94-1555

Sales Tax

Signed 8/8/95

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

:

Petitioner, : ORDER

:

v. : Appeal No. 94-1555

:

AUDITING DIVISION OF THE : Account No. XXXXX

UTAH STATE TAX COMMISSION, :

:

Respondent. : Tax Type: Sales Tax

_____________________________________

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. Joe B. Pacheco, Commissioner, and G. Blaine Davis, Administrative Law Judge, heard the matter for and on behalf of the Commission. Present and representing Petitioner on the telephone was XXXXX. Present and representing Respondent were XXXXX, Assistant Attorney General, together with XXXXX from the Auditing Division.

The Auditing Division performed an audit of Petitioner imposing certain amounts of additional sales and use tax, together with interest thereon. No amount was imposed by way of penalty. Petitioner concurs with the majority of the audit report, but has requested a redetermination of the sales and use tax which was imposed on XXXXX, primarily the XXXXX which are used for XXXXX XXXXX.

In XXXXX for customers who are going to XXXXX, as well as other XXXXX, Petitioner makes XXXXX from which the XXXXX takes place. Petitioner and Respondent both agree that the XXXXX were not subject to sales and use tax, because they were sold to other individuals who were to resell those XXXXX and charge sales tax thereon. However, on the XXXXX which were used to produce those XXXXX for other resellers of the XXXXX, the Petitioner believes that they should also be exempt from sales and use tax, whereas the Respondent maintains that they subject to sales and use tax.

Petitioner maintains that it was its practice to XXXXX XXXXX to the resellers, even though Petitioner acknowledges that XXXXX customers. Petitioner also acknowledges that there was no XXXXX customers that part of the job was for the XXXXX, and the amount which was to be charged for the XXXXX was not separately XXXXX.

XXXXX, defines what is necessary for those items to be tax free. That provision states:

XXXXX

In addition, the Commission issued XXXXX on XXXXX. That tax bulletin XXXXX what was necessary to have the XXXXX deemed to be tax free.

Petitioner acknowledged that during the audit period it did not comply with the XXXXX. Petitioner maintains that the practice they followed was substantially in accordance with the intent of the XXXXX, but that they did not XXXXX and did not make XXXXX to the customer. However, Petitioner does represent that it has changed its procedures to fully comply with the XXXXX and with the XXXXX.

Petitioner has the burden of proof to establish that an audit assessment made by the Auditing Division is clearly

erroneous, and Petitioner has not sustained that burden of proof.

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 should be sustained. The Petition for Redetermination filed by Petitioner is hereby 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 8th day of August, 1995.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner

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