86-0038 - Sales




Petitioner, )





AUDITING DIVISION, : Appeal No. 86 0038


: through XXXXX

Respondent. )



An informal hearing was held on June 23, XXXXX. XXXXX, XXXXX Attorney, and XXXXX represented Petitioner. XXXXX, Assistant Attorney General, and XXXXX represented the Respondent. Chairman R. H. Hansen and Hearing Officer, XXXXX, heard the matter for the Utah State Tax Commission.

Respondent audited the Petitioner for the period January 1, XXXXX, through September 30, XXXXX. Petitioner challenges the sales and use tax assessments for the audit period on the following:


a) daily admissions,

b) annual and semi-annual admission passes,

c) group use admissions,

d) indoor programs,

e) special events,

f) equipment rental;

2. Animal sales by the XXXXX;

3. Miscellaneous sales including charges for accident reports and police reports;

4. Photocopies made at the XXXXX public library;

5. Sales from land fill salvage;

With regard to admissions charges to the XXXXX, Petitioner argued that Respondent erred in its interpretation of Utah Code Ann. 59-15-4(d)(1) and 59-15-2(10) (Supp. 1986). Section 59-15-4 requires a sales tax on the price of admission to any place of amusement, entertainment, or recreation. Section 59-15-2(10) defines admission. Petitioner believes that the XXXXX is not primarily a place of recreation but is a fitness facility. In support of its argument, Petitioner pointed out that private spas, fitness centers, golf courses, and bowling alleys are not required to charge sales tax on sales of their membership fees. Petitioner also urged that golfing and bowling are more recreational than the activities the XXXXX offers; thus, it is arbitrary and discriminatory to require the XXXXX to charge tax on its fees but not to require private health centers and recreational centers to charge sales tax.

With regard to group use admissions, Petitioner argued that these charges are simply discounted admissions given to certain groups that use the facilities. Also, the money collected for indoor programs are simply membership fees which enable individuals to participate in the activity or team.

Petitioner argues that the XXXXX is not a retailer as defined in Utah Ann. 59-15-2(5) (Supp. 1986). It urged that any sales or charges it made under categories 2 through 5 listed above are "isolated or occasional" sales within meaning of Tax Commission Rule A12-02-S38. Under the Sales Tax Act, sales tax is to be collected only on sales made by a retailer in a regularly organized retail business.

Respondent argued with regard to the XXXXX charges that the admission charges are for recreational activities and thus subject to the sales tax. It pointed out that Tax Commission Rule A12-02-S34, in defining "place of amusement, entertainment, recreation," imposes a sales tax on participants of some activity within the place of amusement, entertainment or recreation. Rule S47 subjects the charge for admission to swimming pools, skating rinks, and other places of amusement to sales tax. Respondent agreed with the Petitioner that charges for the use of private health spas, golf courses, and bowling alleys are not normally taxable because the charges are not made to enter a place of amusement but are a charge for the use of the facility. Payment is only required from persons actually using the facilities. Respondent argued that Petitioner was not assessed tax on charges that entitle the participant to use the facilities. Respondent also argued that Petitioner's activities are not directly analogous to activities of private health spas and that private health spas and fitness facilities would be required to collect sales tax if their admissions or fees charged were primarily for recreational activities.

Respondent acknowledged that Petitioner's primary business is not as a retailer but pointed out that any person (including a municipal corporation) which has regular retail transactions is subject to the requirements of collecting the tax. The fact that the sales may be few or infrequent does not make them isolated or occasional sales within the Sales Tax Act and the rules promulgated under the Act.


1. Utah Code Ann. 59-15-4(1)(d) (Supp. 1986) requires tax to be collected on "the amount paid for admission to any place of amusement, entertainment, or recreation." Section 59-15-2(10) defines admission. "Admission" includes seats and tables or otherwise, and other similar accommodations and charges made therefor and "amount paid for admission" means the amount paid for such admission, exclusive of any admission tax imposed by the federal government or by this act.

2. Tax Commission Rule A12-02-S33 further explains the meaning of the term admission. The term "admission" means the right or privilege to enter into a place including seats and tables reserved or otherwise and other similar accommodations and charges made therefor. The amount paid for the right to use a reserved seat or any seat in an auditorium, theatre, circus, stadium, schoolhouse, meeting house or gymnasium to view any type of entertainment is taxable.
Tax Commission Rule A12-02-S34 indicates that "place of amusement, entertainment, or recreation" has a broad meaning but does convey the idea of a definite location and requires the amount paid for admission to such be subject to tax even though the purchaser may participate in some activity within the place. "For example, the sale of a ticket for a ride upon a mechanical or self-operated device is an admission to a place of amusement." Id.

3. "Retailer" is defined by 59-15-2(5) (Supp. 1986) as "a person doing a regularly organized retail business in tangible personal property, and selling to the user or consumer . . . ." Subsection (6) defines "retail sales" as "every sale within the state of Utah by a retailer or wholesaler to a user or consumer . . . but [does not] include isolated nor occasional sales by persons not regularly engaged in business . . . ."

4. Tax Commission Rule A12-02-S27 indicates that the term "retail sale" is broad and includes transfers, exchanges, or barters and that the "quantity sold or the extent of the clientele are not factors which determine a sale to be or not to be a retail sale." Tax Commission Rule A12-02-S28 points out that one may be a retailer within the meaning of the Act even though the sale of tangible personal property is merely incidental to the general business.

5. Based on the foregoing provisions of the Utah Sales Tax Act and the rules promulgated under the Act, the Commission finds that with regard to the XXXXX, the admissions charges in the form of daily admissions and annual and semi-annual fees, group use admissions, and fees for indoor programs are not taxable admissions within the meaning of the Act. These charges are not admission charges to a "place of amusement, entertainment, or recreation," but are charges for use of the XXXXX facilities. The Commission finds, based on the evidence presented, that Petitioner's facilities are very much like those of private health spas, the fees for which are not taxable.

The Commission finds, however, that equipment rental charges and admission to special events such as youth dances are taxable transactions.

The Commission further finds that the sale of animals, the sale of photocopies at the XXXXX, and sales from landfill salvage are taxable transactions, but that the miscellaneous sales are not taxable transactions. Specifically, the miscellaneous sales which are not taxable are the charges made for police and accident reports. The Commission finds that these charges are not sales charges but are administrative or service fees which are not taxable.


The Commission hereby affirms the sales tax assessment on the special events and equipment rentals at the XXXXX and on the sales of animals, photocopies, and sales from land fill salvage. The Commission grants Petitioner's Petition for Redetermination with regard to the daily admissions, annual and semi-annual fees, and group use fees to the XXXXX, and with regard to the miscellaneous sales made by the XXXXX.

The Respondent is therefore ordered to adjust its records to reflect the decision of the Commission.

DATED this 16 day of October, 1987.


R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner