96-2381
Income Tax
Signed 8/23/97
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
PETITIONER, :
:
Petitioners, : DECISION
:
v. :
:
COLLECTION
DIVISION OF THE : Appeal No. 96-2381
UTAH STATE TAX COMMISSION, :
STATE OF UTAH, : Account No. #####
:
Respondent. : Tax Type: Income Tax
_____________________________________
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 proceedings. A hearing was
held on June 18, 1997. G. Blaine Davis,
Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioners were
PETITIONERS REP.. Present and
representing Respondent were Ms. Michelle Bush, Assistant Attorney General,
together with Mr. Grant Olsen and Mr, Kenneth Cook, from the Compliance Unit.
Based
upon the evidence in the file and presented at the hearing, the Commission
makes its:
FINDINGS
1. The tax in question is income tax.
2. The period in question is calendar years
1994 and 1995.
3. Petitioner, PETITIONER, is a full-time
member of the XXXXX stationed at XXXXX.
Her only source of income during the period in question was her military
pay. Her military records indicate that
she is a resident of STATE, and she was transferred to XXXXX from the State of
STATE.
4. Petitioner, PETITIONER, is a full-time XXXXX
pilot, and a part-time XXXXX reservist stationed in the State of STATE. For the times in question, PETITIONER has
flown out of CITY, CITY, and two months out of CITY. To commence his flights, he commutes from CITY to the city at
which he is stationed, and then begin his flights in that station. He does not fly out of or into the State of
Utah, except on his way to or from his permanent duty station. He is not in the State of Utah more than 183
days during any calendar year, and he came to the State of Utah only to be with
his wife who was transferred to this state by the military. After his arrival in Utah, he did attempt to
be stationed in Utah, but was successful in being stationed here for only two
months.
5. Prior to Petitioner XXXXX being transferred
to Utah, both Petitioners were residents of the State of STATE. They owned four parcels of real property in
the State of STATE, including two homes and one condominium. Both Petitioners have their drivers licenses
from the State of STATE. Both
Petitioners are registered to vote in the State of STATE, and during the last
general election they both voted by absentee ballot in the State of STATE.
6. When PETITIONER was transferred to the State
of Utah, they were unable to locate suitable rental housing, so they purchased
a home in Utah. However, they retained
their homes and condominium in Washington because they anticipate returning to
Washington upon the completion of PETITIONER military service. PETITIONER is anticipating a transfer out of
the State of Utah within a short period following the hearing in 1997, and PETITIONER
intends to join her at whichever location to which she is transferred. Both parties intend to maintain their
domicile in the State of STATE, and intend to return there at some point in the
future.
7. PETITIONER spends anywhere from zero to eight
days per month within the State of Utah, but is out of the State of Utah during
all of the days when he is working.
8. Petitioners filed a Utah non or part-year
resident return for both 1994 and 1995, primarily to obtain a refund of Utah
taxes which were withheld by XXXXX from the paycheck of PETITIONER. When PETITIONER joined his wife in Utah, his
employer apparently believed he was transferring his domicile to Utah, so they
started deducting Utah withholding taxes from his paycheck. PETITIONER claims that he never filled out
any form for such taxes to be withheld, and that such taxes should not have
been withheld. He asserts that he never
abandoned his domicile in STATE, nor established a domicile in Utah.
9. PETITIONER forgot to sign one of the returns
which was filed, so Respondent imposed a 10% failure to file penalty. Respondent also imposed a 15% penalty for
intentional disregard of the laws.
10. At the start of the hearing, Respondent
stipulated that because of the provisions of the Sailors and Soldiers Relief
Act, Petitioner,PETITIONER, was a resident of STATE, and her income was not
subject to taxes in Utah. Therefore,
the only issue in this proceeding is whether the income of Petitioner, PETITIONER,
is subject to tax in the State of Utah.
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,
"domicile" 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.
The
Tax Commission is granted the authority to waive, reduce, or compromise
penalties and interest upon a showing of reasonable cause. (Utah Code Ann. §59-1-401(10).)
DECISION AND ORDER
In
reviewing the above facts, the Commission is of the opinion that there is not
sufficient evidence to indicate that PETITIONER ever abandoned his domicile in
the State of STATE, nor is there sufficient evidence to indicate that he
established a domicile in the State of Utah.
However, for the period of approximately two months when PETITIONER was
stationed in the State of Utah and flew out of the State of Utah for his
employer, such income constituted Utah source income and was taxable by the
State of Utah.
Based
upon the foregoing, it is the Order of the Utah State Tax Commission that the
audit assessment made by Respondent against Petitioners, including the penalty
and interest assessments, are hereby set aside and abated. Respondent is further ordered to prepare a
revised audit which includes as taxable income only that income which was
earned by Petitioner, PETITIONER during the period when he was stationed in Utah
by XXXXX. Any such assessment shall
include interest at the statutory rate,
but shall not include any penalty. It
is so ordered.
DATED
this 26 day of AUGUST, 1997.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
_____________________________
G. BLAINE DAVIS
Administrative Law
Judge
The
agency has reviewed this case and the undersigned concur in this decision.
DATED this 23 day of
AUGUST, 1997.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Richard
B. McKeown
Chairman Commissioner
Joe B.
Pacheco Pam
Hendrickson
Commissioner Commissioner
^^