BEFORE THE UTAH STATE TAX
COMMISSION
_____________________________________
XXXXX, )
:
Petitioner, : FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
v. : AND FINAL DECISION
:
AUDITING
DIVISION OF THE : Appeal No. 91-1210
UTAH STATE TAX COMMISSION, :
: Tax Type:
Sales Tax
Respondent. :
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a prehearing conference on
XXXXX. Paul F. Iwasaki, Presiding
Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner were
XXXXX. Present and representing the
Respondent was XXXXX, Assistant Utah Attorney General.
By
stipulation of the parties, it was determined that the matter would be
submitted to the Commission for its decision based upon the facts as stipulated
to by the parties.
Based
upon the facts stipulated to by the parties, 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 opened for business as a
hotel in the early part of XXXXX.
4. During the audit period, the Petitioner
rented rooms to individual employees of the XXXXX and the room rentals and
charges incurred were done so while in the performance of their official duties
as employees of the XXXXX. Those
individuals further completed "exemption certificates" on forms
printed by the federal government.
5. Because of the "exemption
certificates" and because of the insistent nature of the those individuals
submitting them, the Petitioner accepted the exemption certificates and did not
collect sales tax on the rentals of those rooms.
6. Payment of the room charges was not made
directly by the XXXXX on warrants drawn from XXXXX.
7. On or about XXXXX, an information packet was
prepared for the hotel/motel owners and operators. That information packet set forth the procedure to be used to
document exempt sales of hotel services to XXXXX.
8. The Petitioner denied having knowledge of
the information contained in the above-referenced packets. The Petitioner was first made aware of the
information contained in those packets when it received a copy of them with the
audit report.
9. The Auditing Division assessed a sales tax
deficiency on the rooms rented to the above mentioned individuals. The basis for that deficiency was that the
Petitioner did not comply with Rule R865-19S-41.
CONCLUSIONS OF LAW
Sales
made directly to the United States government or any authorized instrumentality
thereof are not taxable, provided such sales are ordered upon a prescribed governmental
purchase order form and are paid for directly to the seller by warrant on
governmental funds. Vendors making such
sales are required to retain purchase orders, vouchers, stubs, or like evidence
of governmental purchase and payment.
However, where the sale is $100.00 or less, a signed certificate
claiming governmental exemption by the buyer is acceptable evidence of the
exemption. (Utah State Tax Commission
Administrative Rule R865-19S-41).
DECISION AND ORDER
In
the present case, after having been advised as to the correct procedure, the
Petitioner fully admits that its treatment of the room rentals in question was
incorrect. At the time in question
however, the Petitioner states that under the circumstances surrounding the
transactions, it was doing what it believed to be correct.
Under
the facts of the present case, the Tax Commission finds that the Petitioner
violated the provisions of the rule and should have collected sales tax on the
rentals in question. The fact that the
Petitioner was not aware of the requirements for the exemption is
unfortunate. Such a fact does not,
however, relieve it of the obligation to comply with such requirements.
It
should be noted that had the Petitioner contacted the Tax Commission when it
was unsure about the correct procedure to follow, it would have been able to
avoid the situation it now finds itself in.
Clearly, this is the action the Petitioner should have taken.
Based
upon the foregoing, the Tax Commission affirms the sales tax deficiency as assessed
by the Auditing Division for the period in question. It is so ordered.
DATED
this 13 day of February, 1992.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco S.
Blaine Willes
Commissioner Commissioner