95-1624
Income
Signed 2/15/96
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
XXXXX, )
:
Petitioners, : ORDER
:
v. : Appeal No. 95-1624
:
CUSTOMER
SERVICE DIVISION : Serial No. XXXXX
STATE TAX COMMISSION, :
STATE OF UTAH, :
Respondent. : Tax Type: Income
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a Status Conference, and
following discussions with all parties, it was agreed that it would be
converted to an Initial Hearing to be conducted 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 on
the telephone and representing Petitioners was Mr. XXXXX. Present on the telephone and representing
Respondent was Ms. XXXXX, Assistant Attorney General. Present in the hearing room were Ms. XXXXX and Mr. XXXXX from the
Customer Service Division.
Petitioners
resided in New Mexico from XXXXX through XXXXX as missionaries for their
church. They timely filed and paid
their XXXXX Utah resident individual income tax return on XXXXX.
In
XXXXX, the State of New Mexico contacted them and informed them that they were
required to file a XXXXX income tax return in New Mexico. Petitioners promptly had a return prepared
and filed it with the State of New Mexico showing taxes due.
Thereafter,
on XXXXX, Petitioners filed an amended Utah nonresident/part year resident
return, in which they claimed a refund of $$$$$. That claim for refund was denied for the reason that it had been
filed beyond the three year statute of limitations.
On
XXXXX, Petitioners filed an appeal with the Utah State Tax Commission
requesting that a refund be granted to them, even though their request for
refund had been beyond the three year statute of limitations.
Thereafter,
on XXXXX, Petitioners filed a subsequent amended XXXXX Utah resident individual
income tax return in which they claimed a refund for credit paid to another
state, namely New Mexico, in the amount of $$$$$.
When
New Mexico required Petitioners to file a New Mexico tax return in XXXXX, the
statute of limitations had already expired in Utah for filing a claim for
refund, but because New Mexico is on a calendar year for the statute of
limitations, they still had until XXXXX, in which to require Petitioner to file
a tax return and pay the amount of tax.
Petitioners have been caught by the quirk in the law because the statute
of limitations had not expired for the New Mexico tax and New Mexico has required the payment of the additional tax,
but the statute of limitations had expired for claiming a refund in Utah. Therefore, Petitioners have been taxed on
the same income by two different states.
Petitioners
would clearly be entitled to a refund on the amount of taxes paid to the State
of New Mexico if a claim for refund or an amended return had been filed on or
before XXXXX. Therefore, it is only the
statute of limitations that prevents the refund from being paid to Petitioners.
The
legislature has recognized that adjustments to income made by other taxing
agencies can treat taxpayers inequitably and that such inequity should be
corrected. Utah Code Ann. §59-10-536(5)
specifically provides for the statute of limitations to be extended if the Internal
Revenue Service makes an adjustment of the taxable income of a taxpayer after
the running of the limitations period.
Petitioner would be entitled to relief if the adjustment had been made
by the Internal Revenue Service instead of by the taxing agency of another
state government.
The
Commission has authority to make equitable adjustments to the income of a
taxpayer to prevent double tax benefits or double tax detriments. Utah Code Ann. §59-10-115(4) provides in
relevant part as follows:
(4)
The Commission shall by rule prescribe for adjustments to state taxable income
of the taxpayer in circumstances other than those specified by Subsections (1),
(2), and (3) of this section where, soley by reason of the enactment of this
chapter, the taxpayer would otherwise receive or have received a double tax
benefit or suffer or have suffered a double tax detriment.
DECISION AND ORDER
Based
upon the information presented at the Initial Hearing, and the records of the
Tax Commission, the Tax Commission finds that the equitable adjustment
authority given to the Commission should be implemented in this case, and the
Petition for Refund is therefore granted.
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 15th 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
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