03-014

 

July 11, 2003

 

NAME

ADDRESS

PHONE

FAX

 

Dear Ms Hendrickson,

 

Attached are two documents that were previously sent to the State Tax Commission for an official ruling. To date we have not received any response.

 

We would greatly appreciate your assistance in responding to our inquiries.

 

Thank you for your cooperation.

 

 

 

03-014

 

NAME

ADDRESS

 

To Whom It May Concern:

 

We at COMPANY provide state tax research services to OTHER COMPANY an affiliated company. One of the products OTHER COMPANY offers to it’s customers is hat is referred to as convenience copiers. The documentation used between OTHER COMPANY and their customers vary but the essence of the transaction is the same.

 

All convenience copiers are placed at various locations at the customer’s place of business.

 

The customers are charged a base amount which allows them to make a certain amount of copies and an additional charge per copy over the allotted amount.

 

It is not unusual that the customer has the right to terminate the agreement by providing a written notice 60 days prior to the termination and paying, if applicable, an early termination charge. The convenience copiers are usually combined with other unrelated equipment and services under a single agreement but work independently of each other. During the term of the agreement the customer may negotiate for a different copier if they desire i.e. high volume, color etc..

 

It is OTHER COMPANY responsibility to maintain the copiers and provide the toner, developer and fuser. OTHER COMPANY may or may not provide paper depending on the terms of service on a client-by-client basis. The customer has exclusive use of the copiers and has the right to direct the manner of the use i.e. the customer operates the copiers choosing different control functions and have the copiers available for their use anytime of day during the agreed upon period, usually 3 years.

 

The questions I have is whether the agreement between OTHER COMPANY and their customer is a lease/rental or is OTHER COMPANY providing a service? Please provide an official ruling on this questions.

 

Thank you for your assistance in this matter.

 

NAME

ADDRESS

 

Dear NAME

 

We at COMPANY provide state tax research services to OTHER COMPANY, an affiliated company. One of the products OTHER COMPANY offers to its customers is what is referred to as commercial reprographics centers. The documentation used between OTHER COMPANY and their customers vary, but he essence of the transaction is the same.

 

A commercial reprographics center is where OTHER COMPANY makes copies of original documents submitted by customers and provides related copy services (binding, stapling, numbering, etc.) either at OTHER COMPANY facility or the customer’s facility. OTHER COMPANY provides personnel, supplies, and equipment required to produce copies. The copy centers are available to their customers certain hours of the day, and only OTHER COMPANY personnel operate the equipment and various control functions, meaning that these are not lease agreements.

 

The customers are charged a base amount, which allows them a certain amount of copies and an additional charge per copy over the allotted amount.

 

It is OTHER COOMPANY responsibility to maintain the copiers and provide the toner, developer, and fuser. OTHER COMPANY may or may not provide paper depending on the terms of service on a client-by-client basis.

 

Utah Advisory Opinon No 96-159DJ, 10/28/1996, talks about among other things, copy centers and purchases of equipment. Specifically “Question 4” asks whether equipment such as copiers qualify for an exemption from sales tax as manufacturing or printing equipment.

 

Your response under number 5. Equipment purchases is as follows: “Certain printing operations are eligible to purchase printing equipment tax exempt under the manufacturing exemption. Photocopying centers are not considered manufacturing operations. We do not have enough information about the type of copy center you are operating to determine whether your equipment purchases are eligible for exemption.”

 

This seems to imply that certain types of copy centers may qualify for the exemption. From the information I have supplied above, would you please advise me whether our purchase of copiers for the reprographic/copy centers would qualify for a sales tax exemption.

 

Thank you for your prompt cooperation in this matter.

 

NAME