BEFORE THE UTAH STATE TAX COMMISSION
Petitioners, : FINDINGS OF FACT,
v. : CONCLUSIONS OF LAW
AUDIT DIVISION OF THE : AND FINAL DECISION
STATE TAX COMMISSION OF UTAH, ) Appeal No. 87-3154
Respondent. : Appeal No. 87-3155
This matter came before the Utah State Tax Commission for a formal adjudicative proceeding on XXXXX. James E. Harward, Presiding Officer, heard the matter for and on behalf of the Tax Commission. The Petitioner was represented by XXXXX. XXXXX appeared representing the Respondent with XXXXX.
The Tax Commission, after reviewing the evidence and arguments presented at the hearing and the recommendation of the Presiding Officer, makes its
FINDINGS OF FACT
1. The tax involved is sales tax.
2. The period involved is XXXXX.
3. Eight vehicles were booked and recorded as sales; however, those sales were security deposits given by the salesmen who then drove the vehicles as demonstrators with dealer plates.
4. Each of the vehicles was eventually sold on a retail basis within six months of the date of the deposit made by the salesmen. Although only three of the eight were sold during the audit period, subsequent evidence indicates that all eight of the vehicles were sold including the XXXXX which was sold more than six months after the deposit was made by the salesmen.
5. In the transactions between the dealership and the salesmen, title did not transfer to the salesmen.
6. The salesmen would put a deposit with the dealership who would then pay off the flooring on the automobile. The salesmen would then drive the vehicle on dealer plates. The salesmen was required to maintain insurance on the vehicle. In addition, the vehicle was required to have the vehicle on the lot all hours that the salesman was on the lot for demonstration purposes. In all cases, the automobile was sold through the dealership to a retail purchaser upon which transaction of sales tax was collected.
7. In most cases, the amount of the deposit was the amount of dealer invoice of the car. On at least one occasion, the deposit was less than the cost of the automobile to the dealer.
8. In the cases where a manufacturers rebate was applied, that rebate was given to the purchaser of the automobile.
9. Where the automobiles were sold for less than the deposit, the testimony would indicate that this was as a result of damage done to the vehicle by the salesman.
CONCLUSIONS OF LAW
1. Utah Code Ann. §59-12-103 (1)(i) levies a tax on the purchaser of the amount paid of a retail sale of tangible personal property made within the state.
2. A retail sale means any "transfer of title, exchange or barter" including "any transaction under which right to possession, operation, or use of any article...is granted under a lease or contract...."
3. Utah Administrative Rules 865-82S-1 provides that tangible personal property which is held for demonstration is not subject to tax.
4. The Tax Commission concludes that the vehicles in question have been assigned to a salesmen as demonstrators and that the amount paid is for security purposes only. The title has not changed hands, and sale has not been consummated which would make it a retail sale under Utah Code Ann. §59-12-103(1)(a).
It is therefore the order of the Utah State Tax Commission that the Petitioner's request be granted in that the audit shall be adjusted to reflect that the eight transactions in question be exempt from taxation on the grounds that they are demonstrators and not a sale.
DATED this 1 day of May, 1989.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis