BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
XXXXX,
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
Respondent. :
_____________________________________
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.
ABSENT
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco S.
Blaine Willes
Commissioner Commissioner