Signed 2/1/96






Petitioners, : FINDINGS OF FACT,






: Account No. XXXXX

Respondent. )

: Tax Type: Income Tax




This matter came before the Utah State Tax Commission for a Formal Hearing on XXXXX. XXXXX, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing the Petitioners by telephone conference call were XXXXX and XXXXX. Present and representing the Respondent were XXXXX, Assistant Attorney General, XXXXX and XXXXX of the Auditing Division.

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


1. The tax in question is income tax.

2. The period in question is the tax years of XXXXX, XXXXX and XXXXX.

3. Petitioners had filed nonresident individual income tax returns for XXXXX, XXXXX and XXXXX. Petitioners, unsure whether they were required to file as resident or nonresident, filed resident returns for XXXXX and XXXXX, because they had been advised to do so by tax preparers. Petitioners subsequently filed amended nonresident returns for XXXXX and XXXXX claiming all income earned was non-taxable to the State of Utah based on Petitioners' assertion that they were nonresidents of Utah. Petitioner testified that other persons who were working overseas were receiving refunds from the State of Utah.

4. Respondent disallowed the amended returns for XXXXX and XXXXX and changed Petitioners's XXXXX nonresident return to a resident Utah return assessing $$$$$ in tax and interest. Respondent did not change the XXXXX or XXXXX returns because they were beyond the statute of limitations. Respondent made the change to resident return on the assertion that Petitioners were residents of the State of Utah because, although they were living in Japan, they were still domiciled in the State of Utah.

5. Petitioners are appealing the assessment for XXXXX and asking that the amended returns for XXXXX and XXXXX be allowed.

6. Petitioners owned a home in XXXXX, Utah which they occupied until XXXXX, then they moved to Japan to work as civilian employees of the XXXXX and the XXXXX. In Japan Petitioners live in an apartment that they lease.

7. Petitioners have two children who were minors during the subject period. Both children lived in Japan with Petitioners and attended school in Japan during the subject period.

8. Petitioners did not sell their home in XXXXX, Utah until XXXXX of XXXXX. They used the home as a rental during the audit period and hired an agent to collect the rent for them.

9. During the years in question Petitioners owned two building lots in Virginia. After the subject period, in XXXXX of XXXXX, Petitioners purchased a home in Florida. Petitioners obtained a Florida divers licence in XXXXX of XXXXX and in XXXXX of XXXXX Petitioners became registered voters in Florida.

10. Petitioners visited Utah during the audit period. On one visit to Utah in XXXXX Petitioners renewed their Utah drivers licenses because they were told at the Motor Vehicle Division in XXXXX, Utah, that they had to renew their drivers licenses if they wanted to drive while visiting in Utah. Later Petitioners learned that was incorrect, that they could drive while visiting in the U.S. using their U.S. Forces drivers license. 11. Petitioners kept bank accounts in Utah during the subject period. Petitioners or their children visited doctors in Utah in XXXXX. Petitioners were registered to vote in Utah during the audit period but did not do so. Petitioners owned automobiles during the subject period which were registered and driven only in Japan.

12. Petitioners did not pay taxes on their income to Japan, nor did they attempt to give up U.S. Citizenship to become permanently domiciled in Japan. Petitioners remained U.S. Citizens and filed federal income tax returns during the period in question. 13. Petitioners continue to live and work in Japan and when they return to the United States plan on living in Florida. Petitioners testify that after six or eight months in Japan they decided that when they returned to the U. S. it would not be to Utah.


A tax is imposed on the state taxable income of every resident individual for each taxable year. (Utah Code Ann. '59-10-104).

A "resident individual" is either:

a. an individual who is domiciled in this state for any period of time during the taxable year; or

b. an individual who is not domiciled in this state but maintains a permanent place of abode in this state and spends in the aggregate 183 or more days of the taxable year in this state. (Utah Code Ann. '59-10-103(l)(j).)

For purposes of determining whether an individual is domiciled in this state, "domicile" shall mean:

The place where an individual has a true, fixed, permanent home and principal establishment, and to which place he or she has (whenever he or she is absent) the intention of returning. It is the place in which a person has voluntarily fixed the habitation of himself or herself and family, not for a mere special or temporary purpose, but with the present intention of making a permanent home. (Rule R865-9I-2, Utah Administrative Code).


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 or her domicile, a new domicile must be shown. (Rule R865-9I-2, Utah Administrative Code).


The issue presented in this appeal is whether Petitioners were "domiciled" in the State of Utah for the purposes of Utah Code Ann. '59-10-103 during the years XXXXX, XXXXX and XXXXX. Petitioners assert that they were not domiciled in the State of Utah during these years and Respondent maintains that Petitioners were domiciled in the State of Utah.

In order for the Commission to find for Petitioners, Petitioners must show that: 1) they abandoned their Utah domicile; and 2) that they intended to establish and did in fact established domicile in Japan. Petitioners failed to meet the second prong of this test. Petitioners did not intend to establish a permanent domicile in Japan. Although Petitioners may not have intended to return to Utah the facts as presented do not indicate that they intended to reside permanently in Japan and Petitioners have not permanently established domicile in Japan. Petitioners have not given up U.S. Citizenship, attempt to obtain the equivalent status of Japanese citizenship, nor made themselves subject to the equivalent of Japanese income taxes.

Petitioners are concerned that they are being singled out and treated differently than other taxpayers working overseas who are not filing returns or who filed nonresident returns and received refunds. However, this in not the case. It is the policy of the Tax Commission that U.S. citizens working aboard, subject to federal income tax, remain domiciled within the United States for tax purposes, unless they give up U.S. Citizenship, become a permanent citizen of the foreign country and subject to the income taxes laws of the foreign country. Generally, the domicile within the United States for tax purposes is the last state in the United States at which the taxpayer resided.

Petitioners are not being singled out and are being treated consistently with the policy. However, statistically it is impossible for the Tax Commission to find everyone who is violating the law or audit every refund request. Refund requests are often made based on the assertions provided therein. Later an audit may occur. If the assertions are found to be incorrect the taxpayer is required to repay the refund along with interest. Penalties may also be assessed is some circumstances. When the Commission finds taxpayers with Utah domiciles who failed to file Utah returns, or filed nonresident returns, income tax with interest thereon is assessed. Depending on the circumstances substantial penalties may be assessed as well.


Having reviewed all of the facts, the Commission finds that Petitioners were domiciled in the State of Utah during the years of XXXXX, XXXXX and XXXXX for the purposes of Utah Code Ann. '59-10-103. Therefore, Petitioners' income is taxable to the State of Utah for these years.

Based on the forgoing the Commission sustains the assessment as it pertains to individual income tax for XXXXX as set out in the Audit Summary dated XXXXX, along with interest thereon. Further, the Commission sustains the disallowance of the amended returns for XXXXX and XXXXX. It is so ordered.

DATED this 1st day of February, 1996.


W. Val Oveson Roger O. Tew

Chairman Commissioner


Joe B. Pacheco Alice Shearer

Commissioner Commissioner


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 R861-1A-5(P) and Utah Code Ann. ''59-1-601(1), 63-46b-13 et. seq.)