BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX; XXXXX;
XXXXX; ) FINDINGS OF FACT,
and XXXXX, : CONCLUSIONS OF LAW,
: AND FINAL
DECISION
Petitioners, :
:
v. : Appeal Nos. 90-2165 to
: 90-2168
AUDITING
DIVISION OF THE :
UTAH STATE TAX COMMISSION, : Tax
Type: Ind. Income
:
Respondent. :
_____________________________________
STATEMENT OF CASE
The
above cases are consolidated for appeal in that all Petitioners are partners in
the XXXXX Partnership. Each partner
listed above is contesting the same question of law, involving the same time
frame and fact pattern.
After
submitting briefs on the subject matter of this case, Petitioners and
Respondent waived the right to a formal hearing. This decision is based on the entire contents of the file as
presently constituted on XXXXX.
Based
upon the evidence and information contained in the file, the Tax Commission
hereby makes its:
FINDINGS OF FACT
1.
The tax in question is motor fuel tax.
2.
The audit period in question is the year XXXXX through the year XXXXX.
3.
Petitioners' partnership operates a XXXXX ranch with a herd of approximately XXXXX
head of XXXXX.
4.
The XXXXX graze in XXXXX, Utah in the summer and in XXXXX, Utah in the winter.
5.
The partnership purchases bulk gasoline that is stored in storage tanks located
on the ranch. The partnership also buys
gasoline in XXXXX.
6.
The gasoline is used in XXXXX heavy duty water trucks, XXXXX International farm
tractor and XXXXX heavy duty pickup trucks used in conjunction with the
ranching operation.
7.
The partnership filled out Form 4136 claiming that XXXXX% of the bulk gasoline
purchases and selected purchases in XXXXX were used for off-highway usage.
8.
Petitioners estimate that XXXXX% of the vehicles' usage would be considered
highway usage.
9.
The Auditing Division disallowed the off-highway gas credit based upon Utah
Admin. Rule R865-13G-8.
CONCLUSIONS OF LAW
Any
person who purchases and uses any motor fuel within the state for the purpose
of operating or propelling stationary farm engines and self-propelled farm
machinery used for non-highway agricultural uses, and who has paid the tax on
the motor fuel as provided by this part, is entitled to a refund of the tax
subject to the conditions and limitations provided under this part. Utah Code Ann. §59-13-202(1).
Further,
the Commission may promulgate rules to enforce the above code section. Utah Code Ann. §59-13-202(6). In so doing, the Tax Commission has enacted
Administrative Rule R865-13G-8(1A) which states that:
[e]very person who
purchases motor fuel within this state for the operation of farm engines,
including self-propelled farm machinery, used solely for nonhighway
agricultural purposes, is entitled to a refund...
These refunds:
[a]re limited to the
person performing custom agricultural work using nonhighway farm
equipment. (Utah Admin. Rule
R865-13G-8(123.)
DECISION AND ORDER
The
Tax Commission finds that the controlling factor in determining whether or not
motor fuel is subject to a credit is whether or not the farm machinery using
the fuel is being operated for a nonhighway agricultural purpose. This interpretation of the law and rule
allows the motor fuel purchaser to allocate his fuel for nonhighway
agricultural uses and for whatever else he chooses. A credit is allowed for the motor fuel used for nonhighway
agricultural uses only.
It
must be noted, however, that while apportionment is permitted, it must also be
substantiated with sufficient evidence in order for the Tax Commission to
accept the percentages alleged by Petitioner.
Respondent's
contention that all of the motor fuel purchased by the taxpayer must be used in
the requisite farm machinery for nonhighway agricultural purposes or be lost is
unrealistic in the agricultural community.
Based
upon the foregoing, the Tax Commission finds that Petitioners are entitled to a
motor fuel tax credit for the percentage of motor fuel they purchased and
actually used to operate farm machinery for nonhighway agricultural
purposes. It is so ordered.
DATED
this 30 day of April, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco S.
Blaine Willes
Commissioner Commissioner