Response
March 12, 1993
Request
TO: Tax Commission
160
East 300 South
Salt
Lake City, Utah 84134
RE: Sales Tax Applicability
XXXXX
To
Whom It May Concern:
I
am writing to request a written determination from, you about the applicability
of sales tax to the sale of an intangible service. I have been advised that such determinations can take from four to
six weeks.
Are
sales of memberships subject to sales tax?
The membership in question is with XXXXX, which charges annual dues and
a one-time initiation fee. Members are
eligible for services (not products), such as emergency medical flights,
transplant organ delivery, mortal remains return, vehicle return in the case of
injury or illness away from home, and other related services. (Conceptually, I equate a XXXXX membership
with membership in XXXXX (XXXXX, which provides automotive services to members in
need.) XXXXX membership does not entitle the member to admission to any
medical, athletic, or facility (unlike XXXXX (XXXXX) or XXXXX or XXXXX). A copy
of XXXXX “Member Service Agreement” is enclosed for your review.
Are
such services subject to sales tax in UT?
I would appreciate receiving your written determination on this sales
tax question, as well as relevant inclusive or exclusive sales tax Statutes or
Regulations relied on in reaching your determination.
Finally,
is it your policy that your written determinations will not be retroactive,
disputed by the Tax Commission, although they may be subsequently,
prospectively changed?
Please
do not hesitate to contact me if I may be of any assistance in providing
additional information. Thank you for your
help.
Sincerely,
XXXXX
enclosure
A
copy of the Member Services Agreement is located in the Tax Commission files.
TO:
XXXXX, Deputy Executive Director
FROM:
XXXXX, Assistant Director, Auditing Division
DATE:
XXXXX
RE: Advisory Opinion for XXXXX - XXXXX
Attached
for your review is a response prepared by auditing to a request for an advisory
opinion.
If
you have any question call me at XXXXX, if not please forward to Joe Pacheco
for his review and signature.
XXXXX
Re:
Advisory Opinion - Taxability of Membership to XXXXX (XXXXX)
Dear
XXXXX:
Your
request (copy attached) for an advisory opinion as to whether the sale of
memberships in the XXXXX is subject to the Utah sales tax was referred to the Auditing
Division for their analysis.
It
is the division staff recommendation that:
1. Utah Code Annotated Section 59-12-103 (copy
attached) imposes the sales tax on amounts paid to common carriers for “all
transportation.”
2. Specific exemptions are allowed under U.C.A.
Section 59-12-104 (copy attached) for “intrastate movements of freight and
express.”
3. Interstate movements of persons, freight,
etc., are exempt under interpretation of the Interstate Commerce Clause of the
U.S. Constitution.
4.
Air transportation is exempt because of
federal law and is recognized as such in Tax Commission Administrative Rule
R865-19-36S (copy attached).
5. If you were to use a ground carrier with
established routes for intrastate transportation of persons, we would expect
that carrier to handle the sales tax when due.
6. Generally, then, the specific services
mentioned in your letter and its attachments as being provided under the
membership agreement are not subject to the Utah sales tax. Consequently, the sale of the membership is
exempt from the tax.
7. Such a determination will not be
retroactively disputed by the Tax Commission; however, it may be subsequently,
prospectively changed.
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.
In
contacting the Tax Commission, if special accommodations are needed in
accordance with the Americans with Disabilities Act, please call (801)
530-6920, (801) 530-6077 or TDD (801) 530-6269 allowing three working days
notice.
For
the Commission,
Joe
B. Pacheco
Commissioner