93-1604

Income

Signed 5/24/94

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, :

Petitioner, : ORDER

v. : Appeal No. 93-1604

COLLECTION DIVISION OF THE : Account No. XXXXX

UTAH STATE TAX COMMISSION, :

Respondent. :

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a Settlement Conference pursuant to the provisions of Utah Code Ann. §59-1-502.5, on XXXXX. Lisa L. Olpin, Administrative Law Judge, heard the matter for and on behalf of the Commission. Petitioner represented herself by telephone.

Petitioner, a XXXXX, was stationed in Georgia for the entire year XXXXX. Her legal residence at all times was Michigan.

In the year XXXXX, however, Petitioner sold a house that she owned in Utah. She understood that she did not have to pay taxes to Utah based upon the fact that she is military personnel. She relies upon the instructions found in the Utah Income Tax XXXXX instruction booklet and her certified public accountant who prepared her federal return for XXXXX.

Further, even if it is determined that Petitioner does owe taxes on the sale of the Utah home, she does not feel that the tax owing is correct because her exempt military pay is included in the computation process.

Tax Commission auditor XXXXX later reviewed Petitioner's XXXXX return and concluded that the tax amount due Utah ($$$$$) was correctly calculated.

In this case, Petitioner filed a XXXXX Utah return on XXXXX, at the request of the Tax Commission. Two ten percent penalties ($$$$$ apiece) were assessed for failing to file and for failing to pay, together with interest ($$$$$). Later on XXXXX, Petitioner paid the tax amount in full.

At this time, Petitioner is uncertain whether or not she even owes tax on the sale of the Utah home due to her military status. Further, she contends that the penalty and interest amounts should be waived.[i]¹

APPLICABLE LAW

"A non-resident serviceman is tax exempt only on his active service pay; all other income is taxable as provided by the nonresident provisions of Utah law." (Utah Admin. Rule R865-9-2I(E)(2).)

"A tax is hereby imposed on the state taxable income...of every nonresident individual in accordance with the schedules in..., but the individual's Utah tax shall be only the portion of the resident tax so calculated as the individual's federal adjusted gross income received from Utah sources...bears to the individual's total federal adjusted gross income for the same taxable year." (Utah Code Ann. §59-10-116.)

"For the purpose of Section 59-10-116, federal adjusted gross income derived from Utah sources shall include those items includable in federal "adjusted gross income"...attributable to or resulting from: (a) the ownership in this state of any interest in real or tangible personal property...." (Utah Code Ann. §59-10-117.)

DECISION AND ORDER

Based upon the information presented at the conference, and the records of the Tax Commission, the Commission finds that Petitioner is liable for income tax for the year XXXXX in the amount of $$$$$. Further, sufficient cause has not been shown to waive the penalties and interest assessed. Petitioner clearly owed taxes on the income she earned when she sold Utah property.

This Decision and Order will become the Final Decision and Order of the Commission unless any party to this case files a written request for a Formal Hearing within ten (10) days of the date of this decision. Such a request shall be mailed to the address listed below and must include the Petitioner's name, address, and appeal number:

Utah State Tax Commission

Appeals Division

160 East 300 South

Salt Lake City, Utah 84134

It is so ordered.

DATED this 24th day of May, 1994.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner