BEFORE THE UTAH STATE TAX
COMMISSION
_______________________________
dba: XXXXX : FINDINGS OF FACT,
Petitioner : CONCLUSIONS OF LAW,
: AND FINAL
DECISION v. )
AUDITING
DIVISION OF THE : Appeal No. 91-0592
UTAH STATE TAX COMMISSION :
:
: Account
No. XXXXX
Respondent :
__________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal hearing on
XXXXX. Paul F. Iwasaki, Presiding Officer,
heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX, Esq. Present and representing the Respondent was
XXXXX, Assistant Utah Attorney General.
Based
upon the evidence and testimony presented at the hearing, the Tax Commission
hereby makes its:
FINDINGS OF FACT
1. The tax in question is sales tax.
2. The audit period in question is XXXXX
through XXXXX.
3. The Petitioner operates a hotel located in
XXXXX Utah. During the audit period in question, the Petitioner, pursuant to
written proposals, provided rooms to various trucking firms for use by their
drivers.
4. Of the several trucking firms involved, only
one written agreement could be found by the Petitioner. The terms of each of the proposals however,
were similar with the exception, possibly of the rates charged.
5. The terms of the agreement did not require
the Petitioner to reserve a specific room or block of rooms for each
company. The Petitioner was required,
however, to notify the trucking companies if occupancy of the hotel approached
capacity. At that time the dispatchers
for the companies would instruct the hotel to reserve rooms or not as they so
desired.
6. If any trucking company used any room, or
any combination of rooms, for thirty consecutive days then the Petitioner
considered all rooms used by that company to qualify for sales tax
exemption. This was done irrespective
of whether or not the other rooms were utilized by the trucking companies for
thirty consecutive days.
7. In XXXXX, the field auditor contacted the
Petitioner's controller to make arrangements for commencing the audit for the
period in question. An XXXXX start date
was suggested, but because of scheduling problems on both sides the audit was
postponed to XXXXX.
8. On XXXXX, a letter confirming the
commencement date for the audit and a waiver of statute of limitation form was
sent to the Petitioner's controller in XXXXX.
9. The controller forwarded the waiver of statute
of limitation form to the corporate offices in XXXXX where it was executed by a
general partner on XXXXX.
CONCLUSIONS OF LAW
There
is levied a tax on the purchaser for the amount paid or charged for tourist
home, hotel, motel, or trailer court accommodations and services for less than
thirty consecutive days. (Utah Code
Ann. §59-12-103(1)(i)).
Sales
tax shall not apply where residency is maintained continuously under the terms
of a lease or similar agreement for thirty days or more. (Utah State Tax Commission Administrative
RuleR865-19S-79(lB)).
A
monthly rate charged for continuous residency maintained for thirty days or
more constitutes a lease or similar agreement.
(Utah State Tax Commission Administrative RuleR865-19S-79(lC)).
DECISION AND ORDER
In
the present case, the Petitioner presents two issues to be determined by the
Commission: (1) was the first quarter of the audit period barred by the statute
of limitations and; (2) were the rooms rented by the Petitioner to the trucking
firms in question subject to sales tax.
With
respect to the statute of limitation issue, the Petitioner argues that the
limitations waiver executed by the parties should be declared void. The Petitioner argues that the respondent
was aware that the audit could not be completed prior to the expiration of the
statute of limitations yet
Subsequent
to the issuance of this decision, Rule R865-19S-79 was amended. This decision is based in part, however, on
the Rule prior to its having been amended.
The
Tax Commission finds that under the circumstances of this case, no overreaching
or deliberate misrepresentations as to fact were expressed to the Petitioner by
the Respondent which would require a finding that the statute of limitations
waiver signed by both parties be null and void.
Here,
the controller for the Petitioner was initially contacted by the auditor during
the first week of XXXXX. As a follow up
to that initial contact the letter of XXXXX was sent to the Petitioner which
included the waiver of statute of limitations form. Only because of the fact that the waiver form was forwarded to
the corporate offices in XXXXX was the signing of that form delayed until
XXXXX. Therefore, at the time the
waiver was received by the Petitioner, the statements contained therein were
correct and without misrepresentation.
Had the Petitioner's representative chosen to do so, he could have
declined to sign the waiver agreeing to abide by the terms of that waiver. It would be unreasonable under the
circumstances of this case to allow the Petitioner to now raise the defense of
the statute of limitations after having previously agreed not to do so.
With
respect to the sales tax exemption issue, the Petitioner argues that the only
requirement for the application of sales tax upon hotel accommodations is that
such accommodations be for less than thirty consecutive days. The Petitioner argues that any attempts to
impose additional requirements by rule is unlawful. Specifically, the Petitioner argues that Utah State Tax
Commission Administrative RuleR865-19S-79 which states "tax shall not
apply where residency is maintained continuously under the terms of a lease or
similar agreement for thirty days or more" and the Auditing Division's
informational packet provided to hotel/motel owners which requires that long
term accommodations be for specific rooms at a monthly rate and be made under a
written agreement to qualify for the sales tax exemption is an unlawful
exercise of administrative power.
In
support of its argument, the Petitioner makes note of the fact that prior to
XXXXX, then Utah Code Ann. §59-15-4, exempted from sales tax those amounts paid
for hotel accommodations where residency was maintained continuously under the
terms of a lease or similar agreement for a period of not less than thirty
days. That statute was amended in
XXXXX. The amendment deleted the
provision requiring that residency be maintained under the terms of a lease of
similar agreement. The Petitioner
argues that because the statute was intentionally amended to delete such a
provision, the Tax Commission may not by administrative rule make such a
requirement.
The
Tax Commission does not agree with the Petitioner's interpretation of the
inference to be drawn by the change in the statutory language of §59-15-4. The Petitioner offered no evidence of
legislative history to support its position.
Given such clear legislative intent to the contrary, the Tax Commission
finds that the statutory change did not impair the Commission's ability to
adopt specific rules and policies to implement and administer the tax laws of
the state. Furthermore, the Commission
finds that RuleR865-19S-79 which provided that "tax shall not apply where
residency is maintained continuously under the terms of a lease or similar
agreement for thirty days or more" was not an unlawful exercise of the
Commission's rule making authority.
Even
if the Commission determined that the rule in question improperly expanded the
requirements of §59-12-103(1)(1) such a finding, however, would not validate
the Petitioner's practice of extending a sales exempt status to all rooms
regardless of the number of consecutive days they were rented to a trucking
firm if at least one room so qualified.
Such a practice simply does not comport with the requirements of
§59-12-103(i) which requires that the hotel accommodations be rented for thirty
or more consecutive days of a room by a tenant for a sales tax exemption to
apply. This requirement is room
specific and not tenant specific. In
other words, the rental of a room by a tenant must be for a specific room and
for a rental period of thirty days or more.
The tenant may not rent different rooms and combine the total number of
consecutive days the rooms were rented to achieve the thirty day
requirement. To allow otherwise would
create the potential for abuse and facilitate the devising of schemes designed
to avoid the proper payment of sales tax.
Clearly this is not what the legislature intended when it enacted the
statutory provision in question.
Based
upon the foregoing, the Tax Commission finds that to qualify for a sales tax
exemption under Utah Code Ann. §59-12-103(1)(i), the specific room must be
rented to the tenant for thirty consecutive days. Any additional rooms rented to the same tenant for less than
thirty consecutive days are subject to sales tax. Therefore, the determination of the Auditing Division is
affirmed. It is so ordered.
DATED
this 16th day of December, 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