BEFORE THE UTAH STATE TAX
COMMISSION
_________________________
In Re: ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
XXXXX ) AND FINAL DECISION
:
: Appeal No.
91-0349
: 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.
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. During the period in question, Petitioner
purchased a vehicle from XXXXX. At the
time of the purchase, Petitioner maintained home and business locations both in
Utah and Idaho, but spent the majority of his time in Idaho. Petitioner
testified that he spent almost all of his time in Idaho during the years XXXXX,
XXXXX and XXXXX, until he left to XXXXX.
He did not pay Utah sales tax at the time of the purchase of the
vehicle, but registered and paid tax in the state of Idaho. Petitioner testified that he did so because
he was living in Idaho the vast majority of the time and felt that Idaho was
the appropriate place to pay the sales tax and to register the vehicle. The tax has since been refunded to
Petitioner from Idaho.
4. At the hearing, Petitioner testified that he
could not remember specifically signing a nonresident affidavit in order to
obtain the vehicle without paying Utah sales tax. He acknowledged he could have signed such a document but was
under the impression that he should pay Idaho tax instead of Utah tax. Therefore, he would have thought it appropriate
to sign the document.
5. A 50% penalty plus interest has been
assessed by the Tax Commission for the untimely payment of the sales tax in
question. The sales tax, penalty and
interest have all since been paid by Petitioner. Petitioner requests that the penalty and interest be waived and
refunded because Petitioner did not intend to evade the tax, but thought that
he was proceeding properly in paying Idaho tax instead of Utah tax.
CONCLUSIONS OF LAW
1. Utah Code Ann. Section 59-12-104(9) provides
that sales of vehicles which are required to be registered in Utah, which are
made to bona fide nonresidents of Utah and are not thereafter registered or
used in the state except to transport them to the borders of the state, are
exempt from the sales and use tax.
2. Utah Administrative Rule R873-22l-M.B. and
C. provides in pertinent part as follows:
B.
...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 interstate business
and operating a vehicle...as part of the business within this state, or any
person maintaining a vehicle...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...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.
3. 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 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.
4. Utah Code Ann. §59-1-402 provides that
interest in the amount of 12% per annum shall be assessed when tax payments are
not made in a timely manner.
5. Utah Code Ann. §59-1-401(8) provides that,
upon reasonable cause shown, the Tax Commission may waive or reduce the
penalties and interest imposed under the above provisions.
DECISION AND ORDER
The
facts indicate that a 50% penalty for intent to evade the tax is excessive in
this case. Petitioner was negligent in
failing to pay the tax in question in Utah, and therefore, a 10% negligence penalty
is appropriate. The penalty should not
be reduced beyond that point because Petitioner was negligent and the law
requires that a negligence penalty be applied.
No facts exist upon which to base a determination that the 50% penalty
should be imposed. There is no
indication that Petitioner had any intent to evade the tax.
Interest
should not be waived because the state was deprived of the use of the tax funds
in question for a period of time, through no fault of its own, and should be compensated
for that loss of use.
Based
upon the foregoing, the Tax Commission finds that sufficient cause has been
shown which would justify a reduction of the penalty associated with the
Petitioner's sales tax for XXXXX to the amount of $$$$$. Interest shall be
adjusted to account for the reduction in the penalty amount. The additional
penalty and interest amounts already paid by Petitioner are to be
refunded. It is so ordered.
DATED
this 6th day of June, 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