Sales and Use Tax
BEFORE THE UTAH STATE TAX COMMISSION
PETITIONER, ) FINDINGS OF FACT,
) CONCLUSIONS OF LAW,
Petitioner, ) AND FINAL DECISION
v. ) Appeal No. 01-0576
) Parcel No. #####
AUDITING DIVISION OF )
THE UTAH STATE TAX ) Tax Type: Sales and Use
) Judge: Phan
Jane Phan, Administrative Law Judge
For Petitioner: PETITIONERS’ REPRESENTATIVE
For Respondent: Gale Francis, Assistant Attorney General
Scott Smith, Assistant Director, Auditing
Burt Ashcroft, Manger Sales and Use Tax
STATEMENT OF THE CASE
This matter came before the Utah State Tax Commission for a Formal Hearing on July 1, 2002. Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:
FINDINGS OF FACT
1. Petitioner is appealing an audit deficiency of additional sales tax in the amount of $$$$$$, along with the interest of $$$$$$ which has accrued thereon.
2. The audit period at issue is from January 1, 1998 through September 30, 2000.
3. The sales tax deficiency was the result of Petitioner's failure to collect or remit sales tax on fees paid by bowling leagues for the use of Petitioner's bowling facilities. During the months of September through April, Petitioner contracts with various bowling leagues for the use of the bowling facilities. Typically there is different bowling league each night of the week. Petitioner did not charge sales tax on the fees paid pursuant to these league contracts.
4. Petitioners representatives testified that they were unaware of the requirement to charge the tax. In fact, it was their understanding stemming back to some legal action on the part of the Association 1, probably in the 1980's, that the league fees were not subject to sales tax. Petitioner's owners testified that they were never notified of the change in the law in 1994 which clarified that the leagues were subject to sales tax, although they acknowledge that any mail for the business from the State Tax Commission went to the CPA, and would not necessary have been read by them.
5. The 1994 Utah Legislature amended the statute to clarify that all admissions and user fees are subject to Utah sales tax. The amendment specifically listed admissions or user fees for bowling lanes. Utah Code Ann. Sec. 59-12-103(f). The Utah Legislature amended the statute following the Supreme Court decision 49th Street Galleria v. Tax Commission, 860 P.2d 996 (Utah 1993). Prior to the amendment, bowling lanes were not included in the references within Utah Code Ann. Sec. 59-12-103.
6. The Tax Commission issued Tax Bulletin 15-94 with an effective date of July 1, 1994. The Bulletin was mailed generally to affected taxpayers and it explained the 1994 amendment. Tax Bulletin 15-94 stated, "Taxable activities include, but are not limited to, admissions and user fees for . . .bowing lanes . . ." In addition two advisory opinions were issued dealing directly with the issue of fees paid by bowling leagues for the use of the bowling facility and both advisory opinions clearly indicated that these fees were subject to tax. One advisory opinion was issued on December 5, 1995 and the other March 25, 1998.
7. Petitioner did not collect sales tax on the fees paid by the leagues and at this point it would be a serious financial hardship for Petitioner to pay the deficiency. Once Petitioner became aware of the requirement during the audit process, Petitioner started charging sales tax on the league fees and remitting that amount to the Tax Commission.
Except as provided in Section 59-12-104, amounts paid or charged as admission or user fees for theaters, movies, operas, museums, planetariums, sows 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 runs, jeep tours, boat tours, scenic cruises, horseback rides, sports activities, or any other amusement, entertainment, recreation, exhibition, cultural, or athletic activity. Utah Code Ann. Sec. 59-12-103.
CONCLUSIONS OF LAW
1. The statute requires bowling lanes to charge and remit to the State Tax Commission sales tax on the fees paid by bowling leagues for use of the bowling facility. Utah Code Ann. Sec. 59-12-103.
2. Taxpayers within the State of Utah are required to know the laws of the State of Utah. Ignorance of a tax law is not of itself sufficient justification to excuse payment of the tax. In this case the Tax Commission did make a reasonable effort to notify affected taxpayers of the 1994 law change by publishing Tax Bulletin 15-94 and mailing it widely to affect parties.
3. Financial hardship may not be taken into consideration in determining a tax liability at this level. After the appeal process Petitioner can make an offer in compromise based on financial hardship. To obtain information on the Offer and Compromise program, Petitioner must contact Taxpayer Services Division, 297-6300.
DECISION AND ORDER
Based upon the foregoing, the Tax Commission sustains the audit assessment of additional sales tax and interest for the audit period of January 1, 1998 through September 20, 2000. It is so ordered.
DATED this 16th day of July , 2002.
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 16th day of July , 2002.
Pam Hendrickson R. Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc B. Johnson