BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS
OF LAW
v. : AND FINAL DECISION
AUDITING
DIVISION OF THE :
STATE TAX
COMMISSION OF UTAH, ) Appeal No. 87-1270
Respondent. :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Paul F. Iwasaki, Presiding
Officer, heard the matter for and in behalf of the Tax Commission. Present and representing the Petitioner was
XXXXX. Present and representing the
Respondent were XXXXX both with the Auditing Division of the Utah State Tax
Commission. Based upon the evidence and
testimony presented at the hearing, the Tax Commission hereby makes its:
FINDINGS OF FACT
1.
The tax in question is sales tax.
2.
The audit period is XXXXX.
3.
The Petitioner is a manufacturer of cultured marble and onyx products.
4.
The Petitioner would buy raw materials and then turn it into a finished
product. The Petitioner did not pay
sales tax on the raw materials which included resin and fillers.
5.
Some of the finished products the Petitioner sold were sales made on a retail level
to "walk-in" customers. The
Petitioner collected sales tax on those sales.
6.
The majority of sales made by the Petitioner were sales made to those whom the
Petitioner described as "prime contractors." By that term, the Petitioner referred to
general contractors who were responsible for the project in which the products
were being used.
7.
Of the sales made to the "prime contractors", the Petitioner would
charge sales tax if the contractors purchased the products and installed them
themselves. If the Petitioner installed
the product for the contractor, he was, in his opinion, acting as a
subcontractor and would not charge sales tax.
8.
The Petitioner did not keep any accounting records during that period of
time. The audit was based on sales and
purchase invoices.
9.
The Petitioner was given credit for all sales in which exemption certificates
were provided as well as for out of state sales.
10.
A sales tax deficiency was assessed for all sales made by the Petitioner where
sales tax was not paid and no exemption certificates were obtained or other
exemptions applied.
11.
80% of the sales price of the products sold by the Petitioner reflected cost
for materials. The remaining 20%
reflected labor cost.
CONCLUSIONS OF LAW
Retail
sales of tangible personal property made within the state are subject to sales
tax. (Utah Code Ann.59-12-103) Sale of tangible personal property to real
property contractors in repair of real property is generally subject to
tax. (Utah State Tax Commission
Administrative RuleR865-19S-58).
DECISION AND ORDER
In
the present case, the vast majority of the sales made by the Petitioner were to
what the Petitioner described as "prime contractors." In those circumstances where the contractors
simply purchased the product and installed them themselves, the Petitioner
charged sales tax. Petitioner's actions
in those circumstances were quite appropriate.
It is the situation where the Petitioner installed the product for the
contractor and himself acted as a subcontractor that created problems. In those instances, the Petitioner would
sell and install the product for the general contractor and would not charge
sales tax to the general contractor. In
order to properly do so, the Petitioner must have paid sales tax on the
materials used in making the product.
That he did not do. During the
course of hearing, the Petitioner seemed to imply that he was not given proper
credit for those sales which were made to tax exempt entities and for which
exemption certificates were obtained. There was no showing however, beyond the Petitioner's bare
allegations, that the audit was not properly conducted and that proper credit
for all sales tax paid and for those sales which were legitimately tax exempt
were given. Based upon the foregoing, the
Tax Commission affirms the deficiency as assessed by the Auditing Division for
the audit period. It is so ordered.
DATED
this 21 day of March, 1990.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B. Pacheco G.
Blaine Davis
Commissioner Commissioner
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