00-019

Response September 7, 2000

REQUEST LETTER

00-019

May 8, 2000

Dear Mr. NAME,

I am writing to request an advisory opinion regarding a sales tax problem that we have encountered in COUNTY County. As you are probably aware, the RESERVOIR Reservoir and the RIVER are located in our county. We have a very large number of fish guides that do business in our county. Some of the guides have their main place of business in counties other that COUNTY. They submit their sales tax to the county where their business is located (point of sale) rather than to the county where the trip actually takes place - COUNTY County.

There are approximately ##### full time residents in COUNTY County. We do however have around ##### visitors a year. COUNTY County is responsible for EMT's, ambulance, Search and Rescue, law enforcement and courts that take care of these two million visitors. We are acquiring a very large expense without any offsetting revenues. With a very small tax base, this puts a very large burden on the county residents. We feel that the only logical and fair way to distribute this tax would be trip origination rather that point of sale. We believe that this is consistent with the Supreme Court case in the Salt lake Airport matter and that the tax revenue should go to the county providing the services and directly impacted by the activity.

Please review our request and if you have questions or wish to visit with me regarding this request, please feel free to contact me.

Sincerely

RESPONSE LETTER

September 7, 2000

RE: Advisory Opinion Request Concerning Point of Sale

Dear Ms. NAME,

You have asked us to reconsider our response in Tax Commission Advisory Opinion 95-046DJ, in which we set forth a Apoint of sale@ policy to address the same concerns you asked about in 1995. You state that reconsideration is warranted because the decision subsequently rendered by the Utah Supreme Court in Salt Lake City v. Property Tax Div., 368 Utah Adv. Rep. 36, 979 P.2d 346 (1999), is in conflict with the answer we previously gave you. However, the Court=s decision in Salt Lake City concerned article XIII, section 10 of the Utah Constitution, a provision pertaining to property taxation, and addressed whether the Property Tax Division=s apportionment methods violated this provision. This property tax provision and the Court=s interpretation of it does not affect sales tax issues such as the one you ask about.

Utah Code Ann. '59-12-207, however, does address how the point of sale is determined. That section provides that:

All sales and use taxes collected under this part shall be reported to the commission on forms which accurately identify the location where the sale or use transaction was consummated. If a retailer has no permanent place of business in the state or has more than one place of business, the place or places at which the retail sales are consummated for the purposes of this part shall be determined under rules of the commission . . . .

This section specifically grants the Tax Commission the authority to determine by rule where a retail sale is consummated when the retailer has no permanent place of business in the state or has more than one place of business. The Tax Commission has adopted Utah Admin. Rules R865-12L-5 and R865-12L-9 to address these situations, pertinent parts as follows:

R865‑12L‑5. Place of Sale Pursuant to Utah Code Ann. Section 59‑12‑207.

A. All retail sales shall be deemed to occur at the place of business of the retailer.

. . . .

C. If a seller has more than one place of business in Utah, and if two or more of such locations participate in the sale, the sale occurs at the place of business where the tangible personal property is located or the place from which it is shipped or delivered.

R865‑12L‑9. Sellers With No Fixed Place of Business Pursuant to Utah Code Ann. Section 59‑12‑207.

A. A seller with no fixed or determinable place of business in Utah, making sales from different and variable locations within Utah, will be required to report such sales on the basis of the county in which they are made . . . .

To specifically address the situation where a business may have one office from which its repairmen and servicemen are dispatched to work in others cities and counties, Utah Admin. Rule R865-12L-13 provides that A[c]harges for repairs, renovations, or other taxable services to tangible personal property are assigned to the office or place of business out of which the repairman or serviceman works . . . , regardless of where in Utah the service or labor is performed.@

Section 59-12-207 and the rules discussed above have not changed substantively since we answered your request in 1995. Though we have reconsidered the issue because of the impact it so obviously has on your county, we still find that the response in Advisory Opinion 95-046DJ offers the most effective interpretation of the statute and rules. Accordingly, we reconfirm the pertinent portions of Advisory Opinion 95-046DJ that address your request and include them below with only slight modifications.

1. Under Rule R865-12L-5, when a retailer has only one place of business, all of the retailer's sales are deemed to occur at that place of business regardless of where the service is performed or the goods are delivered. Therefore, if the guide services are sold from a shop doing business only in Salt Lake, the sales tax is reported at that location, even if the actual activity takes place in COUNTY County.

An exception to this rule arises if the vendor uses a third party agent to market his product or services. For example, when the Smiths in Provo sells tickets to a Jazz game in Salt Lake City, the sales tax is reported by the Jazz as if the sale took place in Salt Lake City. In that case, the Jazz is selling the ticket, and Smiths is merely an agent. Applying this exception to fly fishing in COUNTY County, if a fly fishing guide who has a fixed place of business in COUNTY County pays a commission to a third party in Salt Lake to sell the guide's services in COUNTY County, the sales tax must be reported by the fly fishing guide in COUNTY County. However, the opposite is true if the guide is acting as a contract employee of a Salt Lake tackle shop. In that case, the tackle shop sells the service which is merely delivered by the guide in COUNTY County, and the tackle shop must report the sale in Salt Lake City.

2. Under Rule R865-12L-5, if the seller has more than one place of business in Utah and two or more such locations participate in the sale, the sale occurs at the place of business where the tangible property is located. Although the language of the rule does not address taxable services, it is logically extended to the location where the service takes place.

Assume that a Salt Lake tackle shop has a place of business in Salt Lake and a business license in COUNTY County. Accordingly, if the reservation takes place in the Salt Lake tackle shop, but the service delivered in COUNTY County, the sale should be reported in COUNTY County.

3. Rule R865-12L-9 states that when the seller has no fixed place of business and makes sales at various locations within the state, the seller is required to report all sales in the county where they are made. For instance, assume a guide does not have a fixed place of business. Instead he arranges his sales through third party agents at tackle shops in Salt Lake City, but he conducts business on the shore at Flaming Gorge and in other locations around the state. He must report each sale in the county where the services are provided.

As before, we suggest you check your sales tax report against the business licenses in your county. If you find that fishing guides or tackle shops licensed to do business in your county are not reporting sales tax in your county, inquire into their business arrangements to determine if they are reporting sales tax properly.

For the Commission,

Marc B. Johnson

Commissioner