95-1241

Income

Signed 12/20/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

PETITIONER, )

:

Petitioners, ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

v. ) AND FINAL DECISION

:

AUDITING DIVISION OF THE ) Appeal No. 95-1241

UTAH STATE TAX COMMISSION, :

) Account No. #####

Respondent. : Tax Type: Income

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a Formal Hearing on October 1, 1996. G. Blaine Davis, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioners were XXXXX from the law firm of LAW FIRM, together with PETITIONER. Present and representing Respondent were Ms. Susan Barnum, Assistant Attorney General, together with Mr. Dan Engh, Mr. Frank Hales, and Ms. Becky McKenzie from the Auditing Division.

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

FINDINGS OF FACT

1. The tax in question is income tax.

2. The periods in question are the calendar years 1992, 1993 and 1994.

3. Respondent has made a determination that the income of Petitioner is taxable by the State of Utah for the periods 1992, 1993 and 1994. Petitioner claims that such income for the relevant periods is not taxable to the State of Utah because he alleges he was not a resident or domicile of the state of Utah for such periods.

4. Petitioner, PETITIONER, was raised for seventeen years in STATE. Thereafter, he was employed and lived in STATE 2, STATE 3, STATE 4, and in 1982 moved to CITY, Utah, where he was director of industrial engineering for a coal mine owned by a subsidiary of COMPANY C. Petitioner and his wife, lived in CITY, Utah from 1982 through 1990. In September 1990, Petitioner was transferred to the state of STATE 5 to be the General Manager of COMPANY C=s XXXXX Mine.

5. Upon the transfer of Petitioner to STATE 5, his wife remained in Utah where she owned a retail clothing business by the name of ACOMPANY B.@ In addition, PETITIONER owned a home in CITY, Utah, and PETITIONER remained in the home during most of the time that Mr. PETITIONER was in STATE 5.

6. From September 1990 through the end of the year, Petitioner returned home at least twice to be with his family. During 1991 and 1992, the situation remained much the same as it was at the end of 1990, i.e. Petitioner was employed in STATE 5, but returned periodically on weekends or whenever he was able to be with his family. Mrs. PETITIONER continued to operate her business in CITY, Utah, although she was attempting to sell her business and the home in CITY so that they could move to STATE.

7. Mrs. PETITIONER was ultimately successful in selling her business in December 1992. She also sold the home in CITY, Utah, and the closing on that sale occurred on June 30, 1993.

8. Following the sale of the home, Mrs. PETITIONER moved all of their possessions to the state of STATE 5, and they rented a home in which to live within the state of STATE 5.

9. In February 1994, Petitioner was transferred to the state of STATE 2, and Mrs. PETITIONER went with him to try to locate a place to live in STATE 2. However, upon being unable to locate a place to live at a CITY they believed to be affordable, and further because Mrs. PETITIONER was bothered with asthma attacks in STATE 2, she determined she would rather live in Utah than in CITY, STATE 2. Accordingly, the parties searched for a home in Utah, and ultimately purchased a home located at ADDRESS in CITY, Utah. Following the purchase of that home, Mrs. PETITIONER lived regularly in the home, and Mr. PETITIONER worked in STATE 2, but would return to be with his family when he was able to make the trip on some weekends, holidays and vacations.

10. The parties had one son, XXXXX, who lived with them in CITY, attended public schools while living with them, and attended public college within the state of Utah after apparently reaching his majority during the term of the audit period.

11. After Mr. PETITIONER was transferred to the state of STATE 5, Mrs. PETITIONER remained in their house in CITY, Utah, with their son XXXXX, and continued operating her retail clothing business. Mr. PETITIONER rented a furnished apartment in STATE 5, and retained his Utah Driver=s License and car registrations.

11. The years of 1990 and 1991 were not audited by Respondent, because they were beyond the statute of limitations. Therefore, only the years of 1992, 1993 and 1994 are at issue in this proceeding.

12. During 1992, Petitioner returned to his Utah home for a total of 48 days, or an average of four days per month. In June 1992, Mr. PETITIONER moved from his furnished apartment to an unfurnished apartment, and he purchased sufficient furniture for the apartment.

13. In July 1992, Mr. PETITIONER opened a bank account in STATE 5, and purchased a vehicle which he registered in STATE 5. However, Mr. PETITIONER renewed his Utah Driver=s License in 1992. During that year, Mr. PETITIONER owned a 1986 Cadillac and a 1988 Ford Pickup Truck which were registered to XXXXX in CITY, Utah, and they also owned a 1977 Chevrolet registered to Mr. PETITIONER in CITY, Utah. The license and registration on all of those vehicles was renewed in 1992 at the CITY, Utah address. In November 1992, the 1986 Cadillac was traded in for a 1992 Pickup Truck at Butterfield Ford, in Salt Lake City, Utah. The title and registration documents are signed by Mr. PETITIONER, and it was titled in his name in November 1992 at his address in CITY, Utah.

14. In 1993, Mr. PETITIONER returned to the state of Utah for a total of 29 days. In January 1993, he purchased a Utah Commercial Hunting License, and in May 1993, he purchased a Utah Resident Fishing License. Mrs. PETITIONER and their son XXXXX, continued living in CITY until June 1993, when the home and business were sold, and she left to join Mr. PETITIONER in STATE 5. Mr. and Mrs. PETITIONER rented a house in CITY, STATE 5, because they could not find an apartment which was large enough to hold all of their furniture. In 1993, when Mr. and Mrs. PETITIONER went to STATE 5, XXXXX had graduated from high school and remained in CITY, Utah to work and attend the COLLEGE. In November 1993, the 1992 Ford Pickup truck registered to Mr. PETITIONER was renewed using the CITY address.

15. In February 1994, Mr. PETITIONER was transferred from STATE 5 to COMPANY A., COMPANY B, CITY, STATE 2. Mr. and Mrs. PETITIONER bought their home in CITY, Utah in April 1994, and moved their belongings from their rented house in CITY to CITY, Utah. On the loan application for the CITY home, Mr. PETITIONER stated that he had worked for the same employer for twelve years. In May 1994, Mr. and Mrs. PETITIONER opened a bank account at BANK in CITY, STATE 2, and listed their address as ADDRESS in CITY, Utah.

16. Since June 1994, Mrs. PETITIONER has maintained their home in CITY, Utah and Mr. PETITIONER has rented an apartment in CITY, STATE 2, which is near his work.

17. In June 1994, the vehicle which had been registered and titled to Mr. PETITIONER in STATE 5 was switched to Mr. and Mrs. PETITIONER=s name and was registered and titled in Utah at the CITY address. That same vehicle registration was subsequently renewed again in June 1995. Also, in June 1994, Mr. PETITIONER bought a utility trailer from XXXXX in CITY, Utah and registered and titled it in his name only showing the address at the home in CITY, Utah. That registration was renewed in June 1995 at the same CITY address. In November 1994, the registration for the 1992 Ford Pickup truck was renewed by Mr. PETITIONER in CITY, Utah and the address was changed from CITY, Utah to the CITY, Utah address. That vehicle registration was again been renewed in November 1995.

18. Mr. and Mrs. PETITIONER were not divorced or legally separated during any of the time periods 1992, 1993 or 1994. During that time period, Mr. PETITIONER had a current Utah Driver=s License during the entire period. Mrs. PETITIONER had a current Utah Driver=s License during the time she lived in Utah, although for the period she was in STATE 5, she did obtain a STATE 5 Driver=s License. During the audit period, a total of six (6) vehicles were registered in Utah in the name of Mr. PETITIONER or in the name of both Mr. and Mrs. PETITIONER, and Utah addresses were shown and listed on all of those vehicles.

19. Mr. PETITIONER=s 1994 COMPANY A. W-2 form and 1994 tax documents from Utah, STATE 5, and STATE 2 lenders all listed the address for Mr. PETITIONER as ADDRESS, CITY, Utah. The final utility bills for their rental house in STATE were also mailed to Mr. PETITIONER at the Utah address in CITY, Utah.

20. The TELEPHONE Directories for 1990/1991, 1991/1992, and 1992/1993 for CITY and CITY, Utah listed Mr. PETITIONER as PETITIONER, ADDRESS, CITY, Utah. The TELPHONE Directory for the Salt Lake City, Utah area for September 1994/1995 and 1995/1996 listed PETITIONER and PETITIONER at ADDRESS, CITY, Utah.

21. Mr. and Mrs. PETITIONER filed joint federal tax returns from 1992 through 1994. Mr. XXXXX, a Certified Public Accountant, who practices in CITY, Utah, prepared the returns for each of the three years. The address shown on the 1992 and 1993 returns was ADDRESS, CITY, Utah. The address on the 1994 return was ADDRESS, CITY, Utah.

22. Mr. and Mrs. PETITIONER claimed their son, XXXXX, as a dependant on their 1992, 1993 and 1994 federal income tax returns. XXXXX also filed Utah Resident returns in 1993 and 1994, had a current Utah Driver=s License for 1991-1994 and purchased a Utah Resident Small Game Hunting License in 1993. XXXXX attended public high school and college in Utah throughout the audit period.

23. In 1992 and 1994, Mr. and Mrs. PETITIONER filed part-year resident Utah Individual Income Tax Returns. In those returns, Mr. and Mrs. PETITIONER did not include any of PETITIONER=s wages as Utah income. Mr. and Mrs. PETITIONER did not file a 1993 Utah return. Accordingly, the Auditing Division of the Utah State Tax Commission adjusted tax years 1992, 1993 and 1994, and issued a Statutory Notice of Change on October 13, 1995. Petitioner timely filed a Petition for Redetermination.

APPLICABLE LAW

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, Adomicile@ 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. (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).

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. (Rule R865-9I-2, Utah Administrative Code).

A determination of residency or domicile is based upon the facts determined for each case. Those facts and a person=s actions are more demonstrative of a person=s residence and domicile than are any outward declarations, oral or written.

DECISION AND ORDER

In this case, Petitioner and his family (wife and son) had lived within the state of Utah for several years prior to his transfer to STATE 5, and his wife and son remained and continued to live in the state of Utah after his transfer to STATE 5, and until June 30, 1993. During those periods, Mr. PETITIONER would return to Utah as often as possible, and Mrs. PETITIONER would make occasional trips to the state of STATE 5. Mr. PETITIONER continued to avail himself of the benefits of government, including his driver=s license, the registration of his vehicles, the education of his son, and a hunting and fishing license as late as 1993. It is evident that the state of Utah was the place at which Mr. PETITIONER had a true, fixed and permanent home and principle establishment, and to which place he had, whenever he was absent, the intention of returning. It was the place at which he had voluntarily fixed the habitation of himself and his family with the intention of making a permanent home.

However, it is also evident that as of July 1, 1993, Mr. PETITIONER moved himself and his family from the state of Utah with the intention of abandoning his domicile in Utah, and establishing a new one in STATE 5.

Once Mr. PETITIONER was transferred back to STATE 2, it is equally clear that he and his family intended to establish their domicile back in Utah where they purchased their home, continued to register their cars, continued to use their Utah driver=s licenses, and to which Mr. PETITIONER would return whenever possible. Again, it was the place where he had fixed the habitation of himself and family with the present intention of making a permanent home.

Based upon the foregoing, it is the order of the Utah State Tax Commission that Mr. PETITIONER was domiciled in the state of Utah during all of 1992, during the first one half of 1993, and from and after April 1, 1994, during the audit period. The audit assessment is to be adjusted accordingly to reflect that Mr. PETITIONER was domiciled in the state of Utah for those periods, but was not domiciled in the state of Utah from July 1, 1993 until April 1, 1994. It is so ordered.

DATED this 20th day of December, 1995.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Richard B. McKeown

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner

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