BEFORE THE UTAH STATE TAX COMMISSION
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
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
Joe B. Pacheco S. Blaine Willes