Sales and Use Tax
BEFORE THE UTAH STATE TAX COMMISSION
) Appeal No. 01-0863
v. ) Account No. #####
AUDITING DIVISION OF ) Tax Type: Sales/Use Tax
THE UTAH STATE TAX )
COMMISSION, ) Audit Period: 8/1/97 thru 7/31/00
Irene Rees, Legal Counsel / Hearing Official
For Petitioner: PETITIONER REP, represented the taxpayer
For Respondent: Clark Snelson, Assistant Attorney General, represented the Auditing Division.
STATEMENT OF THE CASE
This matter came before the Utah State Tax Commission for a status conference on August 29, 2001. The parties agreed to allow additional time for submission of briefs and evidence and agreed to have the initial decision made upon the filings.
Respondent issued an assessment against Petitioner in the amount of $$$$$ for unpaid sales tax on electricity used in Petitioner's business. The amount assessed includes tax and interest. No penalty was assessed.
At issue is whether Petitioner qualifies for the sales tax exemption set out in section '59-12-104 (42) of the Utah Code for fuel sold for "industrial use." The exemption applies to manufacturers who are classified or described in codes 2000 to 3999 of the Standard Industrial Classifications Manual (SIC) of 1987.
Petitioner is in the business of retreading tires for sale to the public. Retreading operations are classified as code 7534 in the SIC system, outside of the range of codes that are eligible for the exemption. However, Petitioner states that its retreading business qualifies as a manufacturer under the North American Industry Classifications System (NAICS). Petitioner asks the Commission to overlook the statutory language which limits the exemption on the basis of SIC codes and to grant the exemption on the basis of the NAICS classifications, which may be considered more accurate in describing industry groups.
Where legislation is clear, the Commission must implement the law as it reads without regard to public policy arguments raised by the parties. The language of the exemption clearly applies only to industries which are classified within the SIC systems as manufacturers. Petitioner's industry does not fall within the qualifying SIC codes, and, therefore, does not qualify for exemption.
The legislature is aware of the development of the NAICS system, but it has not chosen to replace the statutory reference to the SIC codes. Until it does, the Commission is bound by the current statutory language.
DECISION AND ORDER
Based on the foregoing, Petitioner's request for exemption on the basis of its NAICS classification is denied.
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 a 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
210 North 1950 West
Salt Lake City, Utah 84134
Failure to request a Formal Hearing will preclude any further appeal rights in this matter.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
The Commission has reviewed this case and the undersigned concur in this decision.
DATED this 28th day of November, 2001.
Pam Hendrickson R. Bruce Johnson
Commission Chair Commissioner
Palmer DePaulis Marc B. Johnson