Response
November 9, 1990
November
9, 1990
XXXXX
Re:
Declaratory Judgment - Autoclaves
Dear
XXXXX:
This
letter is in response to your recent request for a Tax Commission ruling on
whether Utah sales tax is due on the sale of two autoclaves manufactured in
Utah and shipped to the final consumer in Nevada. You have stated that title
will pass in Utah.
The
Tax Commission policy is to initially treat all such inquires as requests for
advisory opinions. As such, it was referred to the Tax Commission's Auditing
Division for their analysis and recommendations. The division's recommendation
is as follows:
1. Code Section 59-12-102(8)(a) defines a
retail sale to mean "any sale within the state of tangible personal
property ..." (emphasis added). §59-12-103 imposed sales tax on retail
sales and such tax is due where the sale takes place regardless of where the
property may later be taken for use. This position is supported by the
rehearing by the United States Supreme Court in the 1962 case of Pacific States
Cast Iron Pipe Co. vs the Utah State Tax Commission.
Administrative
Rule R865-19-44S provides an exemption for sales made in interstate commerce. In
order to qualify as an interstate sale, the seller must either physically
deliver the products across the state line, or hire a common carrier to do
it. It doesn't matter who pays the
common carrier as long as the seller is the shipper.
In
summary, if there is no way to structure the transaction to qualify as an
interstate sale, Utah tax must be collected even though the state of Nevada
will also collect tax.
Based
upon the facts presented in your letter, we are in agreement with the Auditing
Division's recommendations. Obviously,
if there are deviations from these facts, this opinion may be negated.
If
you do not agree with this determination, you may appeal to the Tax Commission
for a formal hearing. The results of that hearing would constitute a declaratory
judgment and be appealable to the Utah State Supreme Court. A Notice of Appeal
Rights is attached.
For
the Commission,
Joe
B. Pacheco
Commissioner
MEMORANDUM
TO: XXXXX
FROM: XXXXX
DATE: October 19, 1990
SUBJECT: Request for Advisory Opinion
XXXXX
has requested a declaratory judgment/advisory opinion on the tax exempt status
of future sales of steel vessels manufactured in Utah for future shipment to
Nevada.
Please
respond according to the guidelines established by the Commission. Thank you.
STATE
TAX COMMISSION
160
East 300 South
Salt
Lake City, UT 84134
Gentlemen:
Subject: SALES TAX STATUS
Several
weeks ago I contacted your department in regard to the tax consequences of our Company's
future sale of a steel vessel that we will be manufacturing in Utah for future
shipment to Nevada.
A
representative with your department suggested that we get a formal ruling from
your state as to whether the transaction would be subject to Utah State Sales
Tax and that the ruling would be binding on all parties.
The
facts are as I set forward:
-
Our Company has contracted with a customer in Nevada to install two (2)
Autoclaves and support vessels in the State of Nevada. An Autoclave is a steel
pressure vessel which is used in the XXXXX Industry for pressure oxidizing gold
ore. The steel vessels that will become part of the finished Autoclave are to
be manufactured in Utah for shipment to Nevada. Our problem relates to passage
of title. Title will pass in Utah. Would these steel vessels then be subject to
Utah State Sales Tax?
-
We have been informed by Nevada Taxing Authorities that the completed Autoclave
will be subject to Nevada State Sales and Use Tax. Nevada doesn't grant credit
for Sales Tax paid in other states. We, therefore, request a ruling as to the
sales tax consequences of this transaction for the State of Utah.
If
you need any additional information, please contact the writer.
Very
truly yours,
XXXXX
Tax
Accountant