BEFORE THE UTAH STATE TAX COMMISSION
Petitioner ) FINDINGS OF FACT,
) CONCLUSIONS OF LAW,
v. ) AND FINAL DECISION
AUDITING DIVISION OF THE ) Appeal No. 91‑0016
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. Alan Hennebold, Presiding Officer, heard the matter for and on behalf of the Commission. XXXXX, Tax Manager, participated by telephone for Petitioner. XXXXX, Assistant Utah Attorney General, with XXXXX, XXXXX and XXXXX from the Auditing Division, represented Respondent.
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 through XXXXX.
3. Petitioner is a grocery wholesaler doing business in XXXXX and other states.
4. Respondent performed an audit to determine Petitioner's compliance with XXXXX Sales Tax Act for the period in question. As a result of that audit, Respondent assessed Petitioner with additional sales tax of $$$$$, plus a XXXXX% negligence penalty and interest.
5. The additional tax was imposed on sales made to XXXXX of Petitioner's customers. Petitioner did not collect sales tax on the sales in the belief the items were purchased for resale, and therefore exempt from sales tax. Petitioner did not obtain exemption certificates from any of the XXXXX customers.
CONCLUSIONS OF LAW
The Utah Sales Tax Act levies a tax on retail sales in Utah of tangible personal property, as well as tangible personal property stored, used or consumed within the state. [Utah Code Ann. '59‑12‑103(1)(a) and (1).]
It is presumed that tangible personal property sold for delivery in Utah is subject to sales tax unless the seller has obtained a properly completed and signed exemption certificate from the purchaser. [Utah Code Ann. '59‑12‑106(2).]
The burden of proving that a sale is for resale is upon the vendor. If requested, the vendor must produce a valid exemption certificate or other acceptable evidence to support the vendor's claim that the sale is for resale or otherwise exempt. Without such evidence, the sale is considered taxable and the tax is payable by the vendor. (Tax Commission Administrative Rule R865‑19‑23S.lE.)
A XXXXX% penalty is imposed for negligent underpayment of tax. [Utah Code Ann. '59‑1‑401(3)(a).
Interest at the rate of 12% per annum is applicable to any unpaid tax administered by the Commission. (Utah Code Ann. '59‑1‑402.)
DECISION AND ORDER
The issue before the Commission is Petitioner's liability for tax on sales made during the audit period to XXXXX of Petitioner's customers. Petitioner believed the sales were exempt and therefore collected no sales tax. However, Petitioner failed to obtain exemption certificates from the customers.
Under Rule R865‑19‑23S.lE, the burden of proving that a sale is exempt from sales tax is placed on the vendor. Petitioner concedes it has no means of meeting that burden with respect to XXXXX of the XXXXX customers in question. As to the remaining XXXXX customers, Petitioner has submitted entries from telephone directories showing that the customers were restaurants or food brokers. From that evidence, Petitioner asks the Commission to infer that sales were for resale and not subject to tax. The Commission is unwilling to make such an inference without more substantial evidence.
Based on the foregoing, the Commission concludes that Respondent properly assessed additional tax of $$$$$ against Petitioner for the period in question. The Commission further concludes that Respondent properly assessed a XXXXX% penalty for Petitioner's negligent failure to either collect sales tax on the transactions in question, or obtain the exemption certificates which would have established that no tax was due. Respondent's assessment of tax, penalty and interest is therefore affirmed. It is so ordered.
DATED this 30th day of April, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes
NOTICE: You have twenty (20) days after the date of the final order to file a request for reconsideration or thirty (30) days after the date of final order to file in Supreme Court a petition for judicial review. Utah Code Ann. ''63‑46b‑13(1), 63‑46b‑14(2)(a).