94-1546
Sales & Use
Signed 11/22/95
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
XXXXX, )
:
Petitioner, : ORDER
:
v. : Appeal No. 94-1546
:
AUDITING
DIVISION OF THE : Account No. XXXXX
UTAH STATE TAX COMMISSION, :
:
Respondent. : Tax Type: Sales & Use
_____________________________________
STATEMENT OF CASE
This
matter came before the Utah State Tax Commission for an Initial Hearing
pursuant to the provisions of Utah Code Ann. §59-1-502.5, on XXXXX. G. Blaine Davis, Administrative Law Judge,
heard the matter for and on behalf of the Commission. Present and representing Petitioner was XXXXX. Present and representing Respondent were
XXXXX from the Auditing Division.
Respondent
performed an audit on the books and records of Petitioner for the audit period
XXXXX. As a result of the audit,
Respondent made an assessment of $$$$$ for additional sales and use taxes, plus
interest thereon at the statutory rate.
The balance due as of XXXXX is $$$$$.
Petitioner
is a XXXXX.
Petitioner
XXXXX located in XXXXX who XXXXX which is XXXXX the Petitioner. The XXXXX.
Petitioner
XXXXX and XXXXX in the area.
Petitioner
also XXXXX.
XXXXX
are used in XXXXX. The parties have
stipulated that XXXXX, and do not become a XXXXX.
Included
in Petitioner's XXXXX is a XXXXX. This
XXXXX allows individuals to XXXXX and to obtain XXXXX. The system functions as follows: XXXXX. Petitioner receives XXXXX by way of a
XXXXX its premises. The XXXXX the XXXXX. The XXXXX to XXXXX XXXXX. Petitioner alleges that the XXXXX, although
Respondent did not stipulate to those additional functions, and no additional
evidence was presented as to the XXXXX performed by the system. Therefore, no
finding is made regarding whether the system XXXXX. There is $$$$$ to the XXXXX.
The
XXXXX into this state where they are XXXXX to the location either within this state or to XXXXX.
There
is no dispute as to the accuracy of the figures on the audit schedules. Petitioner has accepted the schedules as
accurate, and challenges only the inclusion of those items which it has
identified in its Petition for Redetermination.
In
its Petition for Redetermination, the Petitioner has challenged portions of the
audit assessment. The first challenge
which Petitioner has made is that the XXXXX which are purchased by Petitioner
from out of state XXXXX, should not be subjected to Utah sales and use
tax. However, Section 59-12-103(1)(n),
provides that a tax is to be imposed upon "tangible personal property,
stored, used, or consumed in this State."
Further, Section 59-12-102(15)(a), further defines the word
"use" as "the exercise of any right or power over tangible
personal property ... incident to the ownership or the leasing of that
property, item or service." The
Commission has interpreted those statutes as they relate to the donation of
items of tangible personal property in Utah Administrative RuleR865-19S-68(a)
which states: "Donors of articles of tangible personal property, which are
given away as premiums or otherwise, are regarded as the users or consumers thereof and the sale to them is
a taxable sale." Accordingly, the
Commission finds that the XXXXX which are brought into the state of Utah and are
XXXXX within and without the state of Utah are brought into this state and
stored and used within this state, and are therefore subject to sales and use
tax.
The
second challenge to the assessment made by Petitioner is that his XXXXX should
be exempted from sales and use tax pursuant to the provisions of XXXXX. The Commission has defined XXXXX in XXXXX.
The
above rule clearly defines what constitutes a XXXXX, and a XXXXX does not meet
the criteria set forth in the rules. It
does not appear to be a XXXXX in the general or common sense, it is not XXXXX,
it does not XXXXX, and it does XXXXX together.
Petitioner has argued that he should also be given the XXXXX exemption
because XXXXX his primary competition for the XXXXX XXXXX, and therefore that the exemption should
include his XXXXX. However, that is a
decision for the Legislature, and the current statute does not provide for such
an exemption.
The
third contention of Petitioner is that the XXXXX XXXXX are a component part of
the finished product, and are therefore exempt pursuant to the provisions of
XXXXX which provides for an exemption for, XXXXX. Petitioner has stipulated that the XXXXX are not a physical
component part of the XXXXX which are XXXXX, but he argues that they are an
economic component part of the finished product, and therefore by imposing
taxes on those XXXXX, and later upon the XXXXX, that he is being double taxed
on that part. However, the use of XXXXX
Petitioner clearly does not qualify as exempt XXXXX pursuant to the provisions
of XXXXX XXXXX. Accordingly, the
Commission holds that such XXXXX did not become a XXXXX, and therefore such
purchases were not exempt from sales and use tax.
The
fourth contention of Petitioner is that the XXXXX XXXXX purchased and used in
the State of Utah is eligible for the XXXXX exemption which is provided by
XXXXX. However, the process described
in the stipulation of facts does not qualify as a XXXXX process, and the
Petitioner's facility is not a XXXXX facility in the State of Utah. Further, Petitioner did not establish that
he met the qualifications of the XXXXX, and further did not establish that it
was a XXXXX in the State of Utah.
Accordingly, the Commission determines that the XXXXX did not qualify
for exemption pursuant to the XXXXX exemption as stated above.
DECISION AND ORDER
Based
upon the information presented at the hearing, and the records of the Tax
Commission, the Commission finds that the audit assessment made by Respondent
against Petitioner should be sustained.
The Petition for Redetermination is therefore denied.
This
decision does not limit a party's right to a Formal Hearing. However, this Decision and Order will become
the Final Decision and Order of the Commission unless any party to this case
files a written request within thirty (30) days of the date of this decision to
proceed to a Formal Hearing. Such a
request shall be mailed to the address listed below and must include the
Petitioner's name, address, and appeal number:
Utah State Tax Commission
Appeals Division
210 North 1950 West
Salt Lake City, Utah 84134
Failure
to request a Formal Hearing will preclude any further administrative action or
appeal rights in this matter.
DATED
this 22nd day of November, 1995.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Roger
O. Tew
Chairman Commissioner
Joe B. Pacheco Alice
Shearer
Commissioner Commissioner