Response
Request
March
9 1992
XXXXX
Dear
XXXXX:
Commissioner
Pacheco has asked me to respond to your letter of February 25, 1992.
Both
manufacturers and agricultural producers are entitled to purchase fuels and
electricity tax-free. A dairy farmer is an agricultural producer and is not
required to have a sales tax number. He should sign the exemption certificate
marking the agricultural block where there is no place for a tax number. If
service is provided for the dairy operation and a residence through a single
meter, the predominant use determines whether tax is due. If predominant use is
in the dairy operation, the exemption applies to both uses. It is not required
that a second meter be installed.
A
dairy processing plant is a manufacturer. They should provide their tax number
and mark the block for fuels and electricity. The same predominant use test
applies.
The
Tax Commission has no jurisdiction in setting electricity rates. Utility
companies are regulated by the Public Service Commission and set rates
according to prescribed rules.
Respectfully,
XXXXX
Managing
Auditor
Sales
and Use Tax
February
25, 1992
Joe
Pacheco
State
Tax Commission
Room
514
Heber
Wells Building
160
East 300 South
Salt
Lake City, UT. 84134
Dear
Mr. Pacheco:
Thanks
for talking to me today on the phone. Pursuant to that conversation I am
sending this correspondence. It appears that the concerns about dairy Sales Tax
exemptions are centered around the following questions.
1. Are dairies entitled to Sales Tax exemptions
on their utility bills?
2. If both their house and dairy operation are
on the same meter do they have to pay to have a second meter wired that covers
just the exempt dairy portion of their electrical use?
3. Can an exempt dairy farmer have a residential
rate?
4. Which box is checked on the exemption
certificate?
Following
are the answers we have received to the above questions and our references when
possible. We thought we would include them so you might know how we have been
approaching it.
1.
Dairies are entitled to Sale Tax
Exemptions and have been for many years.
XXXXX, XXXXX State Tax.
2. There would be no need for the predominate
usage ruling (R865-19-35S) if all meters were exclusively one use or the other.
Consequently it must be permissible to have two uses, one that is not tax
exempt and one that is, on the same meter. Above mentioned State Tax personnel.
3. That would be the concern of the utility and
not the taxing authorities. The taxing authorities only determine what taxes do
and do not apply. The utility determines what the rates should be.
4. We were instructed by the State Tax people
mentioned above to check the "fuels, gas, electricity" box on the
Exemption Certificate. However XXXXX has requested that we check the agricultural
box.
I
would appreciate your evaluation of these questions and look forward to hearing
your conclusions.
Sincerely
XXXXX