Response
April 23, 1993
Request
ATTN MR JOE B PACHECO, COMMISSIONER
UTAH
STATE TAX COMMISSION
160
EAST THIRD SOUTH
SALT
LAKE CITY UT 84134
Dear
Mr. Pacheco:
This
represents our formal request for declaratory judgement pending positive
advisory opinion from the Tax Commission's Auditing Division. Under the exclusion rule in 59-12-104
exemptions Utah Tax Code 1991-92 (Sales and Use Tax Rule A-12-02-S85),
exemption is requested for the following capital projects:
PROJECT AMOUNT REF. NO.
XXXXX $$$$$ XXXXX
XXXXX $$$$$ XXXXX
XXXXX/
XXXXX $$$$$ XXXXX
A brief synopsis of
each project follows with more detailed project description/justification
attached to assist in your advisory opinion and declaratory judgement
determination efforts:
XXXXX - Modifications and improvements to
upgrade warehouse space to accommodate the production of XXXXX in our Sandy
molding and extrusion operations.
XXXXX - Growth in manufacturing product volume,
food service cafeteria expansion, accompanied by absorption of the XXXXX into
our Sandy operations compels us to increase load capacity most economically by
constructing a XXXXX electrical substation.
XXXXX - XXXXX market demands for products that
minimize exposure to accidental needle sticks and provide patient and user
safety features require incremental assembly line and applicable support
equipment to meet forecasted unit demand.
Each of the above
capital projects is clearly for use in new or expanding operations and is
exclusive of normal and replacement type outlays.
If you feel further explanation
and documentation is necessary, please contact me at XXXXX. I can meet with you, at your convenience, at your office or our
Sandy, Utah facility.
Sincerely,
XXXXX
TO: XXXXX, Director
FROM: XXXXX, Secretary
DATE: XXXXX
SUBJECT: Request for Advisory Opinion - No. 93-004DJ
Attached is a request
for an advisory opinion from XXXXX of XXXXX. Will you please review the request
of XXXXX regarding exemption for capital projects.
Please prepare the
response for signature by the Commission as per the guidelines established by
them.
Thank you.
XXXXX
Re: Declaratory Judgment, Manufacturer's
Machinery Exemption
Dear XXXXX:
This letter is in response
to your recent request for the Tax Commission to issue a declaratory judgment
that your intended machinery and equipment purchases qualify for exemption from
sales or use tax under the provisions of Utah Code Section 59-12104(15) and
Administrative Rule R865-19-85S.
Although
your inquiry was framed as a request for a declaratory judgement, Tax
Commission policy is to initially treat all such inquiries as requests for
advisory opinions. As such, it was referred to the Tax Commission's Auditing
Division for their analysis and recommendation. The division's recommendations
are as follows:
1. XXXXX, $$$$$ -- Ref. No. XXXXX. This project involves modification of real
property, not acquisition of manufacturing machinery or equipment. The project
does not qualify for the exemption outlined in the above referential statute
and rule.
2.
XXXXX, $$$$$ -- Ref. No. XXXXX. This
project involves some real property and acquisition of equipment not directly
used in the manufacturing process. The project does not, therefore, qualify for
the exemption.
3.
XXXXX, $$$$$ -- Ref. No. XXXXX. The portion of the project representing
equipment. and machinery for what your description categorizes as a “new
product line”, which will actually
result in increased employment, qualifies for the exemption, assuming all other
requirements of statute and rule are met.
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 he 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