Revised January 30, 2008

Utah State Tax Commission

General Sales and Use Tax Workshop

Table of Contents

 

Sales and Leases to Final Consumers

Sales and leases of tangible personal property and certain services to final consumers are taxable. The following transactions are taxable unless a specific exemption applies:

  • Retail sales or purchases of tangible personal property made within Utah.
  • Tangible personal property stored, used, or consumed in Utah.
  • Rentals and leases of tangible personal property if the tangible personal property is located in Utah, the lessee took possession of the tangible personal property in Utah, or the tangible personal property is stored, used, or consumed in Utah.
  • Labor to repair, renovate, wash, clean, and attach tangible personal property in connection with other tangible personal property. This includes maintenance agreements.
  • Laundry and dry cleaning services when the labor is performed at the direction of the seller by an individual who is not the purchaser.
  • Admission or user fees for theaters, movies, operas, museums, planetariums, shows of any type or nature, exhibitions, concerts, carnivals, amusement parks, amusement rides, circuses, menageries, fairs, races, contests, sporting events, dances, boxing matches, wrestling matches, closed circuit television broadcasts, billiard parlors, pool parlors, bowling lanes, golf, miniature golf, golf driving ranges, batting cages, skating rinks, ski lifts, ski runs, ski trails, snowmobile trails, tennis courts, swimming pools, water slides, jeep tours, horseback rides, sports activities, or any other amusement, entertainment, recreation, exhibition, cultural, or athletic activity. User fees include charges for access to a video, video game, television program, or cable or satellite broadcast, if that access occurs at any location other than the individual’s residence.
  • Use of assisted amusement devices when the device or ride is started and stopped by an individual who is not the purchaser or renter of the device and is performing at the direction of the seller.
  • Assisted cleaning or washing of tangible personal property if the cleaning or washing labor is primarily performed by an individual who is not the purchaser of the service and is performing at the direction of the seller.
  • Tourist home, hotel, motel, campground or trailer court accommodations and services regularly rented for less than 30 consecutive days.
  • Telegraph services and intrastate telephone service.
  • Meals at restaurants or other eating places.
  • Sales for commercial use of gas, electricity, heat, coal, fuel oil, or other fuels.
  • Sales for residential use of gas, electricity, heat, coal, fuel oil, or other fuels are taxed at the state rate of 2 percent plus any applicable local and/or public transit tax.
  • Sales of prepaid telephone calling cards, including vending machine sales of prepaid telephone calling cards.
  • Memberships that entitle the purchaser to discounted or free merchandise or services of a type subject to the sales tax. Examples include memberships allowing the card holder to enter a facility and make purchases of merchandise at the stated price without any additional markup, and video memberships that allow members to rent videos at half price. All purchases made with these membership cards are subject to sales tax at the time of purchase unless a specific exemption applies. Tax Bulletin 33-94: Discount membership fees.

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Tangible Personal Property

Utah Code §59-12-102(96) defines tangible personal property as personal property that may be seen, weighed, measured, felt or touched, or is in any manner perceptible to the senses. Tangible personal property includes electricity, water, gas, steam, prewritten computer software, software, and digital and electronic goods .

Utah Code §59-12-104 allows sales tax exemptions for:

  • Sales of water in a pipe, conduit, ditch, or reservoir;
  • Sales of currency or coinage that constitute legal tender of the United States or of a foreign nation; and
  • Sales of an ingot, bar, medallion, or decorative coin that has a gold, silver, or platinum content of 80% or more and does not constitute legal tender of any nation.

In compliance with Utah sales tax laws, there are three treatments of tangible personal property:

  • Tangible personal property attached to other tangible personal property;
  • Tangible personal property permanently attached to real property; or
  • Tangible personal property converted to real property.

Tangible Personal Property Attached to Other Tangible Personal Property

Tangible personal property can be attached to other tangible personal property, such as a stereo being installed in a vehicle.

Tangible Personal Property Attached to Other Tangible Personal Property
Example: Customer has a stereo installed in a vehicle. Stereo and vehicle are both tangible personal property. According to Utah law, attaching (installing) the stereo to the vehicle is a repair and is taxable.
TPP
Labor
Taxable to customer
Taxable to customer
If car or stereo requires repairs
Taxable to customer
Taxable to customer

Resources:

 

Tangible Personal Property Permanently Attached to Real Property

Tangible personal property is classified as permanently attached to real property if (1) the attachment is essential to use the tangible personal property, and (2) the tangible personal property will remain attached over its useful life. This includes attaching an accessory to the tangible personal property if it is essential to the operation of the tangible personal property and is attached solely for that purpose.

This classification is further supported if (1) detachment would cause substantial damage to the tangible personal property, or (2) detachment would require substantial alteration or repair of the real property. The permanently attached tangible personal property retains its classification even if it is temporarily detached for onsite repair or renovation.

The permanently attached classification does not include (1) attaching portable or movable tangible personal property for convenience, stability, or an obvious temporary purpose, or (2) detachment for repair or renovation other than onsite. Also excluded from this classification is a refrigerator, washer, dryer, stove, television, computer or telephone if the attachment to real property is only through a line that supplies water, electricity, gas, telephone or cable.

Tangible Personal Property Permanently Attached to Real Property
Example: Customer calls contractor and has TV satellite dish installed on house. Contractor brings satellite dish and installs to roof. Satellite is tangible personal property permanently attached to real property.
TPP
Labor
Taxable to customer
Not taxable to customer if separately stated on invoice
Satellite dish needs repairs at a later date:
Dish remains attached to roof during repairs
Taxable to customer
Not taxable to customer if separately stated on invoice
Dish is removed from roof, repaired off-site, returned to home and attached
Taxable to customer
Off-site labor to repair dish is taxable to customer. Labor to re-install to real property is not taxable if separately stated on invoice
 
If parts, off-site labor to repair and labor to re-install are combined into one price, all are taxable to homeowner

Resources:

 

Tangible Personal Property Converted to Real Property

Construction materials and fixtures are tangible personal property that is converted to real property when used in the construction of buildings or improvements on real property. Construction materials such as bricks, lumber, nails, cement and other items typically lose their separate identity as personal property once incorporated into real property.

Fixtures are items of tangible personal property, such as furnaces, built-in air conditioning systems, built-in appliances, sinks and tubs. Although these items do not lose their separate identity upon installation, they become an integral part of the real property and are treated as real property.

Sales or use tax is paid by the final consumer of the tangible personal property. When converting tangible personal property to real property, the contractor is typically the final consumer.

Tangible Personal Property Converted to Real Property
Three Treatments
Example #1: Homeowner's hot water heater breaks. Homeowner goes to store, purchases TPP (hot water heater), takes home and installs the TPP. During installation, TPP is converted to real property.
TPP
Labor
Taxable to homeowner
N/A
Example #2: Homeowner's hot water heater breaks. Homeowner goes to store, purchases TPP (hot water heater) and takes it home. Homeowner hires contractor to install/convert to real property.
Taxable to homeowner
Not taxable to homeowner
Example #3: Homeowner's hot water heater breaks. Homeowner calls contractor; asks contractor to bring hot water heater and install in home. This is a "furnish and install" contract; contractor furnishes and installs built-in hot water heater.
Not taxable to homeowner. Contractor pays sales tax or accrues use tax on his cost of hot water heater.
Not taxable to homeowner
Hot water heater needs repairs at later date:
Hot water heater remains in place during repairs
Not taxable to homeowner
Not taxable to homeowner
Hot water heater removed, repaired off-site and re-installed by contractor
Parts used off-site are taxable to homeowner
Off-site labor to repair hot water heater is taxable. Labor to re-install hot water heater to real property is not taxable if separately stated on invoice.
 
If parts, off-site labor to repair, and labor to re-install are combined into one price, all are taxable to homeowner.

Resources:

Examples of tangible personal property that may be provided in a furnish and install contract include, but are not limited to:

  • Carpet and other floor coverings
  • Heating and air conditioning units and parts
  • Plumbing and electrical supplies
  • Wallpaper and other wall coverings
  • Windows
  • Fencing
  • Built-in appliances

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Special Events

A special event is a one-time event or an event that runs for six months or less where sales occur and is generally located in an area other than the seller’s usual place of business. A special event can include state and county fairs, festivals, antique shows, gun shows, food shows, art shows, auctions, seasonal mall kiosks, swap meets, conventions, hobby shows, concerts, and similar events.

Vendors typically sell items of tangible personal property at special events. Sales of tangible personal property at special events are taxable to final consumers. Sellers use the sales tax rate in effect at the event location.

When sales tax is included in the selling price of items sold at special events, the tax must be calculated separately. To determine the sales price without tax, the proceeds are divided by one plus the tax rate in effect at the special event. For example:

  • If the combined tax rate is 6.0%, divide by 1.060
  • If the combined tax rate is 6.125%, divide by 1.06125

A seller who participates in a special event is required to register for a temporary sales tax license, even if a current sales tax license holder, and file a special event sales tax return.

Registering for a temporary sales tax license and return, form TC-790C, can be initiated by phone. Call (801) 297-6303 or 1-800-662-4335, ext. 6303 or send an email to SpecialEvent@utah.gov. The temporary sales tax license and return will be mailed to the seller with a pre-printed tax rate and due date.

If Tax Commission agents do not collect form TC-790C and sales tax on the last day of the special event, sellers file the temporary license return and remit full payment within 10 days after the special event ends.

Sellers with a permanent sales tax license include the special event gross sales on Line 1 of form TC-61 and enter the amount as an adjustment (credit) on Line 6 of the return to offset the sales.

For additional information, please visit the Tax Commission's Special Events website.

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