87-0219 - Sales





Petitioner, )


AUDIT DIVISION OF THE ) Appeal No. 87-0219


Respondent. )



An Informal Hearing was held on XXXXX, by telephone conference call. James E. Harward, Hearing Officer, heard the matter for the Utah State Tax Commission. XXXXX, Tax Manager of Petitioner, represented Petitioner. XXXXX, Managing Auditor, represented Respondent. Petitioner appealed Respondent's disallowance of Petitioner's claim for refund of $$$$$ in sales tax. In XXXXX, Utah enacted an increase in the sales and use tax rate from 4 1/8 percent to 4 5/8 percent effective October 1, 1983. The legislation contained a provision for the refund to construction contractors of the 1/2 percent increase for certain preexisting binding contracts. The 1986 Legislature subsequently repealed the provision concerning the refunds effective July 1, 1986. On XXXXX, Petitioner requested a ruling of Respondent whether three of Petitioner's contracts qualified for the refund. In a letter dated XXXXX, XXXXX stated that it appeared that all of the contracts should qualify for the refund. Claims for Petitioner's job ##### were submitted and paid. However, Petitioner filed a claim for the period XXXXX, on XXXXX. Respondent disallowed this claim citing House Bill No. 135 which repealed the sections providing for the refund. Petitioner claims that House Bill No. 135's effective date of XXXXX, is retroactive and thus unfair. Petitioner was not informed of the law change and had previously been verbally informed to limit the number of refund claims submitted. Petitioner indicated that Respondent would have preferred Petitioner to await contract completion to submit any claims; however, had Petitioner done that none of their claims would have been allowed. Petitioner claims that repeal of the law providing refunds should apply only to tax incurred after XXXXX, rather than to claims filed after that date for tax incurred prior to that date.

Respondent indicated that Petitioner did not have notification of the law but that the claims were disallowed because the statutory authorization for refund had been repealed. Respondent further indicated that normally the claim would be allowed and that the repeal of the refund provision is unfair in its application to Petitioner and the refund should be allowed.


Based on the foregoing, it is the Decision and Order of the Utah State Tax Commission to allow Petitioner's claim for refund for tax incurred prior to XXXXX. Petitioner is correct in asserting that the repeal of the refund provision applies to tax incurred after the effective date of the legislation and not to claims filed after the effective date of the legislation for tax incurred prior to that date. Therefore, Respondent is ordered to refund the appropriate amounts of tax to Petitioner for tax incurred prior to XXXXX, and to adjust its records to reflect the decision of the Commission.

DATED this 15 day of October, 1987.