87-2192 - Sales

BEFORE THE STATE TAX COMMISSION OF UTAH

_____________________________________

XXXXX

Petitioner, :

v. : INFORMAL DECISION

AUDIT DIVISION OF THE : Appeal No. 87-2192

STATE TAX COMMISSION OF UTAH, )

Respondent. :

_____________________________________

STATEMENT OF CASE

This matter is before the Utah State Commission on a petition for redetermination filed by the Petitioner on XXXXX. The Auditing division of the Utah State Tax Commission filed a response on XXXXX. No hearing was requested by the Petitioner or the Respondent. Therefore, the Tax Commission makes its decision on the record before it and upon the recommendation of the Hearing Officer. The Petitioner argues that the electricity, which is a subject of the audit, becomes an ingredient or component part of the final product i.e. the telephone transmission. In other words, the Petitioner is not the end user of the electricity. Because the electricity becomes an ingredient or component part of the tangible personal property, the Petitioner argues that it is a wholesale sale and exempt under Utah code ann. 59-12-104(28). The Respondent argues that pursuant to Utah code ann. 59-12-103(c) the Tax Commission is required to collect tax for "electricity . . . sold or furnished for commercial consumption." Respondent argues that the electricity to provide telephone transmission in long distance telephone service is used or is a type of usage classified as commercial and is, therefore, subject to tax. Further, the Respondent argues that the Petitioner sells telephone services and not tangible personal property and, therefore, Utah Code Ann. 59-12-103 does not apply.

DECISION AND ORDER

Based upon the foregoing it is the Decision and Order of the Utah State Tax Commission that the petition for redetermination is denied. The Tax Commission finds that the arguments presented by the Respondent persuasive and therefore, denies the petition and affirms the assessment.

DATED this 31 day of May, 1988.

BY ORDER OF THE STATE TAX COMMISSION OF UTAH.

R. H. Hansen Roger O. Tew

Chairman Commissioner