97-0252
SALES
Signed 3/24/98
BEFORE
THE UTAH STATE TAX COMMISSION
____________________________________
PETITIONER, )
:
Petitioner, ) FINDINGS OF FACT,
: CONCLUSIONS
OF LAW,
v. ) AND FINAL DECISION
:
AUDITING DIVISION OF THE ) Appeal
No. 97-0252
UTAH STATE TAX COMMISSION, : Account
No. #####
)
Respondent. : Tax Type:
Sales Tax
_____________________________________
STATEMENT
OF CASE
This matter came before the Utah State Tax
Commission for a Formal Hearing on February 10, 1998. Administrative Law Judge Jane Phan and Commission Chairman W. Val
Oveson, heard the matter for and on behalf of the Commission. Present and representing Petitioner were
NAME, and NAME. Present and
representing Respondent were Susan Barnum, Assistant Attorney General, and Bert
Ashcroft of the Auditing Division.
Based upon the evidence and testimony
presented at the hearing, the Tax Commission hereby makes its:
FINDINGS
OF FACT
1. The tax in question is sales tax.
2. The audit period in question is April 1, 1993
through March 31, 1996.
3. Respondent audited Petitioner's sales tax
account for the period in question and assessed additional sales tax and
interest. Petitioner is appealing a
portion of the additional tax assessment, in the amount of $$$$$, plus the
applicable interest which has accrued thereon.
4. Petitioner is in the business of the retail
sale of boats. The tax under appeal
arose from a sale to NAME of a COMPANY
B boat. NAME entered into an
agreement to purchase the boat on June 11, 1994. He put $xxxxx down on the purchase. An express term of the purchase was that Petitioner was to
deliver the boat to NAME in CITY, Montana, where NAME owned a second
residence. NAME paid the balance of the
purchase price on June 30, 1994.
5. Subsequently,
Petitioner was unable to deliver the boat to Montana pursuant to the time
schedule ordinally agreed upon, so NAME went to Petitioner's place of business
on July 5, 1994, informed Petitioner's employee that he was taking the boat and
in fact took the boat and transported it to Montana. 6. None of Petitioner's managerial
employees were present at the time NAME took possession of the boat. It was Petitioner's position that NAME took
the boat without authorization and that he was not entitled to do so. At that time NAME did not receive a
temporary permit, manufacture's certificate of origin, nor title or related
documents. Petitioner mailed these
items to NAME in Montana on July 11, 1994.
7. NAME
registered the boat in Montana. No
evidence was presented to indicate that he brought the boat back for use in Utah, other than for repairs.
8. Petitioner
was unsure whether or not the check issued by NAME for full payment of the boat
had cleared by July 5, 1994.
9. At
the time of the transaction, NAME was a Utah resident.
10. It
was generally Petitioner's policy to hold on to the title documents until after
the check for payment of a purchase had cleared.
CONCLUSIONS OF LAW
There is levied a tax on the purchaser for
the amount paid or charged for retail sales of tangible personal property made
within the state. (Utah Code Ann. '59-12-103(1)(a).)
Sale means any transfer of title, exchange,
or barter, conditional or otherwise, in an manner, of tangible personal
property or any other taxable item or service under Subsection 59-12-103(1),
for consideration. It includes: . .
.(d) any transaction if the possession of property is transferred but the
seller retains the title as security for the payment of the price. . .(Utah
Code Ann. '59-12-102(11) (1994).)
Sales made in interstate commerce are not
subject to the sales tax imposed.
However, the mere fact that commodities purchased in Utah are
transported beyond its boundaries is not enough to constitute the transaction of
a sale in interstate commerce. When the
commodity is delivered to the buyer in this state, even though the buyer is not
a resident of the state and intends to transport the property to a point
outside the state, the sale is not in interstate commerce and is subject to
tax. (Utah Administrative Code R865-19S-44 (A) (1994).)
Before a sale qualifies as a sale made in
interstate commerce, the following must be complied with: . . . the seller must
be obligated by the express or unavoidable implied terms of the sale, or
contract to sell, to make physical delivery of the property across a state
boundary line to the buyer. (Utah Administrative Rule R865-19S-44(B) (1994).)
A manufacturer, importer, dealer, or other
person may not sell or otherwise dispose of a vehicle, vessel, or outboard
motor for purposes of resale without delivering a manufacturer's or importer's
certificate of origin to the purchaser or the new owner. (Utah Code Ann. '41-1a-710(2) (1994).)
DECISION
AND ORDER
After reviewing the evidence and testimony
presented the Commission determines that the transaction at issue was
structured to be a sale in interstate commerce. The unanticipated actions of the purchaser and subsequent
delivery of title documents to Montana do not subject the transaction to sales
tax. Based upon the foregoing, the Tax
Commission finds that Petitioner is not liable for the $$$$$ in additional
sales tax or the interest accrued thereon for the audit period at issue in this
appeal. It is so ordered.
DATED this 24 day of March, 1998.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
Jane Phan
Administrative Law Judge
The agency has reviewed this case and the
undersigned concur in this decision.
DATED this 24 day of March, 1998.
BY ORDER OF THE UTAH STATE TAX COMMISSION.
W. Val Oveson Richard
B. McKeown
Chairman Commissioner
Joe B. Pacheco Pam Hendrickson
Commissioner Commissioner
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