Response
January 18, 1991
January
18, 1991
XXXXX
Excise
and Wage Taxes
Re: Advisory Opinion - Environmental Surcharge
Dear
XXXXX:
This
letter is in response to your recent request for a Tax Commission ruling on whether
the new environmental surcharge of 1/2 cent per gallon of petroleum products
sold is subject to sales tax. It is
your opinion that it is.
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:
1. The environmental surcharge is in the nature
of an excise tax, which would not be subject to sales tax.
2. The Tax Commission, by rule, has determined
that the Waste Tire Recycling Fee, which has to be separately stated on the
invoices and collected from the customer, is not subject to sales tax. The same logic is applied to the
environmental surcharge.
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
XXXXX
Utah
State Tax Commission
6th
Floor
160
East 300 South
Salt
Lake City, Utah 84134
OPINION
REQUEST
SALES
TAX ON UST/ENVIRONMENTAL SURCHARGE
We
are requesting a ruling to determine whether the .5 cents/gallon environmental
surcharge on petroleum sold, used or received in Utah is includable as part of
the taxable purchase price for petroleum products for sales tax purposes.
Utah
Code Section 26-14e-401.1 imposes an environmental surcharge of .5 cents/gallon
on petroleum sold, used or received in Utah.
This surcharge is required to be shown as a separate line item on the
distributor's sale invoice.
Utah
Code Section 59-12-103(1)(A) states in part that the Utah sales and use tax is
levied on the purchaser for the amount paid or charged for retail sales of
tangible personal property made within the state.
Utah
Code Section 59-12-102(6) defines "purchase price" to mean the amount
paid or charged for tangible personal property, etc., excluding cash discounts
taken or any excise tax imposed on such purchase price by the federal
government. The term "amount paid" does not appear to be defined in
the law.
Utah
Code Section 59-12-104(1) states that sales of motor fuels and special fuels
subject to a Utah state excise tax under Chapter 13, title 59, are exempt from
the Utah sales tax.
From
the preceding, we have tentatively concluded the following. First, the
"amount paid" for tangible personal property for sales tax purposes
is meant to exclude cash discounts and federal excise taxes. Second, the
exclusion for federal excise taxes is not meant to extend to Utah excise taxes.
Third, to the extent that a sale of petroleum product is not subject to the
motor fuel and special fuel tax, any Utah environmental surcharge imposed upon
such product will be includable in the amount paid or charged which is subject
to the sales tax.
Therefore,
are we correct in concluding that, with respect to petroleum product sales
which are subject to the Utah sales tax, the Utah sales tax will be imposed on
the amount paid for petroleum products, including the amount of the Utah
environmental surcharge imposed thereon?
Very
truly yours,
XXXXX
Excise
and Wage Taxes
90-017DJ
Response
April 9, 1991
Letter
April
9, 1991
XXXXX
Re: Purchase of Assets from a Leasing Company
Dear
XXXXX:
This
letter is in response to your recent request for a Tax Commission ruling on
whether exercising an option to purchase equipment from a leasing company can be exempted from sales
tax because the lease qualified as an isolated or occasional lease transaction. The option was exercised within eight months
of the inception of the lease.
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:
1. The Utah sales tax law imposes tax on each
separate transaction. The transactions
described include a sale by XXXXX or XXXXX to the parent company, XXXXX. This transaction qualifies for exemption
either as an isolated or occasional sale or a resale sale.
2. In the next transaction, XXXXX becomes a
retailer, and the lease payments collected by a retailer are taxable. XXXXX, as a retailer, must also collect tax
on the buyout of the equipment. The
isolated or occasional exemption is not available for a retailer.
3. The Utah sales and use tax law imposes tax
on the consumer or purchaser, but requires the seller to collect and remit the
tax. The seller's failure to collect
the tax requires the seller to pay it himself.
He then has a right to collect it from the buyer or lessee.
4. Had the transaction been structured as a
conditional sales contract instead of a lease, it would have been a part of the
original exempt isolated sale. It is
too late to change the transaction at this point.
Based
upon the facts presented in your letter, we are in agreement with the Auditing
Division's recommendation. 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
Correspondence
Section of Operations Division
State
Tax Commission
160
East 300 South
Salt
Lake City, Utah 84134
Dear
Commission:
I
am writing this letter at the request of XXXXX of the Provo Office of the State
Tax Commission.
On
April 20, 1990 XXXXX acquired certain assets of XXXXX and XXXXX from the parent
company of XXXXX At that time XXXXX was informed that it did not have to pay
sales tax on the purchase of those assets because of the bulk asset purchase
rule. In accordance with that rule no sales tax was paid on the assets
purchased. However, on the same date a monthly lease agreement was signed for
some crushing equipment that included an option to buy the crushing equipment
with the lease payments being applied to the total purchase price when XXXXX
exercised the option to purchase the equipment. It has been the intention of
XXXXX to purchase the equipment since the lease was signed, but cash flow has
not allowed that option to be exercised until now.
On
Friday, November 30 1990, XXXXX officially notified XXXXX that it would
purchase the equipment. From that decision comes the question of sales tax to
be paid on the crushing equipment. It is the opinion of XXXXX that sales tax is
not owed on the purchase of the crushing equipment since it had a lease with
option to buy on the same date as the actual purchase of the other assets on
April 20, 1990. It is XXXXXs opinion that the bulk asset purchase rule can also
be applied to this lease conversion and therefore would be sales tax exempt.
The
purchase of the equipment is approximately $$$$$ and hence has a big tax
implication if XXXXX handles the transaction wrong. XXXXX told me that he felt
he could argue that this be a taxable transaction as well as argue that it
could be a non-taxable transaction. Therefore, XXXXX now asks your office to make
a ruling as to the taxation of this transaction. Does XXXXX have to pay sales
tax on the conversion of a monthly lease with the option to purchase the
equipment which was exercised within 8 months of the bulk asset purchased from
XXXXX and XXXXX?
Thank
you for your help in this matter. If I can answer any questions please call at
XXXXX.
Sincerely
yours,
XXXXX
Treasurer