Response
December 13, 1989
December
13, 1989
XXXXX
In
response to your letter of September 21, 1989, requesting a ruling as to
whether you can refund sales tax to a user company when a third party leasing
company provides you with an exemption certificate, the intention of the
purchaser is important. If a buyer has not paid for and used the equipment as a
consumer, it is permissible to reverse a sale to the user and issue a new
invoice to a leasing company, providing it is done within a
"reasonable" time. A reasonable time for a purchaser (lessee) to
arrange for financing should not exceed approximately 120 days.
This
opinion is based upon equity. There is no statutory reference to this
situation.
Respectfully,
XXXXX
September
21, 1989
R.
H. Hansen, Chairman
State
Tax Commission
Heber
M. Wells Bldg.
160
East 300 South
Salt
Lake City, UT 84145
RE:
XXXXX
EIN:
XXXXX
We
respectfully request a ruling on the questions below concerning the Utah Sales
and Use Tax consequences of a leasing company transaction. At the present time,
it is difficult to properly collect and remit the sales and use tax because our
customers and their leasing companies cannot agree on the Utah Tax
consequences. This uncertainty increased when several calls were made to the
Utah taxpayer assistance personnel and seemingly different advice was given to
the same question.
A
ruling from your department would give us a definitive document to provide our
customers and their leasing companies and insure that we are all properly
complying with the Utah Sales and Use Tax laws.
Facts:
XXXXX
is a supplier of interactive computer graphics systems. XXXXX sells hardware,
software and maintenance services to various customers worldwide. XXXXX's
principal place of business is located in Alabama, but it has nexus in the
State of Utah and regularly files Sales and Income tax returns with Utah.
The
transaction we are concerned with involves three different parties, the vendor
(XXXXX, the end-user of the equipment (XXXXX), and the leasing company (XXXXX).
XXXXX is registered with Utah as a seller and lessor of computer
equipment. Lessor registered in Utah.
XXXXX
receives a purchase order from XXXXX for computer equipment. The equipment is
shipped to and invoiced to XXXXX in Utah. Sales tax is charged to the XXXXX on this
invoice. Then, up to four months after the initial invoice, the XXXXX contacts
XXXXX stating that they are leasing the equipment to XXXXX The XXXXX requests
that XXXXX bill XXXXX directly without sales tax for the equipment and that
XXXXX credit XXXXX for the initial invoice and sales tax. XXXXX sends XXXXX a
resale certificate dated up to four months after the original invoice. This is
not a sale-leaseback transaction.
Questions:
Can
XXXXX, in good faith, accept this resale certificate? Can XXXXX properly credit
the initial invoice including Sales Tax to XXXXX and bill XXXXX for the
equipment with no Sales tax charged?
Your
prompt response to this ruling request would be greatly appreciated. If you
have any questions, please contact me at XXXXX, or send correspondence to:
XXXXX
Very
Truly yours,
XXXXX
State
& Local Tax Manager