BEFORE THE UTAH STATE TAX COMMISSION
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS OF LAW,
v. : AND FINAL DECISION
AUDITING DIVISION OF THE : Appeal No. 90-1694
UTAH STATE TAX COMMISSION, :
: Account No. XXXXX
STATEMENT OF CASE
This matter came before the Utah State Tax Commission for final decision on XXXXX after both Petitioner and Respondent waived the opportunity for a formal hearing and agreed to have the case decided on the pleadings and file contents.
FINDINGS OF FACT
1. The tax in question is sales and use tax.
2. The period in question is XXXXX through XXXXX.
3. Petitioner is a corporation located in XXXXX, Utah.
4. As a result of an audit over the period in question, Petitioner was required to pay additional taxes, a penalty and interest.
5. Petitioner contests a portion of the sales and use tax that was assessed for the purchase of XXXXX.
6. During the period in question, Petitioner bought $$$$$ in computer software tax exempt. As a result, Petitioner was assessed $$$$$ in taxes, plus interest.
CONCLUSIONS OF LAW
"There is levied a tax on the purchaser of the amount paid or charged for...(a) retail sales of tangible personal property made within the state." (Utah Code Ann. §59-12-103(1)(a).) Tangible personal property means all goods, wares, merchandise, produce, and commodities; all tangible or corporeal things and substances which are dealt in or capable of being possessed or exchanged. (Utah Code Ann. §59-12-102(13) and Utah Administrative Rule R865-19S-26.)
Canned computer software is tangible personal property as defined in Rule R865-19S-92(lB) of the Utah Administrative Rules (1991-1992):
"The sale, rental or lease of canned or prewritten computer software constitutes a sale of tangible personal property and is subject to the sales or use tax."
DECISION AND ORDER
Petitioner contends that Utah Administrative Rule R865-19-92S(lB) cannot be applied to the case at hand because it is a new rule that became effective this year. Therefore, Petitioner argues, the Tax Commission cannot apply it retroactively to include canned computer software in the tangible property category.
The Tax Commission disagrees with Petitioner's contention. The fact that Rule R865-19S-92 postdates the audit period in question does not automatically mean that canned computer software was intangible property prior to the rule's effective date. RuleR865-19S-92 is not a new rule in the sense that it creates a new definition of the phrase "tangible personal property." Rather, the rule serves to help define Utah Code Ann. §59-12-102(103) as it relates to the world of computer technology.
"This rule cites the most common types of transactions involving computer software and it should not be construed to be all inclusive but merely illustrative in nature." (Utah Administrative RuleR865-19S-92(lF).)
Further, the rule in question does not change any existing rule, and therefore, Utah Code Ann. §63-46a-6 does not apply. RuleR865-19S-92 merely exists to explain a statute already in existence.
The Tax Commission therefore affirms the sales and use tax assessed on the computer software purchases for the period of XXXXX through XXXXX. It is so ordered.
DATED this 22nd day January, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger O. Tew
Joe B. Pacheco S. Blaine Willes