91-1793

Sales

Signed 5/13/93

BEFORE THE UTAH STATE TAX COMMISSION

__________________________________

XXXXX :

Petitioner, )

: FINDINGS OF FACT,

v. ) CONCLUSIONS OF LAW

: AND FINAL DECISION

COLLECTION DIVISION OF THE )

UTAH STATE TAX COMMISSION, : Appeal No. 91‑1793

) Account No. XXXXX

Respondent. :

___________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Roger O. Tew, Commissioner and Presiding Officer, and XXXXX, Administrative Law Judge, 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 information and testimony presented at the hearing, the Tax Commission makes its:

FINDINGS OF FACT

1. The tax in question is sales tax.

2. The period in question is XXXXX through XXXXX.

3. The Petitioner operates a business which sells XXXXX and sanitization supplies to XXXXX.

4. Among the supplies sold by the Petitioner are various cleaning and disinfecting solutions used in various stages of XXXXX. Among the brand names of the supplies sold are: XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX; XXXXX.

5. Certain cleaning and sanitization procedures must be observed when XXXXX. The above described supplies are used in those processes. Because of the caustic nature of such supplies, the supplies are not suitable for other purposes such as home janitorial supplies.

6. The above described items were among numerous other items which the Petitioner sold to XXXXX as tax exempt sales.

7. In its audit, the Collection Division determined the above described items to be items which were not exempt from sales tax and included those items in its assessment of a sales tax deficiency against the Petitioner.

CONCLUSIONS OF LAW

Sales of tangible personal property used or consumed primarily and directly in farming operations. . . ., but not sales of: machinery, equipment, materials and supplies used in a manner that is incidental to farming such as hand tools with a unit purchase price not in excess of $100, and maintenance and janitorial equipment and supplies, are exempt from sales tax. (Utah Code Ann. '59‑12‑104(21).)

DECISION AND ORDER

In the present case, the issue before the Commission is whether the sales of the above listed supplies represented sales of tangible personal property used or consumed primarily and directly in farming operations.

The Respondent, in assessing a sales tax deficiency on such items, argued that those items constituted janitorial supplies, the use of which was only incidental to farming.

The Tax Commission finds from the evidence presented at the hearing that the above described supplies are items of personal property which are used primarily and directly in XXXXX operations. Their use is essential in the production of milk and milk products. They are not items whose use is merely incidental to the XXXXX operation.

The Tax Commission also finds from the evidence presented that the use of the items in question is limited to the dairy operation itself and that they are not used in a manner which would be commonly considered to be either a maintenance or janitorial use.

Based upon the foregoing, the Tax Commission finds that the above listed items constituted sales of tangible personal property used primarily and directly in farming operations and therefore are exempt from the imposition of sales tax. The Collection Division is order to amend its audit in accordance with this decision. It is so ordered.

DATED this 13 day of May, 1993.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

R. H. Hansen Roger O. Tew

Chairman Commissioner

Joe B. Pacheco S. Blaine Willes

Commissioner Commissioner

NOTICE: You have twenty (20) days after the date of the final order to file a request for reconsideration or thirty (30) days after the date of final order to file in Supreme Court a petition for judicial review. Utah Code Ann. ''63‑46b‑13(1), 63‑46b‑14(2)(a).

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