Orton v. Utah State Tax Com'n, Collection Div.

Decision Date12 November 1993
Docket NumberNo. 930320-CA,930320-CA
PartiesWorth L. and Annette C. ORTON, Petitioners, v. UTAH STATE TAX COMMISSION, COLLECTION DIVISION, Respondent.
CourtUtah Court of Appeals

Dennis M. Astill (argued), Adam F. Trupp, Strong & Hanni, Salt Lake City, for petitioner.

Jan Graham, State Atty. Gen., Gale K. Francis (argued), Asst. Atty. Gen., Salt Lake City, for respondent.

Before RUSSON, Associate P.J., and BENCH and JACKSON, JJ.

OPINION

RUSSON, Associate Presiding Judge:

Worth L. and Annette C. Orton seek review of a decision of the Utah State Tax Commission holding them liable for non-payment of state income taxes for the years 1983-89. We affirm.

FACTS

On November 20, 1990, the Utah State Tax Commission (Tax Commission) assessed the Ortons with unpaid individual income tax totaling $14,515 for the years 1983-89, plus penalties and interest at the statutory rate of twelve percent per year. The Ortons petitioned for redetermination of the assessment. Following a hearing in April 1992, the Tax Commission found the Ortons jointly and severally liable for the taxes assessed, but (1) waived all penalties on that amount, concluding that the Ortons did not file Utah tax returns for the years in question because of a good faith belief that they were not required to do so, and (2) waived all interest accrued after January 1, 1988, finding that the Ortons had relied on a 1988 decision of a Tax Commission auditor that they had no Utah state tax liability.

The facts relevant to this petition for judicial review are undisputed. Mr. Orton was born and raised in Parowan, Utah. He attended Utah State University, and then served three years in the military, where he met and married Mrs. Orton. The Ortons returned to Parowan, built a home and raised four children, all of whom had left home prior to the tax period in question.

In 1962, Mr. Orton accepted employment as a security guard at a federal testing installation in Nevada, which position he held continuously until 1978. Prior to Mr. Orton's acceptance of the above position, the Ortons had experienced difficulties in their marital relationship; thus, Mrs. Orton did not accompany Mr. Orton to Nevada.

In 1975, Mr. Orton deeded his interest in the family home to Mrs. Orton, in exchange for her renouncing any claim she might have to a Utah mountain cabin that Mr. Orton jointly owned with a friend. In 1978, Mr. Orton left his employment in Nevada and returned to Utah, where he was employed for two years. During those two years, he resided at the family home in Parowan.

In 1980, Mr. Orton returned to work as a security guard in Nevada, where he was employed until his retirement in January 1990. Throughout his employment in Nevada, Mr. Orton never owned any real property in Nevada, but instead paid $21 per month to live in a dormitory supplied by his employer, which included a private bedroom, shared bathroom facilities, a cafeteria, assorted recreational facilities, and weekly maid service.

During the years in question, 1983-89, Mr. Orton made between sixteen and twenty trips to Utah each year, usually returning either to the family home or to his mountain cabin. Additionally, throughout the period in question, Mr. Orton retained ownership interest in four other parcels of land in the Parowan area.

Mr. Orton registered to vote, and did vote, in Nevada. Additionally, he held a Nevada driver's license and registered his firearms and a car in Nevada, although he also registered several cars in Utah. Mr. Orton also maintained various bank accounts in both Nevada and Utah; however, both his Nevada and Utah accounts listed his Parowan address as the mailing address. As to other mail, Mr. Orton used both a Nevada post office box and his Parowan address to receive mail.

During the years in question, the Ortons filed joint federal tax returns, listing the Parowan address on the forms. Moreover, Mr. Orton listed his Nevada expenditures as "away from home" expenses on those forms. Additionally, the phone number and utilities at the family home in Parowan were listed under Mr. Orton's name, and Mr. Orton provided Mrs. Orton with funds necessary for her household and living expenses.

In August 1988, the Tax Commission conducted an office audit of Mr. Orton's income tax liability for the years 1984-87. This audit was conducted because the Ortons had filed federal income tax returns that listed a Utah address, but had not filed Utah income tax returns for those years; however, this assessment was later withdrawn based on Mr. Orton's representation that he was not a resident of Utah. 1 After further investigation, the Tax Commission determined that Mr. Orton was domiciled in Utah during the years in question, and assessed the Ortons with unpaid state income tax totaling $14,515 for the years 1983-89, plus penalties and interest at the statutory rate of twelve percent per year.

The Ortons subsequently petitioned for redetermination of this assessment. On September 4, 1992, following a hearing in April 1992, the Tax Commission issued a final decision holding the Ortons liable for non-payment of state income taxes for the years 1983-89 on the basis of the above facts, but waiving all interest accrued after January 1, 1988, and further waiving all penalties on the amount owed. On September 24, 1992, the Ortons filed a petition for reconsideration of this decision, which petition was denied on December 9, 1992.

The Ortons seek review of the Tax Commission's decision, arguing that (1) the Tax Commission incorrectly determined that Mr. Orton was domiciled in Utah for the years 1983-89; (2) even if the Tax Commission correctly determined that Mr. Orton was domiciled in Utah for the years at issue, it should nonetheless be estopped from assessing state income taxes against the Ortons for that period; and (3) the Tax Commission unreasonably refused to abate interest accruals for the tax years prior to 1988.

JURISDICTION

Before considering the issues above, we must first address the Tax Commission's claim that we lack jurisdiction to hear this matter because the Ortons failed to timely file their petition for judicial review. Specifically, the Tax Commission argues that since Utah Code Ann. § 63-46b-13(3)(b) (1989) provides that a petition for reconsideration is deemed to be denied twenty days after the filing of such request if no action has been taken by that point, the thirty day tolling provision for filing a petition for judicial review under Utah Code Ann. § 63-46b-14(3)(a) (1989) begins to run on the date that the petition for reconsideration is deemed to be denied. Thus, the Tax Commission argues, since the Ortons filed their petition for reconsideration on September 24, 1992, such petition should have been deemed denied on October 14, 1992, and the Ortons only had until November 13, 1992, to file their petition for judicial review, notwithstanding the fact that the agency subsequently denied the Ortons' petition for reconsideration on December 9, 1992.

This court has recently addressed and rejected this very argument in 49th Street Galleria v. Utah State Tax Commission, 860 P.2d 996 (Utah App.1993). In that case, this court held that "a party may file a petition for judicial review within thirty days after the order constituting the final agency action ... 'or ' within thirty days after the 'deemed denied' date established by section 63-46b-13(3)(b)." Id. Under the doctrine of stare decisis, as outlined in State v. Thurman, 846 P.2d 1256, 1269 (Utah 1993), we are bound by that decision. Accordingly, because the Ortons filed their petition for judicial review on January 8, 1993, within thirty days of the Tax Commission's December 9, 1992, denial of their petition for reconsideration, we have jurisdiction to hear this matter.

STANDARD OF REVIEW

Our standard of review in this matter is governed by Utah Code Ann. § 59-1-610 (Supp.1993). See OSI Indus., Inc. v. Utah State Tax Comm'n, 860 P.2d 381 (Utah App.1993). That section provides:

(1) When reviewing formal adjudicative proceedings commenced before the commission, the Court of Appeals or Supreme Court shall:

(a) grant the commission deference concerning its written findings of fact, applying a substantial evidence standard on review; and

(b) grant the commission no deference concerning its conclusions of law, applying a correction of error standard, unless there is an explicit grant of discretion contained in a statute at issue before the appellate court.

(2) This section supersedes Section 63-46b-16 pertaining to judicial review of formal adjudicative proceedings.

Additionally, it is the Ortons' burden to establish a reasonable basis for granting their petition for judicial review. See O'Rourke v. Utah State Tax Comm'n, 830 P.2d 230, 232 (Utah 1992).

DOMICILE

The Ortons assert that the Tax Commission incorrectly held them liable for non-payment of state income taxes for the years 1983-89 based on its erroneous determination that Mr. Orton was domiciled in Utah during that period. The Tax Commission responds that its finding that Mr. Orton was domiciled in Utah at the time in question was supported by substantial evidence, and thus, assessment was proper.

In O'Rourke v. Utah State Tax Commission, 830 P.2d 230 (Utah 1992), the Utah Supreme Court held that the Tax Commission's determination of domicile involves a question of fact, reviewing such determination under a "substantial evidence" standard of review. See id. at 232; see also Allen v. Greyhound Lines, Inc., 583 P.2d 613, 614 (Utah 1978) ("The sole issue presented ... [is] one of fact, viz., the place of plaintiff's domicile."). Thus, we review the Tax Commission's determination that Mr. Orton was domiciled in Utah during the years 1983-89 under Utah Code Ann. § 59-1-610(1)(a) (Supp.1993), which mandates that we "grant the commission deference concerning its written findings of fact, [and apply] a substantial evidence standard on review."

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