92-1464 - Income

BEFORE THE UTAH STATE TAX COMMISSION

_________________________________

XXXXX & XXXXX, )

:

Petitioners, ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

v. ) AND FINAL DECISION

:

AUDITING DIVISION OF THE ) Appeal No. 92-1464

UTAH STATE TAX COMMISSION, :

) Account No. XXXXX

Respondent. :

________________________________

STATEMENT OF CASE

A formal hearing was held in this matter before the Utah State Tax Commission on XXXXX. Lisa L. Olpin, Administrative Law Judge, presided. Petitioner represented himself by telephone. XXXXX, Assistant Utah Attorney General, represented Respondent by telephone.

Based upon the evidence and testimony presented at the hearing, the Tax Commission makes its:

FINDINGS OF FACT

1. The tax in question is personal income tax.

2. The year in question is XXXXX.

3. Petitioner moved from Wyoming to Utah in XXXXX.

4. While residing in XXXXX, Mr. XXXXX was a union member employed with XXXXX in a management position.

5. In XXXXX, Mr. XXXXX resigned from his management position and took a leave of absence from XXXXX.

6. At this time, Mr. XXXXX also offered his employer the option to buy out his seniority status with the union.

7. In late fall XXXXX, XXXXX agreed to buy out Mr. XXXXX's seniority.

8. As a result, XXXXX began processing the $$$$$ severance check.

9. Due to time delays in processing the check, Petitioners received the money sometime in the first quarter XXXXX while residing in XXXXX.

10. Petitioners claimed the $$$$$ severance check amount on their XXXXX federal income tax return.

11. They did not claim this amount on their Utah XXXXX state income tax return.

12. The Auditing Division added the $$$$$ to Petitioner's XXXXX state taxable income. A ten percent penalty plus interest was also assessed.

13. Petitioners claim that the severance amount is not taxable to XXXXX as it was earned while working in XXXXX. Through no fault of their own, the severance check was not ready until after Petitioners had left XXXXX.

14. Petitioners contend they will suffer a double tax detriment as described in Utah Code Ann.59-10-115(4) if they are required to include the disputed amount in their state taxable income.

CONCLUSIONS OF LAW

Relevant Utah tax statute 59-10-112 reads:

"State taxable income" in the case of a resident individual means his federal taxable income (as defined by Section 59-10-111) with modifications, subtractions, and adjustments provided in Section 59-10-114. Federal taxable income means taxable income as currently defined in Section 63 of the Internal Revenue Code of 1986.

DECISION AND ORDER

In this matter, Petitioners basically claim that Utah has unethically placed itself in a windfall position to benefit from wages earned by a then nonresident from a non-Utah source.

Petitioners are correct in asserting that if they had received the severance check while still residing in Wyoming, this amount would not be deemed taxable income to Utah.

The fact remains, however, that Petitioners were residents of Utah at the time they received the severance check. This money then becomes taxable to the state of Utah.

There is no double tax detriment as the disputed amount was never taxed in XXXXX.

Based upon the foregoing, the Tax Commission finds that the $$$$$ severance amount is taxable income for the year in which Petitioners received it. (XXXXX).

The ten percent penalty is waived. The interest is not. It is so ordered.

DATED this 18th day of February, 1993.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

ABSENT

R. H. Hansen Roger O Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner