the date in question, Petitioner purchased a XXXXX automobile from XXXXX in XXXXX, Utah. At that time, Petitioner completed and signed a nonresident affidavit and purchased the vehicle exempt from Utah sales tax. Petitioner subsequently registered the vehicle in XXXXX and paid tax there.
4. Petitioner's employment is that of a construction superintendent for a firm involved in the construction and upgrading of waste incinerators. The nature of this employment requires that Petitioner travel to construction sites located in several different states, and while he is working at each construction site, to set up temporary residence near that construction site. On XXXXX, Petitioner was transferred by his employer to the state of Utah in order to work on the completion of a hazardous waste facility at XXXXX, Utah. Prior to this time, Petitioner was working at a construction site in XXXXX.
5. Prior to Petitioner's current employment, he was a resident of XXXXX and still has interest in a partnership which owns property in that state. Petitioner maintained a post office box in XXXXX until recently and did maintain that post office box as of the date in question. Since before the time of his current employment, Petitioner has considered himself to be a resident of XXXXX and continued to consider himself a XXXXX resident on the date in question.
6. When Petitioner was transferred to Utah, he rented an apartment in XXXXX, Utah, where he resides while working on the construction site. Petitioner also maintains a telephone number at that residence.
7. For the tax year XXXXX, Petitioner filed a Utah nonresident or part year resident income tax return which indicates Utah taxable income for the tax year XXXXX. Petitioner obtained a Utah driver's license on XXXXX surrendering his XXXXX license in order to do so.
8. It is Petitioner's position that Petitioner was a resident of XXXXX on the date in question, and was, therefore, not required to pay Utah sales tax on the purchase of the vehicle in question. Petitioner considered his residence in Utah to be merely temporary and considered XXXXX his state of permanent residence.
9. It is the position of the Respondent that Petitioner owed sales tax on the vehicle in question and that Petitioner had an intent to evade the payment of that tax in Utah. Therefore, Respondent has imposed the tax amount plus a XXXXX penalty for intent to evade the tax and interest.
CONCLUSIONS OF LAW
1. Utah Code Ann. §59-12-104(9) provides:
The following sales and uses are exempt from the taxes imposed by this chapter:
(9) sales of vehicles of a type required to be registered under the motor vehicle laws of this state which are made to bona fide nonresidents 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...
2. Utah Administrative Rule R873-22l-M.B. and C. (formerly R873-OlV-l), pursuant to Utah Code Ann. §59-12-104(9) provides as follows:
B. 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, boat, boat trailer or outboard motor registration, the term "resident" means, but is not limited to, the following:
1. every person who is a legal resident of this state; (the fact that a person leaves the state temporarily will not be sufficient to terminate residency.)
2. any person engaging in intrastate business and operating a vehicle, boat, boat trailer or outboard motor, as part of the business within this state, or any person maintaining a vehicle, boat, boat trailer or outboard motor, with this state designated as the home state;
3. any person, except a tourist temporarily within this state, or a student, covered under rule R873-22M-4, who owns, leases, or rents a residence or a place of business within this state, or occupies or permits to be occupied a Utah residence or place of business;
4. any person engaging in a trade, profession, or occupation or accepting gainful employment in this state;
5. any person allowing a vehicle, boat, boat trailer or outboard motor, to be kept or used by a resident of this state; and
6. any person declaring himself to be a resident of Utah to obtain privileges not ordinarily extended to nonresidents, such as going to school or placing children in school without paying nonresident tuition or fees, maintaining a Utah driver's license, etc.
C. Any person qualifying as a resident under the above definitions, does not qualify as a nonresident for purposes of the exemption from sales tax under Utah Code Ann. Section 59-12-104...
3. Utah Code Ann. §59-1-401(3) provides as follows:
The penalty for underpayment of tax is as follows:
(a) If any underpayment of tax is due to negligence, the penalty is 10% of the underpayment.
(b) If any underpayment of tax is due to intentional disregard of law or rule, the penalty is 15% of the underpayment.
(c) For intent to evade the tax, the penalty is the greater of $500 per period or 50% of the tax due.
(d) If the underpayment is due to fraud with intent to evade the tax, the penalty is the greater of $500 per period or 100% of the underpayment.
DECISION AND ORDER
It is clear under the above provisions that Petitioner was a legal resident of Utah for purposes of payment of the sales tax on the vehicle in question. Petitioner maintained a residence in Utah. Although Petitioner considered this only a temporary residence, the above provisions are quite clear in mandating that a temporary residence such as that maintained by Petitioner is sufficient to establish Petitioner's residency for the payment of sales tax on the vehicle in question.
Petitioner rented a place of residence in the state of Utah, engaged in his trade or profession or gainful employment in the state, used the vehicle within the state, and had obtained a Utah driver's license. All of these factors indicate Petitioner's legal residency for purposes of payment of the sales tax.
The XXXXX to evade penalty was assessed in this case largely because Petitioner signed the nonresident affidavit indicating that he was a nonresident. Under the circumstances of this case, the Commission finds that Petitioner did not have the specific intent to evade the tax in question. Petitioner had sufficient cause to consider himself a resident of XXXXX. That state was his place of permanent residence before accepting his current employment, and his places of abode while working at job sites in various states were considered by him to be merely temporary residences. Therefore, the XXXXX intent to evade penalty is inappropriate. The nonresident affidavit, however, does clearly state the factors which will establish residency for the purposes of paying sales tax, and Petitioner's signature is on the affidavit indicating that he had read and understood the provisions noted on that affidavit. The facts indicate that he disregarded the provisions on the affidavit. Therefore, a XXXXX penalty for intentional disregard of law or rule is appropriate.
Based upon the foregoing, the Tax Commission finds that the imposition of the tax and interest in this case are appropriate. The Tax Commission finds, however, that the XXXXX intent to evade penalty should be reduced to a XXXXX penalty for intentional disregard of law or rule. Interest shall be adjusted to account for the reduction in the penalty. It is so ordered.
DATED this 14 day of February, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis