90-1055 - Sales





Petitioner : ORDER


v. : Appeal No. 90-1055




Respondent. :



This matter came before the Utah State Tax Commission upon a Petition for Reconsideration, dated XXXXX, filed by the Petitioner as a result of the Commission's final decision dated XXXXX.


1. Utah Administrative Rule R861-1A-1(P) provides that a Petition for Reconsideration "will allege as grounds for reconsideration either a mistake in law or fact, or the discovery of new evidence." Under this rule, the Tax Commission may exercise its discretion in granting or denying a Petition for Reconsideration. The points raised in Petitioner's Petition for Reconsideration are discussed below, in the order of their presentation.

2. Petitioner argues that because it was advised by Audit Division staff that several of its other activities were not subject to sales tax, Petitioner was justified in concluding that its XXXXX was also not taxable. Petitioner's arguments overlooks that fact that it had also been advised by others on the Audit Division staff that its activities were subject to sales tax. Petitioner chose to accept the advice to its liking and reject the contrary advice. Then, without further discussion of the matter with Audit Division staff, Petitioner concluded that the XXXXX was also not subject to tax. The XXXXX had not existed when Audit Division staff initially reviewed Petitioner's operation. In its previous Order, the Commission waived retroactive application of sales tax to those specific activities where Petitioner received conflicting advice from different members of Audit Division staff. Petitioner did not receive conflicting advice regarding the taxability of the XXXXX. The Commission therefore reaffirms its decision that the XXXXX is subject to sales tax.

3. Petitioner also contends the Commission did not respond to its challenge to the Administration rules under which sales tax was imposed on Petitioner's various activities. In effect, Petitioner argues that such rules exceed the scope of Utah's Sales Tax Act. The Commission recognizes that payment of sales tax cannot be required other than as authorized by the Sales Tax Act. However, the Commission is authorized to prescribe rules in conformity with the Act to ascertain and assess the tax imposed by the Act. (See Utah Code Ann. 59-12-118.) The rules upon which the assessment was made in this case are an application of the foregoing rulemaking authority. The rules themselves have remained unchanged for many years, with no legislative direction to the contrary. The commission therefore finds no merit in Petition's challenge to those rules.

4. Petitioner contends that 59-12-103(1)(f) of the Sales Tax Act and the administrative rules pertaining to that portion of the Act are unconstitutionally vague. Petitioner has framed its objections in conclusionary language, with no citation of authority and minimal analysis. The commission therefore rejects Petition's challenge the constitutionality of the statute and rules.

5. Petitioner further argues that no logical distinction can be drawn between bowling, which is not subject to sales tax, and batting cages, which are subject to tax. The Commission recognizes that distinctions between the two activities are difficult to draw. The exemption of bowling from sales tax is largely historical and perhaps would not exist if a fresh look at the issue were possible. Even so, the fact that receipts from bowling may have been excluded form taxation for historical reasons does not require that receipts from batting cages also be excluded, where such receipts are otherwise subject to sales tax under the Sales Tax Act.

6. The Petitioner also contends that it has overpaid other sales taxes and is therefore entitled to an offset against the sales tax liability imposed by the audit which is the subject of this appeal. The Petitioner did not pursue such a position during the hearing in this matter, nor has any specific claim for refund been submitted. Petitioner may claim such a refund in the manner provided by law and regulation.

7. Finally, the Commission must correct Petitioner's misstatements regarding a draft informal opinion prepared during XXXXX by an Assistant Utah Attorney General. Petitioner contends the Commission concealed the opinion because it was favorable to Petitioner's position. First, the so called opinion is merely a draft that was never signed, never approved by the Attorney General and never accepted by the Commission. Second, the Commission has made no effort to conceal the draft. The Petitioner has a copy of the draft, which has been made a part of the record in this matter. The draft is not binding on the Commission, and the Commission has rejected its conclusions for the reasons stated in the Commission's original decision.


Based upon the foregoing, it is the decision and order of the Utah State Tax Commission that the Petition for Reconsideration is denied. It is so ordered.

DATED this 10 day of March, 1992.


R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner