96-0899

IFTA

SIGNED 12/16/97

 

 

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

 

PETITIONER., )

:

Petitioner, ) DECISION

:

v. )

:

AUDITING DIVISION OF THE ) Appeal No. 96-0899

UTAH STATE TAX COMMISSION, :

) Account No. #####

:

Respondent. ) Tax Type: IFTA

_____________________________________

 

STATEMENT OF CASE

This matter came before the Utah State Tax Commission pursuant to the Administrative Procedures Act and the rules of the Utah State Tax Commission for informal adjudicative proceeding. A hearing was held on June 11, 1997. Jane Phan, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner were PETITIONERS REP., PETITIONER and PETITIONERS REP.. Present and representing Respondent were Clark Snelson, Assistant Attorney General, and Tom Darais of the Auditing Division.

Based upon the evidence in the file and presented at the hearing, the Commission makes its:

FINDINGS

Respondent performed an audit of Petitioner's special fuel tax liability. As a result of the audit Respondent assessed on April 12, 1996, additional IFTA tax, penalty and interest for the audit period of October 1, 1992 through September 30, 1995. The amount of additional tax assessed was $$$$$. The penalty assessed was a negligence penalty in the amount of $$$$$. The basis for the negligence penalty was that this was the second time Respondent discovered errors made by Petitioner concerning the IFTA tax. Similar errors had been discovered by Respondent in a prior audit. Interest was assessed at the statutory rate.

The Utah Legislature has enacted legislation to allow a tax exemption on special fuel for off road use.[1] However, the Legislature required that the taxpayer maintain detailed mileage and fuel disbursement records in the Utah Motor and Special Fuel Tax Act. As Respondent correctly explained in its Brief, such records must establish to the satisfaction of the Tax Commission that the special fuel is exempt from tax. Further, as Respondent pointed out, the burden is on the taxpayer to prove they are exempt.[2]

The Utah Tax Commission enacted Administrative Rule R865-4D-18 which indicated the type of records the Tax Commission would require. The rule requires individual vehicle mileage records to be maintained. The records must separate taxable Utah miles and non-taxable Utah miles. It also requires supporting information with the dates of trips, trip mileage and odometer readings.

Petitioner did not keep the required records. Petitioner did make a note at the end of each year on a calendar of how many miles each vehicle had traveled, but the records did not separate mileage between on and off public roads and were insufficient to satisfy the Tax Commission's criteria. As Petitioner had not kept adequate special fuel records, Respondent's assessment was a conservative and reasonable estimate based on the best information Respondent had available.

However, Respondent added an additional 10% charge, an amount of approximately $$$$$, in order to compensate for the possibility that Petitioner used some of the dyed fuel on public roads. Respondent pointed out that Petitioner had a diesel powered Cadillac and diesel powered pick-up trucks. Petitioner's representative took a strong exception to this and testified that this would be a federal crime and that Petitioner did not use dyed fuel on public roadways. He testified that his trucks had been stopped a number of times by state agencies during the audit period and they were never found to be in violation.

APPLICABLE LAW

The Utah Legislature has provided for a special fuel tax exemption in Utah Code Ann. '59-13-301 as follows:

(1)(a) A tax is imposed at the rate of 19 cents per gallon on the sale or use of special fuel. . .

 

(2) No tax is imposed upon special fuel which:(a) is sold or used for any purpose other than to operate or propel a motor vehicle upon the public highways of the state, but this exemption applies only in those cases where the purchasers or the users of special fuel establish to the satisfaction of the commission that the special fuel was used for purposes other than to operate a motor vehicle upon the public highways of the state;. . .

 

As a result of the Utah Motor and Special Fuel Act, the Tax Commission enacted Utah Administrative Rule R865-4D-18(C)as follows:

Individual vehicle mileage records (IVMRs) separating Utah miles from non-Utah miles must be maintained. Utah miles must be separated further into taxable Utah miles and nontaxable Utah miles. An adequate IVMR will contain the following information:

1. starting and ending dates of trip;

2. trip origin and destination;

3. route of travel, beginning and ending odometer or hubometer reading, or both;

4. total trip miles;

5. Utah miles;

6. fuel purchased or drawn from bulk storage for the vehicle; and

7. other appropriate information that identifies the record, such as unit number, fleet number, record number, driver's name, and name of the user or operator of the vehicle.

 

DECISION AND ORDER

After review of the information presented at the hearing, Petitioner did not keep the required records for the special fuel tax exemption. For the most part, Respondent's assessment was a reasonable estimate based on the best information available. However, the additional 10% assessment of approximately $$$$$, relating to Respondent's assumption that dyed fuel was used on public roads, was not sufficiently supported in light of Petitioner's testimony. Petitioner's testimony was supported by the fact that Petitioner's trucks had not been cited for violation by other agencies. As Petitioner did not keep sufficient records, and in light of the fact that this was not a first time error, sufficient cause was not given for waiver of the 10% negligence penalty.

Based on the foregoing the Tax Commission sustains in part the April 12, 1996, audit assessment for the period of October 1, 1992 through September 30, 1995, sustaining all the additional tax assessment except the approximately $$$$$ which was assessed based on Respondent's assumption that some dyed fuel was used on public roads. The penalty and interest are also sustained. It is so ordered.

DATED this _16____ day of __DECEMBER____, 1997.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

 

_____________________________

Jane Phan

Administrative Law Judge

 

The agency has reviewed this case and the undersigned concur in this decision.

DATED this 16 day of DECEMBER, 1997.

 

BY ORDER OF THE UTAH STATE TAX COMMISSION.

 

W. Val Oveson Richard B. McKeown

Chairman Commissioner

 

Joe B. Pacheco Pam Hendrickson

Commissioner Commissioner

^^

 


[1]Utah Code Ann. '59-13-301.

[2]Utah Code Ann. '59-13-301(2)(a)