BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, ) FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. ) AND FINAL DECISION
AUDITING DIVISION OF THE ) Appeal No. 92-0302
UTAH STATE TAX COMMISSION, :
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for a formal hearing on March 22, 1993. Alan Hennebold, Presiding Officer, heard the matter on behalf of the Commission. Petitioner XXXXX participated by telephone on his own behalf. XXXXX, Assistant Utah Attorney General, 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 individual income tax.
2. The periods in question are calendar years XXXXX through XXXXX.
3. On XXXXX, Respondent assessed Petitioner with individual income tax for the XXXXX tax year in the amount of ($$$$) plus penalty of ($$$$) and accrued interest. That same day, Respondent also assessed Petitioner with individual income tax for the XXXXX tax year in the amount of ($$$$), plus penalty of ($$$$) and accrued interest. On XXXXX, Respondent assessed Petitioner with individual income tax for the XXXXX tax year in the amount ($$$$), plus penalty of ($$$$), and accrued interest.
4. Petitioner filed his appeal of the XXXXX and XXXXX assessments on XXXXX. He filed his appeal of the XXXXX assessment on XXXXX.
5. Prior to XXXXX, Petitioner had resided in Utah with his wife and children. During XXXXX, Petitioner accepted employment as an attorney with a law firm in southern California, where he has since remained employed.
6. Petitioner's wife has continued to live in the family residence in Bountiful, Utah, while Petitioner resides in a motel apartment in California. Petitioner returns to Utah periodically for family reasons. During such times, he stays at the family residence, with his wife and children.
7. Petitioner owns no real estate in California.
8. Petitioner maintains a Utah driver's license.
9. Petitioner has not registered to vote in California, but has instead voted by absentee ballot in Utah.
10. Petitioner's school age children have attended public schools in Utah.
11. Petitioner provides the funds necessary to maintain his family and home in Utah.
12. During each of the years in question, Petitioner and his wife filed joint federal income tax returns, listing the family residence in Bountiful, Utah as their address. Petitioner also filed California "Nonresident or Part-Year Resident" income tax returns and paid income tax to California for each of the years in question.
13. During each of the years in question, Petitioner did not file an income tax return with Utah.
CONCLUSIONS OF LAW
1. Utah's Individual Income Tax Act imposes a tax on Utah state taxable income of every resident individual. (Utah Code Ann. §59-10-4 et seq.)
2. Every resident individual liable for Utah individual income tax must file an annual income tax return. (Utah Code Ann. §59-10-501, 502.)
3. "Resident individual" includes, among other things:
An individual domiciled in Utah for any period of time during the taxable year, but only for the duration of such period. (Utah Code Ann. § 59-1O-103(j ).)
4. "Domicile" is defined as:
The place where an individual has a true, fixed, permanent home and principal establishment, and to which place he has (whenever absent) the intention of returning.
It is the place in which a person has voluntarily fixed the habitation of himself and family, not for a mere special or temporary purpose, but with the present intention of making a permanent home. After domicile has been established, two things are necessary to create a new domicile; first, an abandonment of the old domicile; and second, the intention and establishment of a new domicile. The mere intention to abandon a domicile once established is not of itself sufficient to create a new domicile; for before a person can be said to have changed his domicile, a new domicile must be shown. (Utah Administrative RuleR865-9I-2(D).)
5. Utah Code Ann. §59-10-408(1) provides as follows:
Every person liable for any tax imposed by the Individual Income Tax Act shall make such returns and comply with such rules as the Commission may from time to time by rule prescribe. Whenever in the judgment of the Commission it is necessary, it may require any person, by notice served upon such person or by rule, to make such returns, render such statements, or keep such records, as the Commission deems sufficient to show whether or not such person is liable for tax under this chapter.
6. The income tax return required by Utah's Individual Income Tax Act must be filed with the Commission on or before the 15th day of the fourth month following the close of the taxpayer's taxable year. (Utah Code Ann. §59-10-514.)
7. Utah Code Ann. §59-10-406(2) provides:
If any person fails to timely make and file any return required by Utah's Individual Income Tax Act, or makes a false or fraudulent return, the Commission shall make such return from its own knowledge and from such information as it can obtain. Any such return made by the Commission is prima facia good and sufficient for all legal purposes.
8. Utah Code Ann. §59-10-527 provides:
The Commission may make assessments of all taxes imposed by the Utah Individual Income Tax Act. Such assessments shall be made by recording the liability of the taxpayer in the office of the Commission in accordance with Commission rules. The Commission may, at any time within the period prescribed for assessment, make a supplemental assessment if it is ascertained that any assessment is imperfect or incomplete in any material respect.
9. The Commission may assess individual income tax at any time if no return is filed or if a false or fraudulent return is filed with intent to evade tax, or a return is prepared by the Commission for the taxpayer. (Utah Code Ann. §59-10-536(3).)
10. If a return has been filed, the Commission may assess any tax imposed by the Individual Income Tax Act within three years of the date the return was filed. (Utah Code Ann. §5910-536(1).)
11. Except for three specific exceptions which do not apply in this matter, the burden of proof is on the Petitioner in any proceeding before the Commission under the Individual Income Tax Act. (Utah Code Ann. §59-10-542.)
DECISION AND ORDER
In this case, Respondent's assessment of tax, penalty and interest against XXXXX rests upon the conclusion that XXXXX was a resident of Utah for income tax purposes for the years XXXXX through XXXXX. While Utah Code Ann. §59-10-103(j) sets forth two definitions of "resident", Respondent concedes that the second of those definitions is not applicable in this case. Therefore, if XXXXX is a resident of Utah at all, it is under the following definition of resident: an individual who is domiciled in this state for any period of time during the taxable year, but only for the duration of such period. (emphasis added).
Domicile is defined by the Commission's RuleR865-9I-2(D) as follows:
"Domicile" means the place where an individual has a true, fixed, permanent home and principal establishment, and to which place he has (whenever he is absent) the intention of returning. It is the place in which a person has voluntarily fixed the habitation of himself and his family, not for a mere special or temporary purpose, but with the present intention of making a permanent home. After domicile has been established, two things are necessary to create a new domicile: first, an abandonment of the old domicile; and second, the intention and establishment of a new domicile. The mere intention to abandon a domicile once established is not of itself sufficient to create a new domicile; for before a person can be said to have changed his domicile, a new domicile must be shown.
Admittedly, Petitioner's domicile was in Utah prior to 1988, when he began work in California. In order to establish that he was not a resident of Utah for income tax purposes during and after 1988, Petitioner must have abandoned his Utah domicile and established a new domicile.
The facts do not support Petitioner's contention that he established a new domicile in California. He continues to vote in Utah and maintains a Utah driver's license. He maintains a residence in Utah where his wife and children reside and where he returns whenever possible. He has filed federal income tax returns showing his Utah home as his residence, and California returns on which he claims to be a nonresident or part-time resident of that state.
The only fact which supports Petitioner's contention that he is not a resident of Utah is that he is employed and maintains an apartment in California.
In consideration of the foregoing factors, and giving appropriate weight to each, the Commission finds that Petitioner had not abandoned his Utah domicile and is, therefore, a resident of Utah for income tax purposes. The Commission affirms Respondent's determination of Petitioner's tax liability for the years in question, but notes that both Petitioner and Respondent agree Petitioner is entitled to credit for taxes paid to California. This matter is therefore remanded to Respondent with instructions that it determine the extent to which Petitioner can claim such credit, then issue its amended assessment for each of the years in question showing the tax remaining due after deduction of such credits.
The final question before the Commission is whether and to what extent it should exercise its discretion to waive penalty and interest in this matter.
Penalties equivalent to 10% of the tax due or $50, whichever is greater, have been assessed against Petitioner for late filing of his Utah returns for the years in question. A penalty in the same amount and for the same years has also been assessed for Petitioner's late payment of the tax due. Interest at the statutory rate has also been assessed on the principal amount of tax due.
Petitioner has put forward no basis to justify waiver of penalty. The record establishes that Petitioner has taken inconsistent positions regarding his state income tax liabilities and has not exercised due care in filing his returns. The Commission finds no reasonable cause to support waiver of penalties in this matter. However, the Commission instructs Respondent to recompute the amount of penalty and interest assessed against Petitioner based upon the amount of tax due Utah after proper credit is given for taxes paid to California.
In summary, and based upon the foregoing, the Tax Commission finds that Petitioner is a resident of Utah for the tax years XXXXX through XXXXX. Respondent will redetermine the amount of income tax due Utah from Petitioner for those years, after giving proper credit for taxes paid to California. Respondent will also recompute penalty and interest to take into account a reduction in tax which results from credits given for taxes paid to California. It is so ordered.
DATED this day 27th day of December, 1993.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes