91-0592 - Sales










: Account No. XXXXX

Respondent :



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:


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.


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)).


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.



R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner