94-0198
Audit
Signed 2/29/96
BEFORE THE UTAH
STATE TAX COMMISSION
____________________________________
XXXXX
:
Petitioner, : ORDER
:
v. : Appeal No. 94-0198
:
AUDITING
DIVISION OF THE : Account No. XXXXX
UTAH STATE TAX COMMISSION, :
:
Respondent. : Tax Type: Audit
_____________________________________
STATEMENT OF
CASE
This
matter came before the Utah State Tax Commission for an Initial Hearing
pursuant to the provisions of Utah Code Ann. §59-1-502.5, on XXXXX. G. Blaine Davis, Administrative Law Judge,
heard the matter for and on behalf of the Commission. Present and representing Petitioner was XXXXX, from the law firm
of XXXXX. Present and representing
Respondent were XXXXX, Assistant Attorney General, together with XXXXX, XXXXX
and XXXXX from the Auditing Division.
Respondent
has determined that Petitioner was required to file an individual income tax
return in the state of Utah for the years XXXXX and XXXXX, and has accordingly
made an assessment of taxes, penalty and interest against Petitioner for those
two years. It is the position of
Petitioner that he was not a resident of the state of Utah and was not
domiciled in the state of Utah, and was therefore not required to file tax
returns or pay taxes to the state of Utah for those years.
Petitioner
was born and raised in the state of Washington, and came to Utah in XXXXX when
he married his former wife, XXXXX, who already had a son and daughter living
with her here in Utah.
Petitioner
originally lived in XXXXX, Utah, but later moved to XXXXX, Utah, where he lived
from late XXXXX through XXXXX. During
that time, he filed Federal and state of Utah income tax returns through XXXXX.
Petitioner
and XXXXX experienced marital difficulties and in XXXXX XXXXX contacted an
attorney and obtained an Order requiring Petitioner to move from his house in
XXXXX, Utah. Petitioner and XXXXX were
not divorced at that time, although Petitioner represents that they entered
into an "oral divorce".
Petitioner represents that the terms of that oral divorce were that
XXXXX could have the house in XXXXX, but that Petitioner would work and pay
support for XXXXX and the children.
Petitioner took one of their sons with him and moved to the state of
California in XXXXX. Petitioner
obtained work and registered to vote and did vote as a resident in
California. Petitioner represents that
since XXXXX he has never returned to Utah to live.
Petitioner
represents that together with the home, XXXXX was to have custody of the
children, subject to reasonable rights of visitation. Petitioner agreed to pay to XXXXX for the support of XXXXX and
the children all of the money which he earned except for a certain amount which
he would keep for his own living expenses, and he agreed to pay that amount
until any divorce was final. Petitioner
also agreed that all payments and accounting would be sent directly to XXXXX
whenever possible so she could verify the earnings and the amounts
received. That included an agreement to
have his W-2 forms provided to her so that she could have a tax return prepared
and any refund would be sent to her.
XXXXX
and the minor children lived in the home that was agreed to be XXXXX’s at
XXXXX, Utah. XXXXX retained all of the
utilities, including the prior phone listing in the name in which they had been
previously registered prior to the separation.
XXXXX continued to pay the utilities, including the phone bill, with the
money which was sent to her by Petitioner.
Petitioner
resided in California from XXXXX until XXXXX when he moved to XXXXX,
Wyoming. Upon his move to XXXXX,
Wyoming, Petitioner obtained a Wyoming driver’s license and surrendered his
Utah driver’s license to the Wyoming authorities. Petitioner maintains that he has not had a Utah driver’s license
since XXXXX. However, Respondent submitted
a computer document which would indicate that a new driver’s license was issued
in XXXXX and it shows the address of Petitioner is XXXXX, Utah. Nevertheless, the Driver’s License
Division does not have an application
for renewal signed by XXXXX, and it does not have anything which he signed
following his alleged move to California and then to Wyoming.
Petitioner
registered all of his cars in the state of Wyoming or later in the state of
Washington, but his wife had a vehicle which was registered in the state of
Utah during the years in question.
Petitioner
maintains that he has never voted in the state of Utah after XXXXX, but has
voted in either California, Wyoming, or Washington, and he further claims that
he has never worked in Utah and has never lived in Utah after XXXXX. Vehicles were registered for Petitioner in
Wyoming in XXXXX, XXXXX, and XXXXX.
Petitioner’s
visitation with his children in XXXXX occurred in Wyoming, and not Utah.
Petitioner
filed his XXXXX individual income tax return in the state of Utah, but did not
file a XXXXX, XXXXX, XXXXX or later tax return in the state of Utah. However, in XXXXX, XXXXX of the Utah State
Tax Commission inquired of Petitioner and requested that he file a XXXXX tax
return. Petitioner represents that he
ultimately filed and paid a XXXXX tax return because he alleges that XXXXX “tricked”
him into filing a return by representing that if he would do so that all tax
matters with the state of Utah would be final and taken care of.
In
XXXXX, when XXXXX was attempting to resolve the alleged tax deficiencies for
XXXXX and XXXXX, Petitioner did return to Utah to meet with XXXXX at the Tax
Commission. While he was in Utah,
Petitioner explored the possibilities of a reconciliation with XXXXX, and also
investigated possible employment here.
Petitioner ultimately did not reconcile with XXXXX, and did not obtain
employment within the state of Utah, but instead returned to Wyoming. While he was here in Utah, he did receive a
speeding ticket near XXXXX, Utah. His representation
was that he had been to see his children in XXXXX after leaving XXXXX in XXXXX,
and that he was then going to Nevada to seek employment. He represents that at the time the Highway
Patrol Trooper threatened to put in him jail for having a Wyoming driver’s
license and Wyoming license plate, but upon checking and determining that he
did in fact reside in Wyoming, Petitioner alleges that the trooper then let him
go with only the speeding ticket.
In
XXXXX, Petitioner applied for unemployment from the state of Wyoming. The payments therefore were sent directly to
XXXXX in Utah for the support of XXXXX and the children as Petitioner had
agreed to.
On
about XXXXX, Petitioner left the state of Wyoming and returned to his native
state of Washington. In Washington,
Petitioner obtained a driver’s license and licensed his motor vehicle. He did not return to Utah in between his
move from Wyoming to Washington. In
XXXXX and XXXXX, Federal tax returns were filed by Petitioner from Petitioner’s
address in Washington. The parties
filed joint income tax returns, because they were not yet divorced. The tax returns did not show a Utah address.
On
XXXXX, XXXXX filed an application for extension to file a XXXXX Utah return,
but the address was shown as XXXXX.
Petitioner represented that the application for extension was filed as a
protective measure because they were not sure what the obligation may be to
file a Utah return, especially in view of the fact that the divorce had not yet
been finalized. In fact, they had tried
to reconcile in Washington, but it
ultimately did not work out.
W-2
forms and 1099 forms for dividends were mailed to the XXXXX address which the
parties had agreed to do so that XXXXX would know the amount of income which
had been earned and would know whether Petitioner was living up to the
agreement which he had made.
Petitioner
applied for and received unemployment compensation from the state of Wyoming in
XXXXX, and from the state of Washington in XXXXX. He never received unemployment compensation from the state of
Utah.
When
Petitioner moved from Wyoming to Washington, he obtained a Washington driver’s
license and the Washington driver’s license authorities then punched a hole in
his Wyoming driver’s license and canceled it.
After
Petitioner moved to the state of Washington, XXXXX moved to the state of Washington
for an attempted reconciliation. XXXXX
sold the home of the parties in XXXXX and she retained all of the proceeds from
the sale of the home in accordance with the verbal separation agreement which
had been made. Petitioner represented
that he did not get any of the proceeds from the sale of the XXXXX home.
The
attempted reconciliation in the state of Washington failed, and the parties
were ultimately divorced in the state of Washington in XXXXX. XXXXX filed the Federal tax returns for
XXXXX and XXXXX for the parties, and she showed the Utah address on the Federal
returns so that the refund would be sent to her.
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:
a. 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. (RuleR865-9I-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. (RuleR865-9I-2, Utah Administrative Code).
A
part year resident is an individual who changes his or her status during the
tax year from a resident to a nonresident or from a nonresident to a resident.
(RuleR865-9I-2, Utah Administrative Code).
DECISION AND
ORDER
It
is clear that Petitioner has had very little contact with the state of Utah since the middle of XXXXX. In fact, the only tie which he has had to
the state is that his wife and children were here, and they continued to own a
home which continued to have the name of Petitioner on it, and the respective
utilities thereto remained in the name of Petitioner. However, it is also clear
that he resided outside of the state for the entire time period at issue in
this hearing, XXXXX and XXXXX, and that even though he and XXXXX were not yet
divorced, that their marriage was effectively determinated, and ultimately did
terminate, and that Petitioner had terminated his domicile here and had
established a domicile elsewhere.
Based
upon the foregoing, it is the Order of the Utah State Tax Commission that the
determination of the Auditing Division is hereby set aside, and Petitioner is
determined to have not been a resident or domicile of the state of Utah for the
years in question, and was not required to file a Utah State individual income
tax return for XXXXX and XXXXX. It is
so ordered.
This
Decision does not limit a party's right to a Formal Hearing. However, this Decision and Order will become
the Final Decision and Order of the Commission unless any party to this case
files a written request within thirty (30) days of the date of this decision to
proceed to a Formal Hearing. 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
210 North
1950 West
Salt Lake
City, Utah 84134
Failure
to request a Formal Hearing will preclude any further administrative action or
appeal rights in this matter.
DATED
this 29 day of February, 1996.
BY ORDER OF THE UTAH STATE
TAX COMMISSION.
W. Val
Oveson Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco Alice
Shearer
Commissioner Commissioner
^^