94-1736

Income Tax

Signed 11/16/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

:

Petitioners, : ORDER

:

v. : Appeal No. 94-1736

:

AUDITING DIVISION OF THE : Account Nos. XXXXX

UTAH STATE TAX COMMISSION, : & XXXXX

:

Respondent. : Tax Type: Income Tax

_____________________________________

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. Jane Phan, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioners was XXXXX, CPA, XXXXX. Present and representing Respondent were XXXXX, Assistant Attorney General, and XXXXX of the Auditing Division.

Petitioners are appealing the assessment of Utah individual income tax, penalties and interest for the years XXXXX through XXXXX. Petitioners had filed joint federal individual income tax returns for the years in question. However, Petitioner XXXXX filed separate resident individual Utah tax returns for these years. Petitioner XXXXX filed separate individual income tax returns in the State of XXXXX.

APPLICABLE LAW

It is the intent of the state legislature to impose on each resident individual for each taxable year a tax measured by the amount of his or her taxable income. (Utah Code Ann. §59-10-102.)

A resident individual is an individual who is domiciled in this state for any period of time during the taxable year. (Utah Code Ann. §59-10-103(1)(j)(I).)

Domicile is defined as the place where an individual has a true, fixed, permanent home and principal establishment, and to which place he or she has the intention of returning whenever he or she is away. (Utah Admin. RuleR865-9I-2(D).)

ANALYSIS

The issue in this appeal is whether or not XXXXX was "domiciled" in the State of Utah for the purposes of Utah Code Ann. §59-10-103(1)(j)(I) for the tax years XXXXX through XXXXX. A taxpayer's domicile is a question of fact. Petitioners assert that XXXXX was not domiciled in the state of Utah and therefore not liable for Utah individual income tax. Respondent asserts that Petitioner has maintained sufficient ties to the State of Utah so that he is domiciled in Utah for the purposes of individual income taxation. Respondent has agreed to allow XXXXX a credit for income tax paid to the State of XXXXX.

Petitioners offer the following facts in support of their position. Although during the audit period XXXXX lived and worked full time in the State of Utah, XXXXX lived and worked full time in XXXXX. In fact XXXXX had lived and worked full time in XXXXX for fifteen years prior to the audit period, during the audit period and up through the time of the hearing. He had only XXXXX drivers licenses during the audit period. He owned the homes in which he lived in XXXXX, in joint tenancy with XXXXX, during the audit period. XXXXX was registered to vote and did vote in XXXXX. He attended church in XXXXX. He owned cars which were registered in XXXXX. For the years XXXXX and XXXXX XXXXX moved to XXXXX and lived with XXXXX. From XXXXX through XXXXX XXXXX would spend her summers in XXXXX with XXXXX. Further Petitioner's representative provided documents that indicated XXXXX received bank statements, insurance information and other correspondence at his home in XXXXX. XXXXX had a library card in XXXXX. For each of the audit years XXXXX filed and paid individual income taxes with the State of XXXXX.

Petitioner's representative alleges that XXXXX is separated from XXXXX and during the audit period made only sporadic, brief and infrequent visits to XXXXX in the State of Utah. They had no minor children during the audit period. Petitioner's representative provided written statements from some of XXXXX neighbors who wrote that they rarely or never saw XXXXX at XXXXX home. Petitioner's representative states that XXXXX does not plan on retiring to XXXXX, Utah.

Respondent asserts that the following facts support the position that XXXXX was domiciled in Utah during the audit period. He was legally married to and not legally separated from XXXXX. He and XXXXX owned two homes in XXXXX, Utah. One of these homes was maintained by XXXXX as her residence. On the income tax forms he filed with the State of XXXXX, XXXXX listed XXXXX as city of residence for the years XXXXX and XXXXX. The XXXXX address was listed on the federal returns for each year during the audit period and for one of the years the federal refund was mailed to the XXXXX address. XXXXX had made statements to Tax Commission employees that when XXXXX retired he would return to live with her in XXXXX, Utah.

Respondent pointed out that Petitioner had visited XXXXX, Utah at least three times during XXXXX as he had claimed on Schedule E of his XXXXX Form 1040 three trips with airfare and meals from XXXXX to XXXXX, Utah, for a total of XXXXX days, against rental income from the second XXXXX, Utah home.

Further, Respondent pointed out that there were several errors and inconsistencies in the way Petitioners filed their state and federal tax returns, including the fact that the copies of their joint federal returns which were attached to XXXXX state returns were not the federal returns that were actually filed with the IRS for those years. Respondent asserted that this went to Petitioners' credibility. Petitioners' representative stated that the errors and inconsistencies occurred because Petitioners did not fully understand the filing requirements.

According to Utah Admin. RuleR865-9I-2(D)domicile is the place where an individual has a true, fixed, permanent home and to which place he has the intention or returning whenever he is absent. It is the place in which a person has voluntarily fixed the habitation of himself and family, not for a mere special or temporary purpose but with the present intention of making a permanent home. XXXXX residence in XXXXX has not been temporary. It had lasted fifteen years prior to the beginning of the audit period. Petitioner's filing and paying individual income tax in XXXXX as a resident of XXXXX indicates his intent to be a resident of XXXXX subject to its tax laws and further indicates that Petitioner is not claiming XXXXX residence to avoid paying state individual income tax. XXXXX visits to Utah have been infrequent, possibly three times a year.

Although Petitioner XXXXX is married to a resident of the State of Utah the weight of the evidence indicates that he is domiciled in the State of XXXXX, not in the State of Utah.

DECISION AND ORDER

Based upon the information presented at the hearing, and the records of the Tax Commission, the Commission finds Petitioner XXXXX was not domiciled in Utah from XXXXX through XXXXX and orders that all income tax, interest and penalty assessed on the basis of his being domiciled in the State of Utah for this period be removed.

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 16 day of Novmeber, 1995.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner

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