95-1089
Sales
Signed 1/12/96
BEFORE THE UTAH STATE TAX
COMMISSION
____________________________________
XXXXX, )
:
Petitioner, : ORDER
:
v. : Appeal No. 95-1089
:
AUDITING
DIVISION OF THE : Account No. XXXXX
UTAH STATE TAX COMMISSION, :
:
Respondent. : Tax Type: Sales
_____________________________________
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. Commissioner Alice Shearer, heard the matter
for and on behalf of the Commission.
Present and representing Petitioner was XXXXX, Attorney at Law and
XXXXX. Present and representing Respondent were XXXXX, Assistant Attorney
General, and XXXXX from the Auditing Division.
Respondent
performed an audit on the books and records of Petitioner for the audit period
XXXXX to XXXXX. As a result of the
audit, an assessment of $$$$$ additional tax and $$$$$ interest was assessed
against the taxpayer for a total of $$$$$.
Petitioner recites that all issues in the audit except for the one percent restaurant tax have been
settled and agreed to between the parties.
The Petitioner’s business is a dance hall. There is an admission fee for the customers and proper sales tax
is collected and remitted on those fees.
On the food and drink, which Petitioner says is only ten percent or less
of the total gross cash flow, no restaurant tax was collected from the time it
was imposed by Salt Lake County.
Petitioner explains that the food and drink sales from the three
separate counters in the establishment are an accommodation to the guests and
cannot be considered as a separate line of business. It is a way for the business to accommodate the customers that
are actually there for dancing and the ambience of a party. Taxpayer also indicates that when he
received the tax bulletin number 8-91 he called the Tax Commission and was told
he did not need to impose, collect the restaurant tax and remit it because he
was not a restaurant establishment.
Since he did not considered himself to be a restaurant, he decided not
to collect taxes, has not collected and did not remit any restaurant tax on the beverages and food sold to
customers of the dance hall.
Respondent notes that Petitioner accounts for the food service
separately in its books, therefore it is logical to consider it as a separate
line of business. The rule in question
isR865-12L-17 A & B. In the B
section, the rule reads:
A single retailer or
vendor engaged in multiple lines of business at one location may be deemed to
be operating multiple retail establishments if the lines of business are not
commonly regarded as a single retail establishment or if there are other
factors indicating that the lines of business should be treated
separately. The operation of concession
stands by stadium owners, performers, promoters, or others with a financial
interest in ticket sales or admission charges to any event shall be considered
a separate line of business constituting a retail establishment.
Respondent
argues that there is no necessary connection between dancing and the purchase
of beverages and food items. They are
not lines of business commonly regarded
as a single retail establishment. In
fact, concession stands at many kinds of businesses and places of amusement
have been charging the restaurant tax and remitting it, this business seems to
fall into that category. Petitioner
again reiterates it is not a separate part of the business because they do not
make money on this accommodation, but it is simply a convenience and an assist
to the regular business which is the overall recreation and party atmosphere
that is provided at the establishment.
Petitioner asserts and Respondent agrees that the taxpayer has filed his
taxes in a timely matter and in good faith.
He honestly believed that he did not owed this tax.
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.
Although the Petitioner truly believed that he should not be covered by
this tax, others in similar situations have been covered and are collecting tax
and have been since the law went into effect on October 1, 1991.
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 12th day of January, 1996.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val
Oveson Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco Alice
Shearer
Commissioner Commissioner
^^