BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX,
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS
OF LAW
v. : AND FINAL DECISION
:
AUDITING DIVISION
OF THE : Appeal No. 90-2578
UTAH STATE TAX COMMISSION, :
Respondent. :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Paul F. Iwasaki, Presiding Officer,
heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX. Present and representing the Respondent was
XXXXX, Assistant Attorney General.
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 date in question is XXXXX.
3.
On XXXXX, the Petitioner purchased a XXXXX van from XXXXX. No sales tax was paid on that transaction
because the Petitioner represented himself to be a resident of XXXXX.
4.
In XXXXX, the Petitioner attempted to establish residency in XXXXX. Towards that end the Petitioner obtained a
XXXXX drivers license and also became licensed to practice XXXXX in XXXXX, and established
a XXXXX practice in that state.
5.
Besides living in XXXXX, the Petitioner also lived in XXXXX, Utah. The Petitioner maintained a practice in Utah
while contemporaneously maintaining a practice in XXXXX. The Petitioner would spend approximately two
weeks in one state and then commute to the other state and reside there for
approximately two weeks before returning.
6.
In addition to being gainfully employed in both Utah and XXXXX, the Petitioner
filed resident tax returns for Utah for the years XXXXX through XXXXX.
7.
At the time the Petitioner purchased the motor vehicle in question, he signed a
nonresident affidavit. In signing that
affidavit, the Petitioner represented that he was not a resident of Utah, nor
had he lived in Utah within the past 60 days.
The Petitioner also represented that he had read both sides of the
affidavit and answered all questions to the best of his knowledge and belief.
8.
The nonresident affidavit which the Petitioner signed did not have a reverse
side which typically contained the Tax Commission's rule which defines
"resident."
9.
The Petitioner testified that at the time he signed the nonresident affidavit
he had not read the provisions of the affidavit and that he signed his name to
that document as well as numerous other documents during the course of the
transaction without being aware of the actual contents of the nonresident
affidavit.
10.
The Auditing Division assessed a sales tax deficiency in the amount of
$$$$$. The Auditing Division also
assessed a XXXXX penalty, alleging the Petitioner acted with the intent to
evade payment of the sales tax due.
CONCLUSIONS OF LAW
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 to use in the state except as necessary to transport them
to the borders of the state are exempt from sales tax. (Utah Code Ann. §59-12-104(9).
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 registration,
the term "resident" means:
...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 the state,
or occupies or permits to be occupied a Utah residence or place of business;
Any person engaging in
a trade, profession, or occupation or accepting gainful employment in this
state. (Utah State Tax Commission
Administrative Rule R873-22M-1(B)(3 & 4), formerly Rule R873-01V.)
DECISION AND ORDER
In
the present case, the issue to be decided by the Commission is whether or not
the Petitioner was a bona fide nonresident of this state within the meaning of
Utah Code Ann. §59-12-104(9), and as defined by Utah State Tax Commission
Administrative Rule R873-22M-1.
Sales
of vehicles, which must be registered under the motor vehicle laws of the state
of Utah, which are made to bona fide nonresidents of Utah are not subject to
sales tax. In order to be a bona fide
nonresident, one must not be a resident as that term is defined by Utah State
Tax Commission Administrative Rule R873-22M-1(D).
In
applying the above mentioned statute and rule, it is clear that the Petitioner
was gainfully employed within the state of Utah, and further, that he owned a
residence within the state of Utah which he lived in during the time he was
here. Therefore, by the terms of the
rule, he is considered a resident of Utah for purposes of determining the
applicability of the sales tax exemption.
The
Tax Commission, therefore, finds that the Petitioner was not a bona fide
nonresident of Utah for purpose of the sales tax exemption on the purchase of
the vehicle in question and is liable for the payment of the sales tax due.
The
Tax Commission also finds that the Petitioner acted with the intent to evade
the tax due at the time of the transaction.
The Tax Commission finds it incredulous that anyone with the significant
ties to this state such as the taxpayer has, including the filing of resident
income tax returns, would in good faith believe himself to be a nonresident of
this state when purchasing a motor vehicle.
It
is also apparent that the Petitioner made a material omission of fact when he
filled out the nonresident affidavit by representing he was then currently
employed in XXXXX and omitting the fact that he was also employed in Utah. The only logical conclusion to be drawn from
such actions is that the Petitioner was attempting to paint himself as a
nonresident of Utah to avoid paying the sales tax due.
It
is not known from the evidence presented if the automobile dealership in
question assisted in the false representations made in the affidavit, or if it
had knowledge that the information contained therein was not correct. If such a showing can be made, then the
dealership may be subject to a revocation of its sales tax license, and an
assessment of sales tax, interest and 100% penalty.
The
Tax Commission is concerned that such may be the case, particularly where the
affidavit provided to the Petitioner was incomplete. The Auditing Division is directed to investigate the matter to
see if action against the dealership is appropriate.
Based
upon the foregoing, the Tax Commission affirms the determination of the
Auditing Division in its assessment of a sales tax deficiency against
Petitioner and further affirms the XXXXX penalty imposed. It is so ordered.
DATED
this 14 day of May, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner