BEFORE THE UTAH STATE TAX COMMISSION
XXXXX and )
XXXXX, : FINDINGS OF FACT AND
Petitioners, ) DECISION IN SUPPORT OF
: IMPOSITION OF A PENALTY
v. ) FOR INTENT TO EVADE TAXES
COLLECTION DIVISION OF THE ) Appeal No. 93-0538
UTAH STATE TAX COMMISSION, :
) Account Nos. XXXXX
: and XXXXX
Respondent. ) Tax Type: Income
The Utah State Tax Commission has previously concluded as a matter of law that XXXXX was a resident of Utah from XXXXX through XXXXX, and assessed income tax on XXXXX income during the period in question. The Commission=s finding of domicile and assessment of tax was upheld by the Utah Court of Appeals. Clements v. Utah State Tax Commission, 893 P. 2d 1078 (Utah Ct. App. 1995).
In conjunction with the aforementioned assessment, the Commission assessed a 50% penalty for intent to evade tax. The Court of Appeals remanded the case back to the Tax Commission for further findings in support of the imposition of the penalty. Id. at 1082.
In compliance with the directive of the Utah Court of Appeals, the Commission hereby makes the following findings of fact in support of the imposition of the 50% penalty for intent to evade payment of income taxes.
FINDINGS OF FACT
1. The penalty in question is a 50% penalty for intent to evade payment of income tax, imposed pursuant to Utah Code Ann. '59-1-401(5)(a)(iii).
2. The period in question is XXXXX through XXXXX.
3. During the audit period, Petitioner XXXXX worked as a XXXXX based out of XXXXX. (Exhibit P2, received at p.41, line 14 Transcript of Proceedings).
4. Petitioner voluntarily sought the transfer to XXXXX. (Testimony of XXXXX at p. 112, lines 14 - 17).
5. Petitioner claimed that during the audit period he would commute from XXXXX, Wyoming to XXXXX for work, and back after work. (Testimony of XXXXX at p. 270, lines 3 -7).
6. XXXXX, Wyoming is located approximately XXXXX miles southeast of XXXXX, Wyoming. It is approximately XXXXX hours from XXXXX to the XXXXX by car. (Exhibit P40, received at p. 31, line 12; testimony of XXXXX at p. 179).
7. During the winter months, Petitioner=s dwelling in XXXXX, Wyoming is only accessible by snowmobile over a three-mile access road. (Testimony of XXXXX at p. 177, lines 20 -25).
8. Petitioner claimed that during the audit period he resided in XXXXX, Wyoming, and his wife and daughter resided in XXXXX, Utah. (Testimony of XXXXX at p. 56, lines 16 -18).
9. Petitioner claimed that he would visit his wife and daughter in XXXXX, Utah on days that he did not work, or they would visit him in Wyoming. (Testimony of XXXXX at p. 56, lines 16 - 18).
10. In XXXXX, Petitioner obtained a Wyoming driver=s license and has possessed a Wyoming driver=s license continually since that time. (Testimony of XXXXX at p. 58, lines 23 - 25).
11. In XXXXX, Petitioner obtained a Utah driver=s license. Petitioner maintained the Wyoming and Utah driver=s licenses contemporaneously. (Exhibit R7, received at p. 129, line 15).
12. The application form for a Utah driver=s license asked Petitioner Aare you now or have you been licensed to drive by another state?@ Petitioner answered Ano@ to that question. (Exhibit R7).
13. Above Petitioner=s signature on the application form for a Utah driver=s license is the following language. AI the undersigned being duly sworn state that I am the applicant described above, that I am at least 16 years of age, that I have carefully read this application and the information entered therein is true and correct to the best of my knowledge.@ (Exhibit R7).
14. Petitioner knew that the foregoing information he entered on his XXXXX Utah driver=s license application form was not true. (Testimony of XXXXX at pp. 76, 134).
15. In late January or early February of XXXXX, Petitioner=s Utah driver=s license was confiscated by a XXXXX Highway Patrol trooper after Petitioner had been stopped for a traffic violation. At that time, Petitioner was informed by the trooper that it was unlawful to simultaneously possess two driver=s licenses issued by separate states. (Testimony of XXXXX at pp. 74-75).
16. On XXXXX, within days after his Utah driver=s license had been confiscated and after Petitioner had been made aware of the unlawful nature of his actions, Petitioner applied for and received a duplicate Utah driver=s license. (Exhibit R8, received at p. 131, line 5).
17. Petitioner was required to sign the application for a duplicate Utah driver=s license under oath, declaring that AI have carefully read this application and the information entered therein is true and correct to the best of my knowledge.@ (Exhibit R8).
18. On the application for his duplicate Utah driver=s license, Petitioner represented that he resided in XXXXX, Utah, and that all other driver=s licenses which had previously been issued to him had expired, though he continued to hold a Wyoming driver=s license. (Exhibit R8).
19. Petitioner knew that his Wyoming driver=s license had not expired, and therefore, knew that the information he had entered on his application for a duplicate Utah driver=s license was not true. (Testimony of XXXXX at pp. 76, 136).
20. At the time he applied for his duplicate Utah driver=s license Petitioner knew that it was unlawful to carry driver=s licenses from two states contemporaneously. (Testimony of XXXXX at p. 132, lines 16-18).
21. For the years XXXXX, XXXXX, XXXXX, XXXXX, and XXXXX Petitioner represented himself to be a resident of Utah in order to obtain Utah resident hunting and fishing licenses. He affirmed, under penalty of perjury, that his permanent primary domicile had been Utah for XXXXX years, and that his address was in XXXXX, Utah. (Exhibit R4, received at p. 115, line 25; See also, testimony of XXXXX at pp. 114-116).
22. For each of the audit years Petitioner also obtained resident hunting and fishing licenses in Wyoming. The application for the Wyoming resident hunting and fishing license required Petitioner to swear that he was a resident of Wyoming, and had not claimed residency elsewhere for any purpose during the year immediately prior to purchase of the license. (Exhibit P6, received at p. 82, line 23; See also, testimony of XXXXX at p. 121, at line 8 - 19).
23. Petitioner represented on the application for his XXXXX Wyoming hunting and fishing license that he had been a resident of Wyoming for six years. Petitioner knew that this information was not correct. (Testimony of XXXXX at pp. 120 - 121).
24. The fees for resident hunting and fishing licenses in Utah and Wyoming are less than the fees for non-resident licenses. (Testimony of XXXXX at p. 269, lines 10 - 16).
25. Petitioner represented himself to be a resident of both states when making applications for the hunting and fishing license so that he could obtain the licenses for a lower price. (Testimony of XXXXX at p. 118, lines 16 - 19).
26. Petitioner, his wife and his daughter are shareholders in XXXXX, a corporation. The principal place of business of the corporation is XXXXX, Utah. (Testimony of XXXXX at p. 157, lines 9 -24).
27. For the XXXXX and 1XXXX tax years, the Utah Small Business Corporate Franchise Tax return filed on behalf of XXXXX represented that all shareholders were non-residents of Utah. (Exhibit R19, received at p. 160, line 4; See also testimony of XXXXX at p. 161 lines 12 - 15; Exhibit R21, received at p. 166, line 23; testimony of XXXXX, at p. 167, lines 1 - 3).
28. A $$$$$ minimum tax is charged to corporations whose shareholders are all non-residents of Utah. The minimum tax was due on both XXXXX=s XXXXX and XXXXX returns.
29. On or about XXXXX, and XXXXX, after having learned that XXXXX would not be subject to the $$$$$ minimum tax and that all penalties and interest would be waived upon the filing of an amended return showing that all shareholders of the corporation were Utah residents, Petitioner filed such amended returns for both XXXXX and XXXXX tax years. Petitioner signed those returns and represented that all shareholders of XXXXX were Utah residents. (Exhibit R20, received at p. 162, lines 10 -15; Exhibit R22, received at p. 167, line 21; testimony of XXXXX at p. 168, lines 1 -4).
30. The reason Petitioner filed the amended XXXXX returns was to avoid paying the $100 minimum tax and to avoid payment of the penalty and interest that had been assessed. (Testimony of XXXXX at p. 165, lines 19-25).
31. Petitioner signed the amended returns and declared under penalties of perjury that the information on the returns was true and correct. (Exhibits R20, R22).
32. Petitioner consistently listed his XXXXX address and phone number on credit card slips and credit applications that he completed during the audit period. (Exhibits R14-18).
33. During the audit period Petitioner had the mail that was addressed to his XXXXX, Wyoming address forwarded to his XXXXX, Utah address. (Testimony of XXXXX at p. 184, at lines 18 - 21).
34. Petitioner had phone service available at his dwelling in XXXXX, Wyoming, but did not have a phone installed there during the audit period. (Testimony of XXXXX at p. 186, lines 7 - 12).
35. Petitioner knew or should have known that he was a resident of Utah during the audit period.
36. Petitioner has displayed willingness to be dishonest in order to avoid paying tax obligations, and a willingness to manipulate the laws of various states in order to benefit himself.
37. By utilizing state laws which were helpful to him, and disregarding and avoiding state laws which caused him inconvenience or expense, Petitioner was able to enjoy the benefits of citizenry of at least two states without paying the price for such benefits.
38. Petitioner has a pattern of misrepresenting information under oath and under penalty of perjury in order to avoid paying fees and taxes.
Based on the foregoing findings of fact, the surrounding circumstances, and reasonable inferences that may be drawn from the surrounding facts, the Commission finds that Petitioner XXXXX claimed that he was a resident of Wyoming in order to evade paying Utah income tax. The penalty which has been assessed for intent to evade tax is the greater of $500 per period or 50% of the tax due pursuant to Utah Code Ann. '59-1-401(3)(c).
The Commission deems that penalty to be appropriate in light of the facts of this case, and the Commission=s finding that Petitioner had specific intent to evade paying Utah individual income tax. The 50% penalty is hereby affirmed.
DATED this 27th day of September, 1995.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val Oveson Roger O. Tew
Joe B. Pacheco Alice Shearer
NOTICE: You have twenty (20) days after the date of a final order to file a Request for Reconsideration with the Commission. If you do not file a Request for Reconsideration with the Commission, you have thirty (30) days after the date of a final order to file a.) a Petition for Judicial Review in the Supreme Court, or b.) a Petition for Judicial Review by trial de novo in district court. (Utah Administrative Rule R861-1-5A(P) and Utah Code Ann. ''59-1-601(1), 63-46b-13(1), 63-46-14(3)(a).)