Response March 13, 1995
Request
January 12, 1995
Commissioners
Utah State Tax Commission
210 North 1950 West
Salt Lake City, Utah 84134
Dear Commissioners:
Regarding:
Exemption from sales or use tax for inspection equipment used in
manufacturing.
We represent a company which manufactures
computer parts. Because of the high
technology nature of its products, this company has an intensive inspection
process which starts with the raw materials and continues through to the final
product. Each piece of the inspection
equipment is necessary to the manufacture of quality products, even though
phases of the inspection process occur at the beginning and at the end of the
production sequence.
It is our understanding that the inspection
equipment for the interim inspection of semifinished product and for final
inspection of finished product at the end of an uninterrupted manufacturing
process would qualify for the exemption from sales or use taxes.
We understand that the exemption would not
apply to equipment to inspect raw materials.
We also realize that equipment to inspect product after it has been
warehoused would not qualify for the exemption
We appreciate your taking the time to clarify
this position for us.
Sincerely,
XXXXX
Research Consultant
TO: XXXXX,
Director
FROM: XXXXX,
Secretary
DATE: January
30, 1995
SUBJECT:Request for Advisory Opinion - No.
95-005DJ
Attached is a request for an advisory opinion
from XXXXX of XXXXX Will you please review the request of XXXXX for an advisory
opinion regarding exemption from sales or use tax for inspection equipment used
in manufacturing.
Please prepare the response for signature by
the Commission as per the guidelines established by them.
Thank you.
XXXXX
XXXXX
Re: Advisory Opinion -- Exemption from Sales or Use Tax Inspection
Equipment Used in Manufacturing
Dear XXXXX:
You requested an opinion as to whether purchases of inspection
equipment used in the manufacturing process, including inspection of raw
materials and finished goods, will qualify for the exemption from sales or use
tax for new or expanding manufacturing facilities.
Our research indicates that the exemption in Utah Code Annotated
Section 59-12-104(15) (copy attached) would include machinery and equipment
used to test and inspect raw materials, goods in process, and finished goods
when such functions are an integral part of the manufacturing and quality
control processes performed prior to product shipping. This, of course, assumes that the equipment
meets the other defined criteria for exemption.
This opinion is based upon the facts presented in your letter. 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 judgement 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,
Alice Shearer
Commissioner
TO: ALICE
SHEARER, Commissioner
FROM: XXXXX, Executive Director
DATE: March
8, 1995
RE: Advisory
Opinion for XXXXX - Exemption from Sales or Use Tax for Inspection Equipment
Used in Manufacturing
Auditing Division has prepared an advisory
opinion for XXXXX regarding exemption from Sales or Use Tax for inspection
equipment used in manufacturing. I have
reviewed this opinion and am forwarding it to you for your review and
signature.
Thank
you!