96-091
Response
May 17, 1996
Request
This opinion arises out of an appeal decision on
appeal number 95-1542. The appeal addressed
and penalty and interest issue, and advised the petitioner that the Commission
would issue an advisory opinion as to the taxability of income earned from
XXXXX.
DOCUMENT OFFERED IN SUPPORT OF
APPEAL
November
20, 1995
Appeals
Division
Utah
State Tax Commission
210
North 1950 West
Salt
lake City, Utah 84134
RE:
Income Tax, Account # XXXXX
Dear
Sir/Madam:
This
is to request a redetermination of your ruling as contained in your letter
dated XXXXX, a copy of which is herewith attached.
For
sometime, I have an uneasy feeling about the tax liability assessed by IRS,
Utah State, and XXXXX Government. I believe that I have located the real issue
in the case.
My
major income has been paid by a source in XXXXX. XXXXX government treats all
foreign consultant equally by skimming off the first 20% of the payment. This
money taken by XXXXX government I have no chance of claiming them back, unless
I live in XXXXX long enough to file tax returns there. I only receive the
balance of the 80% monthly via wire transfer to my bank account in Utah. To me,
this 80% is my gross income. The only reason I declare the other 20% in IRS
return is the fact that IRS allow me to come back at the end of the form to
claim some tax credit.
For
the Utah return, I have to start out my 80% + the above-mentioned 20% on line 4
as the Federal adjusted gross income (copied from IRS return.) But State return
does not give me a chance to make any equitable adjustment for the 20% money I
never received, and had no access to claim refund. My contention is that the
20% skimmed off the top should be treated as cost of doing business in XXXXX
and be allowed in the equitable adjustment. Or allow me to report the 80% as
the entry in line 4 of the Utah return. Otherwise, the 20% money is literally
taxed three times, first taken away by XXXXX, second by IRS for only giving me
partial credit, third by Utah for assessing a 7% on the 20%. I do not believe
that any body should be punished this way for earning their living from a
foreign source.
Please
allow me a hearing to clarify the case before the commission. Thank you for
your consideration.
Sincerely,
XXXXX
XXXXX
Advisory
Opinion - Tax on income earned in foreign countries.
Dear
XXXXX
As stated in our decision and order
on your appeal (appeal number 95-1542), we are issuing you this advisory
opinion pertaining to the taxability of the income that you earn in XXXXX.
All income earned by a taxpayer who
is a resident of Utah is taxable in Utah regardless of the source of
income. As a resident, you must report
all of your income, including income derived from sources in XXXXX. Although you are entitled to a credit for
taxes paid to another state or possession of the United States, Utah law allows
no credit for taxes paid to foreign countries.
This outcome may seem harsh, but we have no authority to grant an
exemption. This is an issue that you
may wish to address with the legislature.
Please let us know if you have other
questions.
For the Commission,
Alice Shearer,
Commissioner