90-013
March
6, 1991
XXXXX
Re:
Sales Tax on Gasses & Fuels
Dear
XXXXX:
This
letter is in response to your recent request for a Tax Commission ruling on
whether gasses such as acetylene, argon, nitrogen and carbon dioxide are exempt
from sales tax when used in a manufacturing process. You stated that all of
these gasses used go into the manufacturing process of the products you sell
and collect tax on. Also, you have requested a refund of sales tax paid on oxygen
purchases as assessed in an audit of your company.
The
Tax Commission policy is to refer such requests to the division most qualified
to analyze the request and make recommendations concerning it. As such, your
request was referred to the Tax Commission's Auditing Division for their
analysis and recommendation. The Division's recommendation is as follows:
The
Auditing Division has been instructed to amend the audit report to eliminate
the tax on oxygen in accordance with present Tax Commission policy. This policy
may change in the future.
It
is the Tax Commission's intention to amend its administrative rule R865-19-35S
to more clearly define which gasses qualify as a fuel, and therefore, be exempt
when used in a manufacturing process.
Acetylene
is a fuel, but argon, nitrogen and carbon dioxide are not fuel gasses and would
not be exempt from sales tax even when used in a manufacturing process.
4.
Non-fuel gasses which are consumed in a manufacturing process are taxable even
though you may collect tax on the sale of your products.
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
Utah
State Tax Commission
160
East 3rd South, Fifth Floor
Salt
Lake City, UT 84134
Attn:
Commissioner R. H. Hansen
Dear
Commissioner Hansen:
Per
your letter of August 6, 1990, I have not been contacted by your auditing
division with regard to a refund of use tax we paid on oxygen and other gasses.
I
have attempted to do some work of my own on this, but became confused about the
other gasses that go into the manufacture of our product; such as acetylene,
argon, nitrogen and carbon dioxide. All of these gasses used go into the
manufacturing process of our product for which we charge sales tax to our
customers.
If
you will clarify this for me, I will be able to continue to find out what taxes
we paid to our suppliers since October of 1988.
Yours
sincerely,
XXXXX
XXXXX
President