96-2233
INCOME
Signed 5/30/97
BEFORE THE UTAH STATE TAX COMMISSION
____________________________________
PETITIONERS, )
:
Petitioners, ) ORDER
:
v. ) Appeal No. 96-2233
:
AUDITING DIVISION OF THE ) Account
No. #####
UTAH STATE TAX COMMISSION, )
:
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 April 21, 1997. Jane Phan, Administrative Law Judge, heard
the matter for and on behalf of the Commission. Present and representing Petitioner was PETITIONERS REP., POA.
Present and representing Respondent were Gale K. Francis, Assistant Attorney
General, along with Frank Hales and Dan Engh of the Auditing Division.
Petitioners are appealing the assessment of
Utah individual income tax and interest for the year 1993. The assessment was set out in the Statutory
Notice dated March 6, 1996. Respondent made the assessment based on the
assertion that both Petitioners were residents of Utah during this period. Petitioners filed a joint federal return for
1993. Petitioner PETITIONER did file a
Utah individual return for 1993.
However, Petitioner PETITIONER did not file a Utah resident individual
income tax return for 1993 based on the assertion that she was a resident of
STATE. She did file an STATE income tax
return for this year.
The assessment as set out in the Statutory
Notice does not allow a credit for the taxes PETITIONER paid to STATE. Respondent agreed that if PETITIONER was
found to be a Utah resident for 1993 the assessment would be revised so that
credit would be allowed for taxes paid to STATE. Although not yet subject to assessment, the parties anticipate
that the decision for the 1993 tax year will be followed for the years 1994 and
1995.
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).
Resident individual is defined in Utah Code
Ann. '59-10-103(1)(j) as follows:
A "resident individual" is either:
(I) an individual who is domiciled in this
state for any period of time during the taxable year; or
(ii) 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.
For purposes of determining whether an
individual is domiciled in this state the Commission has defined
"domicile" in Utah Administrative Rule R865-9I-2(D) as follows:
the place where an individual has a true,
fixed, permanent home and principal establishment, and to which place he has
(whenever he 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.
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.
ANALYSIS
The issue in this appeal is whether
PETITIONER was a "resident individual" in the State of Utah for the
purposes of Utah Code Ann. '59-10-103(1)(j) for the year 1993.
From the information presented she did not spend in the aggregate more
than 183 days in the State of Utah
during the period in question. A
resident individual, in the alternative, is one who is "domiciled" in
the State of Utah.
Petitioners were both clearly residents and
domiciled in the State of Utah prior to 1987.
In approximately 1981 Petitioners married and PETITIONER moved to Utah
from STATE. Sometime in 1987
Petitioners moved to STATE where PETITIONER took a position managing a horse
farm. They owned no real property in
Utah at that time. PETITIONER had been
working for COMPANY A in Utah and was able to transfer her employment to the
Company=s STATE offices. They rented an apartment in STATE. They filed a part year Utah return and a part year STATE return
for 1987. For 1988 they filed an STATE
return.
Then in 1988 or 1989 PETITIONER moved back to
Utah.PETITIONER remained in STATE where she continued her employment with the
COMPANY A. Petitioners= representative pointed out that she could
have transfered her position back to her employer=s Utah office but she chose instead to stay in STATE. She would visit PETITIONER in Utah during
vacations about two weeks per year and he visited her in STATE from time to
time. The representation from Petitioner=s representative was that for the period in
issue, 1993, PETITIONER had an STATE drivers license, registered her vehicles
in STATE, obtained insurance in STATE, maintained bank accounts in STATE, and
did not have any bank accounts individually or jointly in Utah. Petitioner provided documentation of these
activities but for the most part the documentation reflected dates after the
audit period. However, these
representations were unrefuted by Respondent
PETITIONER Utah driver=s license record indicates that she changed
her address in June of 1988 to ADDRESS, CITY, Utah. However, Respondent reports that it looks like the Utah license
was surrendered in August of 1988.
Also, as Respondent pointed out, Petitioners filed joint federal returns
and Utah returns for the years 1989 through 1992 using the address at
ADDRESS. For 1993 their joint federal
return was filed with the Utah address.
Respondent pointed out that there was no change in their circumstances
between 1992 and 1993 to establish a change of domicile. It was the representative for Petitioners= opinion that the reason they had filed in
Utah was that they followed incorrect advice of their prior tax preparer. For the 1993 year they became her clients
and she determined that PETITIONER was a resident of STATE.
The Commission needs to first consider whether
Petitioners abandoned their Utah domicile in 1987 when the moved to STATE. The representation which was largely
unrefuted by Respondent is that Petitioners had no real property in Utah. They both moved to STATE in 1987. They rented a place and started employment
in STATE. They filed a part year STATE
return as well as a part year Utah return for 1987. In 1988 they filed an STATE resident return. Based on these representations, Petitioners abandoned their Utah domicile at
that point in 1987 when they moved to STATE.
Since the Commission finds that STATE
domicile was established in 1987, it must consider whether PETITIONER later
abandoned her STATE domicile. In order
to show a change of domicile back to Utah the facts must indicate that
PETITIONER: 1) abandoned her STATE domicile; and 2) that she intended to and
did in fact establish a new domicile in Utah.
The facts do not support abandonment of her domicile in STATE. She continued to live and work there full
time even though she could have transferred her employment back to Salt
Lake. She even filed and paid STATE
resident income taxes in 1993.
DECISION AND ORDER
Based upon the information and
representations presented at the hearing, and the records of the Tax
Commission, the Commission finds that PETITIONER was a resident of STATE in
1993. The assessment of income tax and
interest for the 1993 tax year should be adjusted accordingly.
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 30 day of MAY, 1997.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val Oveson Richard
B. McKeown
Chairman Commissioner
Joe B. Pacheco Alice Shearer
Commissioner Commissioner
^^