BEFORE THE UTAH STATE TAX
COMMISSION
_______________________________
XXXXX : FINDINGS OF FACT,
Petitioner, : CONCLUSIONS OF LAW,
: AND FINAL
DECISION
v. :
AUDITING
DIVISION OF THE : Appeal No. 91-1663
UTAH STATE TAX COMMISSION, :
: Account
No. XXXXX
Respondent. :
________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for a formal telephone hearing
on XXXXX. Alan Hennebold, Presiding
Officer, heard the matter for and on behalf of the Commission. XXXXX, attorney at law, represented
Petitioner. XXXXX, Assistant Utah
Attorney General, represented Respondent.
Based
upon the evidence presented at the hearing, the Commission hereby makes its:
FINDINGS OF FACT
1. The tax in question is sales and use tax.
2. The period in question is XXXXX through
XXXXX.
3. Respondent used a projection method in
auditing Petitioner's compliance with Utah's sales and use tax for the period
in question. As a result of the audit,
Respondent assessed Petitioner with additional tax in the amount of $$$$$, plus
interest. No penalty was assessed.
4. Petitioner is a XXXXX located in XXXXX
Utah. It has been in business for
approximately eight years, installing XXXXX in XXXXX projects as well as retail
sales. Prior to XXXXX, Petitioner
purchased its XXXXX and other materials tax free, then charged sales tax to its
customers.
5. On approximately XXXXX, Petitioner's
accountant suggested that Petitioner could pay sales tax on its purchases of
glass supplies, and not charge tax on subsequent sales to its customers. Petitioner's C.P.A. called an unidentified
member of Respondent's staff, advised the staff member that approximately 90%
of Petitioner's sales involved installation of XXXXX on real property, and
asked whether Petitioner could pay tax on its purchase of materials, instead of
on its sales. According to the C.P.A.,
he was told such a method of sales tax payment was acceptable.
6. Following the C.P.A.'s advice, Petitioner
instructed suppliers to charge it with sales tax on all purchases. At that same time, Petitioner surrendered
its sales tax license.
7. Thereafter, Petitioner generally paid tax on
its purchase of materials, however, vendors did not always charge sales tax on
those purchases. Also, Petitioner failed to report and pay use tax on materials
purchased from out-of-state vendors. In
still other instances, Petitioner made sales on a retail basis, such as XXXXX,
but did not collect tax on such sales.
Finally, the audit disclosed that in a few cases, Petitioner had charged
tax on retail sales, then failed to remit such tax to the Commission. All of the foregoing items are set forth in
detail in Respondent's audit and supporting schedules. Overall, approximately 60% of Petitioner's sales
were made on a retail basis during the audit period.
CONCLUSIONS OF LAW
1. The Petitioner has the burden of proof to
establish that its petition should be granted.
(Utah Administrative Rule R861-1A-7(G).)
2. Sales or use tax is levied on the purchaser
for the amount paid or charged for, among other things, retail sales of
tangible personal property made within Utah.
(Utah Code Ann. §59-12-103(1)(a).)
3. Charges for labor to install personal
property in connection with other personal property are taxable. (Utah Administrative RuleR865-19S-51(C).)
4. Sales of materials and supplies to
contractors and subcontractors are taxable transactions as sales to final
consumers. (Utah Administrative
RuleR865-19S-58(A).)
5. Contractors must accrue and report tax on
all merchandise bought tax-free and used in performing contracts to improve or
repair real property. (Utah Administrative RuleR865-19S-58.B.2.)
6. For reasonable cause shown, the Commission
may waive, reduce or compromise any penalties or interest. (Utah Code Ann. §59-1-401(8).)
DECISION AND ORDER
Petitioner
does not challenge Respondent's interpretation of the Sales and Use Tax Act in
this matter. Instead, Petitioner argues
it was entitled to rely upon advice received from one of Respondent's employees
during XXXXX, to the effect that it could pay sales tax on all its purchases
and thereby escape the requirement that it collect tax on sales. Petitioner also contends that even if the
tax is affirmed, the Commission should waive interest charges.
Regarding
the argument that one of Respondent's staff members approved Petitioner's plan
for paying sales tax on its purchases, the details of such advice are
vague. It is not certain what facts
were provided to Respondent, nor is it clear that such information was accurate
regarding Petitioner's retail sales volume.
In the light most favorable to Petitioner, the evidence suggests that
Petitioner's business was different during the period in question than it was
at the time Petitioner sought advice from Respondent. Based on the foregoing, the Commission finds no basis to conclude
that Petitioner was given incorrect advice by Respondent.
Petitioner
also asks the Commission to waive interest in this matter. While Utah Code Ann.
§59-1-401(8) authorizes the Commission to waive assessments of interest for
reasonable cause, interest is a reasonable charge for Petitioner's use of sales
tax funds during the time such funds should have been paid to the Commission. This is particularly true here, where no
penalty has been assessed. The
Commission therefore declines to waive interest in this matter.
In
summary, the Commission affirms Respondent's audit determination, including its
assessment of additional sales tax and interest. It is so ordered.
DATED
this 1 day of September, 1991.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
Abstained
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco S.
Blaine Willes
Commissioner Commissioner