REQUEST LETTER

 

01-002

Response 1/31/01

 

January 9, 2001

 

Dear Members of the State Tax Commission:

 

By this letter Company., a Utah corporation, seeks a formal advisory opinion as to whether, under the Sales and Use Tax Act, a tax is levied on tolls or charges paid to the owner for the right to travel on a toll road.

 

Since legislation on this question may be filed with the Utah Legislature for consideration during the 2001 Legislature Session, an expedited advisory opinion would be much appreciated.

 

Following are facts which may be relevant to your rendering an advisory opinion. If additional facts are needed please call NAME, (PHONE) or our attorney NAME at PHONE .

 

COMPANY obtained a franchise from County pursuant to Section 17-5-235 (now 17-50-308), Utah Code Annotated, 1953, as amended, by Ordinance Granting Franchise, dated DATE. A similar franchise was obtained from County by Ordinance Granting Franchise, dated December 6, 1995.

 

These franchises authorize the construction and operation of a private toll road from the southern terminus of ADDRESS in CITY to the COUNTY Interchange of Interstate Highway ## in CITY. The toll road is approximately one-half mile long and includes a bridge across the RIVER. Since RIVER, at that point, forms the boundary between COUNTY and COUNTY, the toll road is located in both COUNTY and Counties. However, most of the toll road, including the toll collection booth and administrative facilities are located in County.

 

Tolls will be paid either in cash at the toll booth or by establishing a prepaid account through the administrative office. If paid through a prepaid account, the account will be charged electronically when the vehicle passes through the collection facilities. The amount of the toll has yet to be determined, but will likely be between $$$$$ and $$$$$ per vehicle. However, there will be some variations in the toll for the extra axles and/or weight of trucks and larger vehicles.

 

COMPANY is obligated under the franchise agreement with COUNTY to pay a percentage of the gross of all tolls collected to County as consideration for the grant of franchise.

 

The toll road is currently under construction. It is anticipated that the road will be open for travel by the general public on or about DATE.

 

Request is hereby made that the State Tax Commission issue a formal advisory opinion as the applicability of the Sales and Use Tax Act and specifically Section 59-12-103, Utah Code Annotated, 1953, as amended. Stated differently, is a sales or use tax levied on tolls paid for use of the service provided by a private toll road facility?

 

Your expedited consideration of this request would be appreciated.

 

 

Sincerely,

 

NAME

 

DBS/ejb

 

RESPONSE LETTER

 

January 30, 2001

 

 

Dear NAME

 

The Tax Commission has received your request for a written advisory opinion regarding the application of sales tax to users’ charges for the COMPANY. As we understand the facts presented, the COMPANY is a toll road. A toll will be charged to each user who accesses the toll road. The charge may be paid in cash or by electronic means.

 

The Utah sales tax is imposed only on sales of tangible personal property or specific defined services. As a toll road is clearly real, not personal property, the sale of access to the toll road will only be taxable if it falls within the definition of one of the specific taxable services listed in Utah Code Ann. '59-12-103. Of those services listed, only the two discussed below can arguably include access to a toll road.

 

Amounts Paid to Common Carriers for Transportation. Section 59-12-103(1)(b) imposes a sales tax on the amounts paid to common carriers for transportation. A Common carrier (a) is defined in Utah Code Ann. '59-12-102(6)(a) to mean a person engaged in or transacting the business of transporting passengers, freight, merchandise, or other property for hire within this state. COMPANY. does not transport passengers, freight, merchandise, or other property for hire. Instead, COMPANY charges a fee for access to improved real property which its customers can use if they have their own means of transportation. Because COMPANY does not provide transportation for hire, Section 59-12-103(1)(b) is inapplicable.

 

Admission or User Fees. Section 59-12-103(1)(f) imposes a sales tax on admissions or users fees to various specifically listed venues and any other amusement, entertainment, recreation, exhibition, cultural, or athletic activity. A toll road is not one of the listed venues, and we do not believe the general language just cited is broad enough to include such a road. Accordingly, Section 59-12-103(1)(f) is also inapplicable.

 

For these reasons, we hold that the toll road charge to access the COMPANY is not subject to Utah sales tax. Please let us know if you have other questions.

 

For the Commission,

 

 

 

Marc B. Johnson

Commissioner

 

MBJ/IR

01-002