00-0474
Sales Tax
Signed 9/19/01
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
PETITIONER, )
) ORDER
Petitioner, )
) Appeal No. 01-0474
v. )
)
TAXPAYER SERVICES
DIVISION OF ) Tax Type:
Refund/Sales Tax
THE UTAH STATE TAX )
COMMISSION, ) Judge: Phan
)
Respondent. )
_____________________________________
Presiding:
Jane Phan,
Administrative Law Judge
Appearances:
For Petitioner: PETITIONER
For Respondent: Mark Wainwright, Assistant Attorney General
Julie Halvorson
Inez Thomas
Tamara Billingsley
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 June 20,
2001. At the request of Respondent, the
Initial Hearing was scheduled to reconvene on August 20, 2001. Although present on June 20, 2001,
Petitioner did not attend on August 20, 2001.
Petitioner is requesting
a refund of sales tax in the amount of $$$$$ which he paid to COMPANY A
drugstore on the purchase of blood sugar testing supplies.
There is no dispute as
to the facts. In several COMPANY A
advertisements, coupons offered a free glucose test meter with the purchase of
a specified amount of the glucose test strips.
The coupons state specifically that they are manufacturer's coupons and
that coupon redemption would be paid by the manufacturer. The glucose test strips are used in the
meter and can not be used separately from the meter, nor can the meter be used
without the test strips. Petitioner
made several purchases of the test strips and received the free meters. With each purchase COMPANY A did not charge
sales tax on the glucose test strip; the receipt indicated that it was a
pharmacy item. However, even though the
glucose meter was a free item, COMPANY A did charge sales tax based on its
regular value. It is this sales tax for
which Petitioner seeks a refund.
However, as Respondent points out the correct amount of the sales tax
paid according to the receipts presented by Petitioner was $$$$$. Petitioner's calculation of $$$$$ included two duplicate receipts and included
sales tax on other taxable items.
Petitioner agues that
the coupons were store coupons and not subject to sales tax, pointing to Utah
Admin. Rule R865-19S-68. However, the
coupons which Petitioner used were not store coupons for the purposes of the
rule, they were clearly manufacturer's coupons because the store, COMPANY A,
was reimbursed by the manufacturer for the glucose testing meter. The Commission agrees with Respondent on
this issue. The coupons are clearly
manufacturers coupons which are subject to sales tax pursuant to Utah Admin.
Rule R865-19S-68 (D).
At the Initial Hearing,
Petitioner offered a second argument.
Petitioner argued that the meters should be exempt from sales tax as a
pharmacy item, pointing to the fact that sales tax was not charged on the
glucose test strips. He indicated that
in other drugstores the meters were treated as a pharmacy item and no sales tax
was charged.
Respondent had requested
that the Initial Hearing be reconvened because at the June 20, 2001 hearing
Respondent had not considered this second issue. At the August 20, 2001 hearing, Respondent stated that the
glucose test meters were exempt from sales tax pursuant to Utah Code Ann. Sec.
59-12-104 (39) which provides an exemption for sales of home medical equipment
and supplies. Some further requirements
for this exemption are set out at Utah Code Ann. Sec. 59-12-102 (12), which
include the eligibility for payment under Title 18 of the federal Social
Security Act and that they be
prescribed or authorized in writing by a license physician. Respondent acknowledged that the glucose
test meters sufficiently met these requirements so that it came under this
exemption.
APPLICABLE LAW
The following sales and
uses are exempt from the taxes imposed by this chapter: .
. . (39) sales or rentals of
home medical equipment and supplies. (Utah
Code Ann. Sec. 59-12-104 (39).)
"Home medical
equipment and supplies" means equipment and supplies that: (i) a licensed
physician prescribes or authorizes in writing as necessary for the treatment of
medical illness or injury or as necessary to mitigate an impairment resulting
from illness or injury: (ii) are used exclusively by the person for whom they
are prescribed to serve a medical purpose; and (iii) are listed as eligible for
payment under Title 18 of the federal Social Security Act or under the state
plan for medical assistance under Title 19 of the federal Social Security Act
. .
. (Utah Code Ann. Sec. 59-12-102(12).)
If a retailer accepts a
coupon for part or total payment for a taxable product and is reimbursed by a
manufacturer or another party, the total sales value, including the coupon
amount, is subject to sales tax. (Utah
Admin. Rule R865-19S-68(D).)
DECISION
AND ORDER
Based on the foregoing,
although the purchases of the glucose meters at issue do not qualify for exemption
from sales tax due to the store coupon exemption, they do qualify for exemption
from sales tax based on the exemption for home medical equipment and
supplies. (Utah Code Ann. Sec.
59-12-104 (39).) The Commission orders
Respondent to refund to Petitioner $$$$$ plus applicable interest. 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 19th
day of September, 2001.
____________________________________
Jane Phan
Administrative Law Judge
BY ORDER OF THE UTAH STATE TAX
COMMISSION.
The Commission has
reviewed this case and the undersigned concur in this decision.
DATED this 19th
day of September, 2001.
Pam Hendrickson R.
Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc
B. Johnson
Commissioner Commissioner