August
15, 1991 Response from Tax
Commission
July
10, 1991 Letter from XXXXX
XXXXX
Re:
XXXXX
Dear
Mr. XXXXX:
This
letter is in response to your recent request for a Tax Commission ruling on
whether a project entity created under the provisions of Title 11, Chapter 13
of the Utah Code is subject to sales tax. The project entity will be a solid
waste disposal district formed by the XXXXX and the XXXXX which, when the two
districts are combined into one, will be able to operate more efficiently and
economically than the two separate districts. Your concerns are centered on
§11-13-26 which states that "Notwithstanding the provisions of Section
59-12-104, a project entity created under this chapter is subject to state
sales and use taxes."
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:
As
pointed out, Section 11-13-26 states "Notwithstanding the provisions of
Section 59-12-104, a project entity created under this chapter is subject to
state sales and use taxes." The language is sufficiently clear to show
that if two separate service districts combine into one, they will be subject
to sales and use 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 and a copy of the Utah Taxpayer Bill of Rights are
attached.
For
the Commission,
Joe
B. Pacheco
Commissioner
XXXXX,
Managing Auditor
Sales
and Use Tax
Utah
Tax Commission
160
East 300 South
Salt
Lake City, UT 84134
RE:
Utah Code §11-13-26
Dear
Mr. XXXXX
Reference
is made to our recent telephone conversation relative to the application of the
above referenced Code section to a project entity created pursuant to the
Interlocal Cooperation Act, Title 11, Chapter 13, Utah Code, 1953, as amended
(the "Act"). The governmental entities creating the project entity
are comprised of two special service districts, the XXXXX, created by XXXXX
City and three other municipalities, and the XXXXX, created by XXXXX County.
I
represent the County District and am working with XXXXX, Esq., attorney for
XXXXX City. As we were proceeding under the Act we discovered §11-13-26 which
reads as follows:
Notwithstanding
the provisions of Section 59-12-104, a project entity created under this
chapter is subject to state sales and use taxes. The sales and use taxes shall
be paid, collected, and distributed in accordance with the provisions of law
relative to the payment, collection, and distribution of sales and use taxes,
including prepayment as provided in chapter 51, title 63. Project entities are
authorized to make payments, or prepayments of sales and use tax as provided in
Chapter 51, Title 63; from the proceeds of revenue bonds issued pursuant to
Section 11-13-19 or other revenues of the project entity.
In
my telephone conversation with you, you asked that I set forth the facts and
request an opinion as to the applicability of the above section to our proposed
project entity. We both agreed that it made no sense to have two service
district entities which are exempt from sales and use taxes creating a new
entity which would be subject to such taxes. It would stand to reason that the
new entity should also be exempt.
The
purpose of the new project entity will be the operation of a permitted sanitary
landfill in Utah County to be utilized by the above-named Districts and their
respective members but under the management, etc. of the new project entity
created pursuant to the Act.
Therefore,
I request an opinion as to the applicability of the above-referenced Code
section to such new project entity. If this section is not applicable then
perhaps it ought to be repealed or modified in some way so as to not deter by
joint cooperation what can be done singly but not as effectively or
economically.
Thank
you for your courtesy and cooperation in this matter.
Yours
truly,
XXXXX