REQUEST LETTER

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Response February 28, 2001

January 20, 2000

Pam Hendrickson, Chair

Utah State Tax Commission

210 North 1950 West

Salt Lake City, Utah 84134

Re: Request for Advisory Opinion

Dear Commissioner Hendrickson;

As a result of several inquiries to our office, we are requesting an advisory opinion from the Tax Commission regarding the taxable status of personal property which will be brought into the state to accommodate the 2002 Olympics. There will be a substantial amount of broadcast equipment, both from national and international media concerns, communications equipment, timing equipment, outside seating, the possibility of manufactured housing, in addition to special equipment used at the individual venues. The property also may be subject to short‑term lease agreements.

Under normal circumstances all tangible, non‑exempt personal property present in STATE as of January 1 is taxable. It is the intention of this office to assess all property, which is not otherwise exempt, to its owner and which has situs as of January 1, 2002. Our concerns relate to the following issues:

1. If the property enters the state after the lien date, is it subject to a transitory assessment? For example, the media may use broadcast equipment which may or may not be mounted on a vehicle, but is moved about on a regular basis to feed a signal from various sporting events throughout the year. When it arrives in STATE to broadcast Olympic events, does that equipment fit the definition of "transitory property@?

2. Other equipment may include computers, communications equipment, timing devices, etc., which could be in place either prior to the lien date or after the lien date. Our assumption is that if the property is not otherwise exempt, it is fully taxable to its owner as of January 1, 2002. However, does property of this nature arriving after the lien date fit the definition of "transitory property"?

3. Broadcast equipment may be brought into the state from foreign broadcast companies and may be privately owned or state owned, the taxation of which may be controlled by federal treaties. Would the Commission provide advice to the counties with respect to the assessment of both privately and state owned foreign property?

Since the Olympic venues will take place in several COUNTY Front Counties, we feel that it would be advisable to establish policies in advance in order to treat this property uniformly

Sincerely,

NAME

NAME RESPONSE LETTER

February 28, 2001

RE: Applying Property Tax on Personal Property Brought into Utah for the 2002 Winter Olympic Games

Dear Mr. NAME

You have requested the Commission to address whether personal property brought into STATE to accommodate the 2002 Winter Olympic Games is subject to property tax. If tangible personal property is present in STATE on January 1, the lien date, it is subject to taxation under '59-2-103. Personal property brought into STATE after the lien date is subject to transitory personal property tax under Utah Code Ann. '59-2-402.

Length of Time in Utah for Transitory Taxation. Your first question deals with whether or not personal property is subject to transitory assessment upon its entering STATE. Utah Code Ann. §59-2-401 requires the assessment of transitory personal property. Section 59-2-402, however, provides that no transitory personal property may be assessed at “less than 25% of the full year’s assessment.” The Commission has recently adopted Utah Admin. Rule R884-24P-65 (ARule 65"), which interprets these provisions to mean that personal property entering STATE after the lien date is only taxable if that property is present in Utah for 90 consecutive days in that calendar year. Accordingly, if personal property is brought into STATE after the lien date and remains in STATE less than 90 consecutive days during that calendar year, it will not be subject to STATE transitory personal property tax.

Property Subject to Transitory Taxation. You list examples of equipment that may be brought into STATE temporarily for Olympic Games purposes. The list includes broadcast, communications, and timing equipment; outside seating; manufactured housing that serves a temporary purpose; special equipment used at the individual venues; and computers. Rule R884-24P-65 defines Atransitory personal property@ as Aproperty that is used or operated primarily at a location other than a fixed place of business of the property owner or lessee.@ As a result, personal property may be taxed as transitory personal property only if it is used or operated primarily at a location other than a fixed place of business of the owner. The examples you ask about satisfy the definition of transitory personal property and may be taxed as such if they are present in STATE at least 90 consecutive days in a calendar year.

There may be other personal property brought into STATE on a temporary basis for the Olympic Games that is not taxable because it is not transitory. Given the recurring nature of international sporting events in general, and the Olympics in particular, however, we believe you are justified in presuming that all tangible personal property brought into the state in connection with the Olympics is “transitory.” The property owner would then have the burden of showing that any such property does not meet the definition. If the property owner made such a claim, we would be happy to provide additional guidance to you on the basis of the facts and circumstances presented.

Foreign Exemption. You also ask if personal property owned by a foreign government is exempt from taxation. For such personal property to be exempt, two conditions must exist. First, the personal property must be used by the country=s foreign mission or official delegations. Second, the foreign country and the United States must participate in a bilateral reciprocation program; i.e., personal property owned by the United States would be exempt from property tax in that foreign country.

Foreign Mission or Official Delegations. In general, if a foreign country=s personal property is located in the United States and it is not being used by that government=s foreign mission or official delegations, it may be taxed in the United States. For example, military aircraft purchased by the Australian Ministry of Defense was deemed to be subject to use tax in Georgia. However, had the aircraft been purchased by the Australia Foreign Mission, it would have been tax-exempt. The broadcast and other equipment you specifically ask about, if owned by a foreign country, would probably not be associated with that country=s foreign mission or its official delegations. If this is the case, the personal property is subject to taxes imposed by taxing jurisdictions ( including county governments) in the United States. Again, it must be determined in each circumstance whether the personal property is being used by a foreign mission or official delegation or not, which may require consultation with the U.S. State Department, Office of Foreign Missions.

Bilateral Reciprocation Program. Should personal property owned by a foreign country be used by that country=s foreign mission or official delegation, it still may be subject to taxation, depending upon the country that owns it. Under a bilateral reciprocation program, the United States recognizes that a specific country is entitled to tax exemptions in the United States only if the United States is entitled to the same exemptions in that country. Accordingly, whether the property owned by a foreign country and used by its foreign mission or delegation is exempt from STATE property tax has to be determined on a country by country basis. Some countries are not exempt from any United States taxes, others are exempt from all taxes, while most are partially exempt, depending on which exemptions are offered to the United States. Because of this complexity and because the particular exemptions provided by other countries are in constant flux, the Office of Foreign Missions may be best able to determine whether personal property used by a foreign mission or official delegation is subject to Utah=s property taxes. We suggest that you identify all such property when it is brought into your county. Once you have identified the owner of the property, and established that it is reasonably expected to be present in STATE for the requisite 90 days, please contact the Property Tax Division. We will then contact the State Department Office of Foreign Missions on your behalf for further guidance based on the particular country and the specific owner involved.

Please contact us if you have any other questions.

For the Commission,

Marc B. Johnson

Commissioner

MBJ/KC

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