REQUEST LETTER

 

 

TO: TP REPRESENTATIVE

 

FROM: NAME

 

DATE: DATE

 

NAME, we are in need of an advisory opinion. We have a few companies who operate in the State of Utah, who are looking to bring in additional buses for the EVENT. These are buses for hire and are not for use by ORGANIZATION. These buses are not IRP-registered, however they are registered in another state. How do we register them in Utah? If they come into Utah after DATE and only stay for the EVENT period of time, do we collect property tax? Do we need to plate them? Do we collect only registration fees?

 

I would recommend these companies either add the vehicle to their IRP fleet, if they have one or to start an IRP account if they do not have one. While this is the easiest way, I am sure we could force them to open an IRP account if they do not want one. So for those who do not want to open an IRP account, I would like for know how we are to register them.

 

This is similar to the Bus issue ORGANIZATION is going to ask for an opinion on.

 

I am out of the office all this week, will return on Monday. If you or TAXPAYER REP need to talk with me before that time please call me on my cell PHONE. I will check my messages each day and will call back.

 

Thanks

NAME

 

RESPONSE LETTER

 

DATE

 

RE: Advisory Opinion Concerning Registration, Taxation, and Plating of Buses During the EVENT

 

Dear NAME,

 

You have requested the Commission to provide policy guidance to the Division of Motor Vehicles (“division”) on whether it should register buses that are owned by private companies and brought into Utah during the EVENT. You also inquire whether these owners must obtain Utah license plates and pay Utah property taxes. You have indicated in a conversation subsequent to your request that the buses at issue would weigh over 27,000 pounds. Your request is one piece of a larger issue involving all buses brought into Utah for the EVENT . As the Division of Motor Vehicle will need policy guidance from the Commission on how to administer the other bus issues as well, we will answer your question as part of a broader discussion regarding all the buses brought into Utah for the EVENT.

 

Representatives from the Tax Commission recently met with the ORGANIZATION and received the following information. The buses that will be brought into Utah for the EVENT include the following types and will be used for different purposes, as explained below:

 

1.                  ORGANIZATION Spectator Buses: ORGANIZATION is contracting with organizations around the country for use of “transit” type buses (buses with two doors that are easy to load and can accommodate standing passengers). 700 to 800 buses are being brought to Utah for use during the ORGANIZATION. While the contracts call for all buses to be in Utah no later than DATE, many of the buses will arrive after this date. Until the buses are used next DATE, they are being “warehoused” at various facilities in Utah. These buses typically weigh between 26,000 and 30,000 pounds.

 

Type A: About 700 buses (118 from COMPANY; 582 from out-of-state transit systems, with 150 of these already in Utah). All of these buses will be donated without compensation by municipal transit systems around the country to ORGANIZATION for use during the EVENT. ORGANIZATION will hire drivers for the buses, with their salaries and other expenses paid by UDOT with federal funds. The buses will be used to transport persons who show a ticket to an EVENT to that event at no charge. Almost all of these buses are already plated in the state of origin, except for: 1) 65 from STATE where such buses have no plating, registration, or property tax requirements; and 2) 12 new buses donated by STATE that are arriving in Utah directly from the factory before going to STATE. The ones without plates are being trucked to Utah; ORGANIZATION did not indicate if the other buses would be trucked or driven to Utah.

 

Type B: ORGANIZATION will lease, for $$$$$$ a day, $$$$$$ to $$$$$$ spectator buses from a private dealer in STATE. These buses will arrive in Utah with STATE dealer plates, but will be used in same manner as TYPE A buses.

 

2.                  Media and Sponsor Buses. ORGANIZATION is contracting to lease a number of “coach” buses to transport the media and ORGAN IZATION sponsors.

 

Media Buses: ORGANIZATION is arranging for private companies, such as COMPANY, to provide 300 coach buses to transport media persons during the EVENT. The companies will provide their own drivers and will be paid by ORGANIZATION to transport these persons. Some of the buses will come from the Utah fleet, while others may come from out-of-state. No information was given concerning the registration of these vehicles, but it assumed they will arrive in Utah with the plates of the origin states on them.

 

Sponsor Buses: ORGANIZATION is arranging for a private company, COMPANY, to provide 200 coach buses to transport ORGANIZATION sponsors during the EVENT. The companies will provide their own drivers and will be paid by ORGANIZATION to transport representatives of its sponsors. Although we do not know where the buses will come from, it is assumed they will arrive in Utah with the plates of the origin states on them.

 

 

I. Buses in Utah During DATE

 

A.     Registration. None of the buses that arrive this year will be “used” in Utah during date. They will be “warehoused” until DATE. Accordingly, there is no need to register them in Utah for DATE. Any bus being driven into Utah to the warehouse site can obtain a 96-hour temporary registration at the border to enter the state. Should any bus not be warehoused in DATE, registration may be required, as set forth in Section II.A. below.

 

B.     Property Taxes. While buses warehoused in Utah during DATE are not subject to registration, they may be subject to property tax.[1] Under Utah Admin. Rule 884-24P-65 (“Rule 65”), any bus would be considered “transitory personal property,” which is defined as “tangible personal property that is used or operated primarily at a location other than a fixed place of business of the property owner or lessee.”

 

Transitory personal property is usually subject to a proportional assessment once it has been in Utah 90 consecutive days in a calendar year if it arrives in the state after DATE. Utah Code Ann. §59-2-402(1); Section C of Rule 65. However, under Section 59-2-402(2), certain transitory personal property is not subject to proportional assessment, including “state-assessed vehicles.” If a bus subject to Utah’s property tax is determined to be a “state-assessed vehicle,” it is subject to ad valorem property taxes upon its arrival in Utah. Thus, different tax consequences arise for a bus that is deemed a “state-assessed vehicle” versus those for one deemed a “county-assessed vehicle.”

 

A “state-assessed vehicle” is defined in Utah Code Ann. §59-2-201(29)(a) as:

 

(i) any commercial vehicle, trailer, or semitrailer which operates interstate or intrastate to transport passengers, freight, merchandise, or other property for hire; or

(ii) any commercial vehicle, trailer, or semitrailer which operates interstate and transports the vehicle owner's goods or property in furtherance of the owner's commercial enterprise.

 

A “county-assessed vehicle” is defined in Section 59-2-201(8) to include:

 

(a) any commercial vehicle, trailer, or semitrailer which is not apportioned under Section 41-1a-301 and is not operated interstate to transport the vehicle owner's goods or property in furtherance of the owner's commercial enterprise;

(b) any passenger vehicle owned by a business and used by its employees for transportation as a company car or vanpool vehicle; and

(c) vehicles which are:

(i) especially constructed for towing or wrecking, and which are not otherwise used to transport goods, merchandise, or people for compensation;

(ii) used or licensed as taxicabs or limousines;

(iii) used as rental passenger cars, travel trailers, or motor homes;

(iv) used or licensed in this state for use as ambulances or hearses;

(v) especially designed and used for garbage and rubbish collection; or

(vi) used exclusively to transport students or their instructors to or from any private, public, or religious school or school activities.

 

From these definitions, the Commission has determined that any bus whose use is donated to, and then used by, ORGANIZATION to transport passengers for free is a “county-assessed” vehicle for two reasons. First, it is not used “for hire” as required under the definition for “state-assessed vehicle;” and second, because it is not apportioned under IRP and is not used transport goods or property, such a bus meets the definition of “county assessed vehicle” under subsection (8)(a) above. Accordingly, Type A Spectator buses described earlier will be considered “county-assessed” buses for purposes of property tax and, as transitory personal property, will be subject to proportional assessment. As none of the buses brought in from out-of-state will be in Utah for 90 consecutive days in DATE, they will not be subject DATE Utah property tax.

 

However, all other buses brought into the state will be considered “state-assessed vehicles” because they will be used to transport passengers for hire. This will include the Type B Spectator buses leased from the STATE dealer, as well as the Media and ORGANIZATION buses leased from COMPANY, COMPANY, and other entities. Utah Code Ann. §59-2-201(2)(b) requires the collection of property taxes unless current year property taxes have been paid to another state.

 

At issue is whether a state-assessed bus brought into Utah that has paid no property taxes in another state because the other state does not impose property tax must pay Utah property taxes upon its arrival. In this instance, the owner has paid all taxes or fees imposed by the other state; in this instance, zero. The current practice is that taxes must have been paid to another state for the current year. If no property taxes have been paid, Utah taxes are due. Accordingly, any “state-assessed vehicle” that arrives in Utah in DATE is subject to Utah’s ad valorem property tax unless it shows evidence that DATE taxes were paid to another state.[2]

 

II. Buses in Utah on or after DATE

 

A.                 Registration: Utah Code Ann. §41-1a-202(2)(a) provides that registration in Utah is not required for any:

 

vehicle registered in another state and owned by a nonresident of the state or operating under a temporary registration permit issued by the division or a dealer authorized by this chapter, driven or moved upon a highway in conformance with the provisions of this chapter relating to manufacturers, transporters, dealers, lien holders, or interstate vehicles[.]

 

If a vehicle is owned by a nonresident and is registered in another state, Utah registration is not necessary. Thus, the Type A Spectator buses owned by out-of-state municipalities will not need to register in Utah if they are properly registered in their respective “home” states. The 65 buses from STATE are not required to be registered under STATE law. Because they are in full compliance with the laws of their home state, they are deemed to be properly registered in that state and, as a result, need not be registered in Utah.

 

Similarly, Type B Spectator buses, Media buses, or ORGANIZATION Sponsor buses will not need be registered in Utah if their owner is a Utah nonresident and they are properly registered in another state. Thus, if the Type B buses owned by the STATE dealer are registered in STATE and the dealer is not considered a Utah resident as defined in Section 41-1a-202(1), then those buses are not required to be registered in Utah. On the other hand, 12 of the Type A Spectator buses are arriving in Utah directly from the factory. Though they may be owned by a Utah nonresident, they must be registered in Utah if they have not been properly registered in another state.

 

Some of the companies bringing in buses for the EVENT are already Utah residents, such as COMPANY. Subsequently, their buses do not qualify for the exemption from registration even if they are properly registered in another state. Nevertheless, it appears that the buses brought in from another state will remain in Utah for no more than three months in DATE. If so, any bus that is required to be registered in Utah will qualify for the reduced registration fee as provided for in Utah Code Ann. §41-1a-1207. This section allows a vehicle exceeding 12,000 pounds to be registered for less than a 12-month period. If such a vehicle is registered for three months or less, the registration fee is 30% of the regular registration fee.

 

B.                 Property Taxes. Whether a “county-assessed vehicle” or a “state-assessed vehicle,” any bus in Utah on DATE, is subject to the entire yearly property tax assessment. However, because buses are transitory personal property, Section 59-2-402(5) allows an owner who has paid property taxes and removes the bus from the state prior to DATE to receive a refund of a proportionate share of the taxes. Since all or most of the buses brought into Utah for the EVENT will be in Utah for less than three months in DATE, they will probably all be subject to the proportionate refund. As the circumstances involving the EVENT are unique and all parties already know the proportionate amount of taxes that will be due, the Commission sees no need to require ORGANIZATION to pay the taxes for the full year “upfront” and then receive a refund when the buses are removed. Accordingly, the Commission intends to work with ORGANIZATION, the counties, and the division to implement a procedure for ORGANIZATION to account for and pay only the amount of proportionate taxes that will be due instead of requiring payment of the entire tax amount and refunding the majority of it in the future.

 

For buses brought into Utah after DATE, taxation differs for “county-assessed vehicles” and “state-assessed vehicles.” These differences were explained earlier in the section discussing taxation of vehicles brought into Utah in DATE, with the guidelines offered in that section also applicable to buses brought into Utah after DATE.

 

III. License Plates. Utah license plates are only required on those vehicles registered in Utah. Utah Code Ann. §41-1a-401. Accordingly, any bus required to be registered in Utah subject to the above policy guidelines will also need to display a Utah license plate. If Utah registration is not required, then there is no requirement to display a Utah license plate. Nevertheless, buses such as the 65 Type A Spectator buses from STATE are neither required to be plated in STATE nor required to be registered and plated in Utah. Because they have no plates of any sort, such buses may attract inquiries from law enforcement personnel. To forego such additional inquiries, the Commission recommends that the division, upon request from ORGANIZATION, issue some type of temporary registration as a courtesy to ORGANIZATION for any bus not required to be registered in Utah, but which does not have a license plate.

 

We understand that ORGANIZATION can direct any calls regarding the implementation of these guidelines to you at PHONE. The Commission appreciates your attention in administering these concerns.

 

For the Commission,

 

 

 

Marc B. Johnson

Commissioner

 

MBJ/KC

01-035


[1] For purposes of discussion, all buses discussed in this opinion are assumed not to be part of an International Registration Plan (“IRP”) fleet. Were the buses part of such a fleet, registration and property tax issues would be automatically handled through the IRP reporting guidelines and apportionment of the fees paid under that program.

[2] Should a state-assessed vehicle that is transitory personal property be subject to Utah property taxes, Section 59-2-402(5) would allow for a refund of a proportionate amount of taxes paid should that vehicle be removed from Utah before December.