00-016
Response
May 9, 2000
REQUEST LETTER
March 24, 2000
Dear Sirs,
I
was writing for clarification on provisions of the Tourism Tax and Motor
Vehicle Rental Tax. We operate a motor
home rental business in North Salt Lake.
We have always collected both the Tourism Tax and Motor Vehicle Rental
Tax on all out motor home rentals.
However, we've recently had prospective renters tell us that they can
locally rent comparable motor homes and not be subject to both the Tourism Tax
and Motor Vehicle Rental Tax. With both
taxes totaling 9.5%, it has put us at a considerable competitive
disadvantage. This situation has caused
us to take a closer look at the law.
It
seems that some of our motor homes may be exempted based on their weight. In the Sales and Use Tax Guide (publication
#25) on pages 7 and 8, it states that one of the exceptions from both the taxes
are;
"Leases and rentals of
motor vehicles that are registered for a gross laden weight of 12,001 pound or
more."
If "Gross Laden
Weight" is the same as the manufacturer's "Gross Vehicle Weight
Rating" then some of our motor homes should not be subject to both to the
Tourism Tax and the Motor Vehicle Rental Tax.
I
called and spoke to NAME with the Tax Commission who told me that the Gross Vehicle
Weight Rating is the same as the Gross Laden Weight. As a result our motor homes that weigh more that 12,001 lbs
should be exempted from the tax.
Because we had collected the tax on all out motor homes in the past, I
was concerned about changing our tax collection policy without confirming our
understanding in writing. NAME
suggested I write for a private letter ruling to confirm that "Gross Laden
Weight" is the same as the manufacturer's "Gross Vehicle Weight
Rating." It's our intent to
operate in accordance with the law.
Your written clarification would be greatly appreciated. We look forward to your reply.
Sincerely,
NAME
Co-Owner
RESPONSE
LETTER
May
9, 2000
RE: Taxes to Apply on Motor Home Rentals
Dear NAME,
You
have asked for guidance concerning which taxes should be collected when you
lease or rent motor homes. You have
specifically asked how Tax Commission Publication 25, Sale and Use Tax, as
issued in June, 1999, should be interpreted for purposes of motor home rentals. That publication provides that short-term
leases "leases and rentals of motor vehicles that are registered for a
gross laden weight of 12,001 pounds or more,@
while subject to the sales tax, are exempt from both the tourism tax and motor
vehicle rental tax.
Accordingly,
Publication 25 provides that the lease or rental of a motor home that is registered
for a gross laden weight of 12,001 pounds or more is exempt from the
tourism tax and the motor vehicle rental tax.
To be eligible for these exemptions for any vehicle, you must provide
the Division of Motor Vehicles with a Tax Commission Form TC-656a (Application
for Registration/Title), on which you should list the Agross weight@ of
the vehicle as 12,001 pounds or more.
You
have asked whether a vehicle=s Agross
laden weight@ is the same as the Amanufacturer=s gross vehicle weight rating.@ AGross laden weight@ is
defined in Utah Code Ann. '41-1a-102(20)
to mean the Aactual weight of a vehicle or combination of vehicles,
equipped for operation, to which shall be added the maximum load to be carried.@ This weight
refers to the maximum weight of the vehicle, including any vehicles to be
towed, and the maximum load to be carried by these vehicles. The Amanufacturer=s gross vehicle weight rating@ is generally understood to mean the total weight,
including the weight of the vehicle, that the manufacturer claims can safely be
carried by that vehicle. As the owner
of the vehicle may add a maximum load that is greater than or less than the
amount deemed safe by the manufacturer, the actual weight that is inherent in Agross laden weight@
does not necessarily correspond to the Amanufacturer=s gross vehicle weight rating.@
Nevertheless, regardless of a motor home=s Amanufactured gross vehicle weight rating,@ as long as you register the motor home=s Agross weight@ on the TC-656a as 12,001 pounds or more, you will
have qualified for the tourism tax and motor vehicle rental tax exemptions.
Thus, you need only collect sales tax on the lease
or rental of a motor home that is registered with a gross weight of 12,001
pounds or more. On the other hand, when
leasing or renting a motor home for less than 30 days that is registered with a
gross weight of 12,000 pounds or less, you should collect sales tax, the
tourism tax, and the motor vehicle rental tax.
You
should collect taxes on your motor home rentals as described above, in
compliance with the instructions found in Publication 25, until you hear
differently from the Commission. The
Commission is currently studying whether the exemptions from the tourism tax
and motor vehicle rental tax, as described in Publication 25, comply with the
current law. Should they not, the Tax
Commission=s current policy concerning these exemptions may need
to be changed. Should such a change
occur, you will be notified by the Tax Commission. Until then, you should continue to exempt the lease or rental of
a motor home with a manufacturer=s
gross vehicle weight rating of 12,001 pounds or more from both the tourism tax
and the motor vehicle rental tax.
Please
contact us if you have any other questions.
For
the Commission,
Marc
B. Johnson
Commissioner
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