BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
AUDITING DIVISION OF THE : Appeal No. 90-1579
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 were XXXXX, Attorney at Law, and XXXXX. Present and representing the Respondent were XXXXX, Assistant Attorney General, and XXXXX and XXXXX of the Auditing Division of the Utah State Tax Commission.
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. On the date in question, Petitioner purchased in Utah, tax free, two new XXXXX automobiles. At the time of purchase, Petitioner executed two non-resident affidavits, one for each vehicle, indicating that Petitioner was not a resident of the state of Utah and had not been a resident for the past sixty days.
4. Petitioner lived in Utah through XXXXX and up to the fall of XXXXX. He filed Utah resident income tax returns for both years. In October or November of XXXXX, Petitioner left Utah and began residency in the state of XXXXX.
5. After Petitioner had established his residency in XXXXX, he removed all of his personal effects from the state of Utah to his residence in XXXXX, with the exception of one XXXXX motorcycle. Petitioner renewed the Utah registration on the motorcycle in XXXXX, so that he could drive the motorcycle to his residence in XXXXX, but the motorcycle broke down and became totally inoperable, and Petitioner left it in Utah. The Utah registration on the motorcycle is now expired.
6. When Petitioner established residency in XXXXX, he set up a business there and established bank accounts, telephone numbers, and a mailing address in that state. He did, however, maintain a post office box in Utah as well as a telephone answering service so that, according to Petitioner, he could keep in contact with his friends and associates in Utah.
7. In XXXXX, Petitioner was in Utah in order to answer criminal charges filed against him in Utah. At this time he established residency in Utah with his son, XXXXX, in XXXXX's apartment, which the two began to share from that time forward. Petitioner maintains that this was only a matter of convenience and that Petitioner only occupied this residence when he was in Utah to take care of his legal matters in the state. He still considered his permanent residence to be in XXXXX. The evidence indicates that Petitioner assisted his son in making the rental payments on the apartment for the times when Petitioner occupied the apartment with his son.
8. Petitioner obtained a Utah driver's license on XXXXX. Prior to this time, Petitioner had only an XXXXX driver's license. Petitioner states that he obtained the Utah driver's license to use while he was temporarily in Utah to face the criminal charges against him. Petitioner states that he always has planned to relinquish this license once the criminal charges are dismissed.
9. The evidence indicates that Petitioner does have an account established with XXXXX in his name at the address of the apartment which he shares with his son.
10. Respondent has assessed the tax for both the vehicles in question to Petitioner, including a 15% intentional disregard of law or rule penalty for each transaction. Petitioner maintains that he should not be liable for the tax or the penalty, since he was not a Utah resident when he purchased the vehicles in question.
CONCLUSIONS OF LAW
1. Utah Administrative Rule R873-22M-1.B. and C. provide in pertinent part as follows:
For 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 a person leaves
the state temporarily will not be sufficient to terminate residency.)...
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;...
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.59-12-104.
1. For vehicles of a type required to be
registered under the motor vehicle laws of this state (trucks, cars, trailers,
etc.) infrequent, occasional, nonbusiness use in Utah such as by a tourist,
will not invalidate the exemption.
2. Utah Code Ann.59-1-401(3) provides in pertinent part 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
(b) if any
underpayment of tax is due to intentional disregard of law or rule, the penalty
is 15% of the underpayment.
DECISION AND ORDER
Based upon the foregoing, the Utah State Tax Commission finds that Petitioner was a resident of Utah for sales tax purposes at the time of the purchase of the vehicles in question. Petitioner obtained a Utah Driver's license in XXXXX. This forfeits the right Petitioner may have otherwise had to the exemption, and coupled with the fact that he perpetuated his contacts with Utah even after he moved to XXXXX, indicates that Petitioner did not actually ever terminate his Utah residency. However, the penalty should be reduced to a 10% negligence penalty, because Petitioner could have had a reasonable belief that he was not a Utah resident under the circumstances of this case. The determination of the Auditing Division is sustained, but the penalty shall be reduced to a 10% negligence penalty. Interest on the balance shall be adjusted accordingly. It is so ordered.
DATED this 25 day of June, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis