BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX, :
:
Petitioner : FINDINGS OF FACT,
: CONCLUSIONS
OF LAW
v. : AND FINAL DECISION
:
AUDIT DIVISION
OF THE :
STATE TAX COMMISSION
OF UTAH, : Appeal No. 85-0118
:
Respondent :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Commission for a Formal Hearing on
XXXXX. The entire Tax Commission was
present with Roger O. Tew conducting the proceedings. XXXXX, Assistant Attorney General, appeared on behalf of the
Respondent XXXXX and XXXXX appeared representing the Petitioner and XXXXX. After reviewing the evidence and arguments
presented at the Formal Hearing the Tax Commission makes its:
FINDINGS OF FACT
1.
XXXXX entered into two major construction projects involved XXXXX. One of these projects involved remodeling
and constructing, medicinal facilities on the XXXXX. The other project involved the construction of the new XXXXX
together with the adjoining parking lot of the athletic fields.
2.
The XXXXX undertook the responsibilities of the construction project
itself. Rather than hire a prime
contractor the school district acted as the prime contractor for both
projects. To act as prime contractor
the school district hired XXXXX to oversee the project.
3.
Mr. XXXXX was hired and given an office in the school district's offices. He was designated to represent the school
district in performing its duties as the prime contractor. The school district then entered into
twenty-two separate contracts with various businesses for the construction of
the XXXXX and eight businesses for the work to be performed at the XXXXX.
4.
The contracts included site preparation, mechanical, electrical, general
construction, educational equipment, carpet, lockers, bleachers, library
shelving, shop equipment, auditorium seating, state equipment, state lighting,
gym flooring, athletic track, fencing, sprinkling system, Toro equipment,
tennis courts, and stadium seating.
5.
One of the twenty-two contracts was let to XXXXX. XXXXX was to provide general construction on the main building
and a few other items.
6.
As part of the contract, the school district reserved the rights in all of its
contracts to purchase the materials to be used in the construction of the two
facilities. That provision provided
"The owners (school district) shall have the right to furnish any part or
all of the materials and equipment which shall become a part of the permanent
structure."
7.
If the school district elected to furnish the materials it would issue a
purchase order to the vendor, the vendor would then deliver the materials to
the job site. Upon delivery to the job
site title to the materials would pass directly from the vendor to the school
district. The school district had the
responsibility of paying for the materials.
8.
The school district exercised its option on all of its contracts on the two
projects to purchase and furnish materials.
9.
The school district secured lists and specifications through XXXXX from the
various contractors. The school
district then issued change orders to the various contractors deleting the need
to supply the materials and the cost of the materials from the contract. The school district then issued a purchase
order directly to the vendor for the materials.
10.
The contracts with the various subcontractors then became labor only
contracts. The vendor supplied all materials
vendor then billed the school district for the materials which paid for the
materials by check issued directly from the school district.
11.
All vendors billed and receive payment from the school district and did not
look for payment from the contractors.
12.
All warranties on the materials run to the school district and the school
district was and is responsible for enforcing any and all warranties.
13.
School district provided insurance coverage for the materials after purchase
and through construction of the building.
14.
School district was the owner of all surplus materials.
15.
School district inspected the materials when they arrived on the job site and
then at times refused delivery of defective materials. Based upon the foregoing Findings of Facts,
the Commission enter its
CONCLUSIONS OF LAW
1.
Petitioner did not purchase the materials used in the construction of the XXXXX
and therefore it is not liable for the payment of sales tax on those materials.
2.
Purchase of materials by the XXXXX are exempt from sales tax pursuant to Utah
Code Ann. 59-15-6 (1986).
3.
The materials used by the Petitioner in the construction of the XXXXX were
purchased and owned by the XXXXX are exempt from sales tax.
FINAL DECISION
Therefore
it is hereby decided that the sales tax assessment against the Petitioner,
XXXXX, for the period of XXXXX through XXXXX and the accompanying penalties and
interest be rescinded.
DATED
this 25 day of November, 1987.
BY Decision OF THE STATE TAX COMMISSION OF
UTAH.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner