BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX, )
:
Petitioner, ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
v. ) AND FINAL DECISION
:
AUDITING
DIVISION OF THE ) Appeal No. 92-1720
UTAH STATE TAX
COMMISSION, :
) Account
No. XXXXX
:
Respondent. )
_____________________________________
STATEMENT OF CASE
This
matter was heard before the Utah State Tax Commission on XXXXX. XXXXX, administrative law judge,
presided. Present on behalf of
Petitioner was Petitioner's father, XXXXX.
XXXXX, Assistant Utah Attorney General, was present and represented
Respondent.
Based
upon the evidence and testimony presented at the hearing, the Tax Commission
makes its findings of fact:
FINDINGS OF FACT
1. The tax in question is individual income
tax.
2. The years in question are XXXXX and XXXXX.
3. During the years at issue, Petitioner, born
in XXXXX, received money from his deceased mother's federal retirement plan
through a survivor annuity.
4. Upon the death of Petitioner's mother, her
retirement plan continued to make annuity payments to Petitioner's father (the
surviving spouse), Petitioner's brother and Petitioner.
5. Annuity payments were sent directly to
Petitioner's father with instructions for him to pay out specific amounts to
the two sons from the check. The father
retained the balance.
6. In preparing Petitioner's XXXXX and XXXXX
personal income tax returns, Petitioner's father relied upon Tax Commission
instruction booklet L for guidance. He
concluded that Petitioner qualified for the retirement income deduction for
taxpayers under age 65, so he claimed an exemption for amounts under $$$$$ for
each year in question.
7. The Auditing Division contends, however,
that only a surviving spouse receiving funds from a retirement annuity
qualifies for the exemption.
8. Petitioner's father expressed frustration
over the lack of information he received from the Auditing Division when he
questioned its reasoning for disallowing the exemption.
9. At the hearing, the Auditing Division agreed
with Petitioner that Utah law and booklet 'L' do not address the problem presented
in this case. The Auditing Division
denied the exemption because Utah statute, specifically Utah Code Ann.
§59-10-114(2)(d), does not expressly state that children who receive annuity
payments from a deceased parent's qualifying retirement plan are entitled to
the exemption.
CONCLUSIONS OF LAW
The
Utah statute at issue is §59-10-114(2)(d) which states the following:
[a]mounts received by
taxpayers under age 65 as "retirement income" which, for purposes of
this section, means pensions and annuities, paid from an annuity contract
purchased by an employer under a plan which meets the requirements of Section
404(a)(2) of the Internal Revenue Code, or purchased by an employee under a
plan which meets the requirements of Section 408 of the Internal Revenue Code,
or paid by the United States, a state, or political subdivision thereof, or the
District of Columbia, to the employee involved or the surviving spouse.
DECISION AND ORDER
The
code section referred to above does not specifically grant an exemption to
children who receive annuity payments from a deceased parent's qualifying
retirement plan.
A
surviving spouse, on the other hand, is entitled to the exemption on income
received if the deceased spouse had 1)
retired and 2) had been receiving payments
from his/her qualifying retirement plan prior to death. In contrast, a surviving spouse who receives
payments paid out as a part of a survivorship annuity because the deceased
spouse died prior to the actual taking of retirement does not qualify for the
exemption as discussed above.
Based
upon the foregoing, the Tax Commission disallows Petitioner, "a surviving
child," the exemptions he deducted for the years XXXXX and XXXXX as the law lacks the requisite provision. The penalty assessment is waived; the
interest is not waived. It is so
ordered.
DATED
this 7th day of May, 1993.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco S.
Blaine Willes
Commissioner Commissioner