97-1212
Signed 10/28/98
____________________________________
PETITIONER, :
: ORDER
Petitioners, :
: Appeal No.
97-1212
v. : Account Nos. #####
:
AUDITING
DIVISION OF THE : Tax Type: Income Tax
UTAH STATE TAX COMMISSION, :
STATE OF UTAH, : Presiding: Hendrickson
:
Respondent. :
_____________________________________
Presiding:
Pam
Hendrickson, Commissioner
Appearances:
For
Petitioner: PETITIONER
For
Respondent: Mr.
Gale Francis, Assistant Attorney General
Mr. Frank Hales, Assistant Deputy Director, Auditing
Division
Mr. Brent Wood, from the Auditing Division
STATEMENT OF THE 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 March 11, 1998.
Petitioners
are appealing the assessment of Utah individual income tax, penalties, and
interest for the years 1987 through 1993. Respondent made the assessment based
on the assertion that Petitioners were residents of Utah during this period.
Petitioner, PETITIONER had not filed Utah resident income tax returns for the
years in question based on his assertion that he was a resident of California.
Petitioner PETITIONER was a resident of Utah and had not filed Utah resident
returns based on the assertion that she did not earn sufficient income for filing
to be required. Following the Initial hearing held on March 11, 1998,
Petitioner sent a letter dated March 24, 1998 to the hearing officer in which
Petitioner offered further argument regarding his state of domicile. Because
there was no indication that Respondent was provided a copy of the letter, ten
additional days were allowed for comment. After receiving no comment from
Respondent, the Commissioners in their deliberation process, were unable to come to agreement because of
two issues raised in the letter. On September 8, 1998 the hearing was
reconvened to allow those questions to be asked and answered. At that hearing
Commissioner Joe Pacheco joined Commissioner Pam Hendrickson.
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.
The
Utah Legislature has specifically provided that the taxpayer bear the burden of
proof in proceedings before the Tax Commission. Utah Code Ann. §59-10-543 provides the following:
In any proceeding before the commission under
this chapter, the burden of proof shall be upon the petitioner except for the
following issues,.....
ANALYSIS
The
issue in this appeal is whether Petitioner PETITIONER was a “resident
individual” in the State of Utah for the purposes of Utah Code Ann. §59-10-103
(I) (j) for the years 1987 through 1993. For the purposes of income taxes the
concept of domicile becomes the key to whether or not a person is a resident of
Utah. In determining whether Petitioner was domiciled in Utah during the years
in question the Commission weighs all the facts presented as well as the law
and case law on point.
Petitioner
was clearly domiciled in California prior to 1982 when he built a home, and
moved his family to CITY, Utah. From the facts it is clear that Petitioner
intended to establish a new domicile in Utah. However, Petitioner returned to
California in 1987 for full time employment and it becomes less clear as to
whether Petitioner abandoned his California domicile even though he sold his
home there, and lived in a home belonging to a family member during the audit
years. One significant factor for consideration was that Petitioner filed and
paid income taxes to the State of California as a California resident during
the audit period.
It
was undisputed that Petitioners wife PETITIONER and his family were residents
of Utah where they held church memberships and where the children attended
local schools. Petitioner was listed in the local phone directory in Utah, had
several automobiles registered in his name in Utah, held a Utah drivers
license, was listed as joint owner on property tax records in Washington County
and purchased a family burial plot in Utah.
In
support of Petitioners claim to be a
non resident, testimony indicated that Petitioner was registered to vote in
California, had church membership records in California, had a California
drivers license that expired in 1993, registered a car in California, belonged
to the Automobile Club of Southern California, was listed in the California
phone directory, had phone service with Pacific Bell billed to the California
address, and had a banking account in the First Interstate Bank of California with statements going to the
California address. Petitioner submitted evidence of employment from 02-12-88
to 12-31-91 with the University of California - Los Angles. All Federal Taxes
filed between 1987 and 1993 were filed with the California address, never
claiming “away from home expenses”. From the information presented petitioner
PETITIONER did not spend in the aggregate more than 183 days per year in the
state of Utah during the period in question. Petitioner worked in California
and returned to Utah most weekends to see his family.
Petitioner
retired from UCLA in 1993 and returned to live in Utah with his family. In 1994
Petitioner filed Utah resident income tax prepared by NAME, CPA. On January 5,
1995, Petitioner received a Statutory Notice and on the advice of a tax
commission employee filed non- resident
returns, also through his tax advisor.
Even
though it is clear from the facts that Petitioner had intended to reside in
Utah with his family prior to 1982, it has not been demonstrated that he
abandoned his California domicile. Petitioner sold his personal home in
California but continued to reside and work in California as he built and
maintained a home for his family in Utah. He never lived in Utah since he could
not find employment but maintained many
significant ties with California during the audit years including filing
California resident tax returns. Petitioner did not take a substantial
deduction on his Federal Tax returns for away from home expenses incurred
during the time he was employed in California. While there is much evidence to
indicate Petitioner PETITIONER intended to reside in Utah upon retirement, the
weight of the facts indicate that Petitioner was not a resident of Utah for the
state tax purposes for the audit period 1987 to 1993.
DECISION AND ORDER
For
the period at issue, since the Commission has found that the Petitioner was not
a resident of Utah, he is not liable for resident Utah individual income tax
pursuant to Utah Code Ann. §59-10-104.
It is so ordered.
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 appeal rights in this
matter.
DATED
this 29 day of October, 1998.
____________________________________
Pam Hendrickson
Commissioner
BY ORDER OF THE UTAH STATE TAX COMMISSION.
The
Commission has reviewed this case and the undersigned concur in this decision.
DATED this 29 day of
October, 1998.
Richard B.
McKeown Joe
B. Pacheco
Chairman Commissioner
^^