BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
AUDITING DIVISION OF THE : Appeal No. 91-1371
UTAH STATE TAX COMMISSION, :
: Tax Type: Sales & Use
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a prehearing conference on XXXXX. With the consent of both parties the prehearing conference was converted to a formal hearing. Paul F. Iwasaki, Presiding Officer, heard the matter for and in behalf of the Commission. Present and representing the Petitioner was XXXXX. Present and representing the Respondent was XXXXX Assistant Utah 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 period in question is XXXXX.
3. The Petitioner is a resident of the State of Utah. On the date in question, the Petitioner resided in a home in XXXXX and was working at XXXXX where he continues to work.
4. On XXXXX, the Petitioner purchased a XXXXX from XXXXX located in XXXXX Utah. The Petitioner told the dealership that the car was being purchased for use by his ex-wife who lived in XXXXX and that the car would be titled and registered there.
5. The Petitioner completed a non-resident affidavit form listing himself and his ex-wife as the purchasers of the vehicle and listed her address as their address.
6. The Petitioner testified that he was listed as a co-owner of the vehicle because his ex-wife had not established sufficient credit of her own with which to purchase the vehicle. He further testified that his ex-wife has been responsible for making all payments on the vehicle. He further testified that approximately two months after the purchase of the vehicle, his exwife picked up the car and took it to XXXXX where she registered it.
7. The Petitioner testified that it was his belief that because the vehicle was being purchased for his ex-wife and because it was to be registered in the state of XXXXX, that it qualified as a tax exempt sale.
8. The Petitioner testified that he believed the title of the vehicle to be in both his and his ex-wife's name.
CONCLUSIONS OF LAW
Sales of vehicles of a type required to be registered under the motor vehicle laws of the state which are made to bona fide non-residents of the state and are not thereafter registered to use in this 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 the state, or student, covered under the rule R873-22M-4, who owns, leases, or rents a residence or place of business within the state, or occupies or permits to be occupied a Utah residence or place of business. (Utah State Tax Commission Administrative Rule R873-22l-M(lB)).
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 the state within the meaning of Utah Code Ann. §59-12104(9) and as defined by Utah State Tax Commission Administrative Rule R873-22M-1. In determining the requirements of a "bona fide non-resident" one must look to the Utah State Tax Commission Administrative Rule R873-22l-M(lB) which defines "resident" for motor vehicle registration and non-resident status purposes. There the term "resident" means:
any person, except a tourist temporarily within the state, or student, covered under the rule R873-22M-4, who owns, leases, or rents a residence or place of business within the state....
Applying the statute and rule to the present case, it is undisputed that the Petitioner was living within the State of Utah and owned a residence within the State of Utah on the date in question. Therefore, by the express terms of the rule, he is to be 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 non-resident of Utah for purposes of the sales tax exemption on the purchase of the vehicle in question and is liable for payment and sales tax due. The fact that the vehicle was subsequently moved outside of the state of Utah and registered outside of the state of Utah does not affect the outcome of this decision.
Having so decided, the Commission turns to the issue of whether or not the Petitioner acted with the intent to evade the tax, thus requiring the imposition of a 50% penalty.
Based upon the testimony and evidence presented at the hearing, the Tax Commission finds that the while these circumstances do not establish an intent on the part of the Petitioner to evade the tax due, such facts do show that the Petitioner acted negligently in signing the non-resident affidavit without carefully reading the contents of that affidavit. Had he done so, the Petitioner would have been put on notice that he did not qualify for the exemption. Therefore, the Tax Commission finds that a penalty in the amount of 10% is appropriate.
Based upon the foregoing, the Tax Commission affirms the Auditing Division's assessment of a sales tax deficiency in the amount of $$$$$ however, modifies the amount of penalty to be imposed to an amount of 10%. It is so ordered.
DATED this 25th day of February, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes