BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX
Petitioner, :
v. : INFORMAL DECISION
AUDITING
DIVISION OF THE : Appeal No. 87-3152
UTAH STATE TAX COMMISSION, :
Respondent. :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for an informal hearing on
XXXXX. James E. Harward, Hearing
Officer, heard the matter for the Tax Commission. XXXXX appeared representing the Petitioner. XXXXX appeared representing the Respondent.
Petitioner's
part of its sales program presents to purchasers of automobiles a personalized
calendar which contains the purchaser's picture with the automobile
purchased. The calendar with its
picture is only available to those persons who purchase an automobile through
the Petitioner. Petitioner argues that
the gift of the personalized calendar falls within Tax Commission Rule
R865-6A-1b that provides, when a "retailer making a retail sale of
tangible personal property which is subject to tax gives a premium together
with the tangible personal property sold, the transaction is regarded as a sale
of both articles to the purchaser, provided the delivery of such premium is
certain and does not depend upon chance."
Respondent,
on the other hand, argues that the calendar is nothing more than a promotional
tool which is used and consumed by Petitioner. Therefore, the Petitioner is
required to pay sales tax upon the purchase of that personal property. Further, the Petitioner argues that if it were
a premium it would be required to be included on the purchase agreement and be
included as part of the selling price.
The Respondent presented evidence which would indicate that in the sale
of an automobile the gift of the calendar is not included in the sales price or
in the purchase documents and, therefore, it does not qualify under their
interpretation as a premium.
DECISION AND ORDER
The
Tax Commission, after reviewing Rule R865-6A-1 finds that when a gift is given
the tax is paid by the consumer of the item of personal property. That consumer
would be the person giving the gift.
Sub paragraph (b) of Rule 68S allows an exception to that general
rule. When a gift is given in
conjunction with a retail sale and does not depend upon chance, then the retail
sale is considered the sale of both the personal property and the gift, and
sales tax is charged on that transaction.
The purchase of the gift is not subject to tax in this exception.
The salient factors of whether or not a gift
of personal property fits within sub paragraph (b) are: 1) is it given with the
retail sale of personal property, 2) is the premium actually given to the
purchaser, and 3) does the receipt or gift of the premium depend on chance?
The
facts before the Commission indicate that the gift of the calendar to the
purchasers of automobiles is made in conjunction with an actual retail
sale. There is no evidence which would
indicate that the calendar is given to anyone who does not purchase personal
property. In addition, the calendar is,
in fact, given to those purchasers.
Finally, the gift of the calendar does not depend upon chance. Everyone who purchases a car receives the
calendar.
Therefore,
based upon this analysis the Tax Commission finds that the transactions involving
the calendars with the Petitioner are purchased tax exempt by the Petitioner
and is considered part of the retail sale of the automobile. Therefore, Petitioner's request is granted
and the Auditing Division is ordered to adjust its records to conform with this
decision.
DATED
this 29 day of September, 1988.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner