95-007
Request
June
28, 1994
Utah
State Tax Commission
210
North 1950 West
Salt
Lake City, Utah 84134
Dear
Sir:
I
am seeking an advisory opinion on the implementation of sales taxes on charter
buses as it effects XXXXX. I understand
the effective date of the State’s attempt to impose this tax is XXXXX.
Last
month I attended a meeting held by the Tax Commission staff with most local
charter bus companies. Although I was
an uninvited guest, the staff advised the group that the sales tax issue does
not effect interstate commerce, including transportation to XXXXX, XXXXX,
XXXXX, XXXXX, XXXXX, XXXXX, XXXXX, XXXXX and XXXXX. We do not conduct any tours solely within the state of Utah.
It
was only yesterday that I heard a rumor that the Tax Commission was now
attempting to collect sales tax on charter buses to XXXXX, even though these
tours cross a state line and are considered interstate moves by every other
government agency of which I am aware.
Our buses are governed by the rules of the Interstate Commerce
Commission rather than Utah’s Public Service Commission. Our passengers certainly spend a greater
percentage of their time on each tour out of the state of Utah rather than as a
passenger on a bus within Utah’s border.
If the Tax Commission is intent on taxing tours to XXXXX, can you advise
us just how far into XXXXX we must go before it becomes interstate commerce and
nontaxable. How can the Tax Commission
single out XXXXX, XXXXX. for this special treatment? It would seem that tours to XXXXX, XXXXX, XXXXX, XXXXX, and
similar border destinations should be treated equally. How can the Tax Commission single out
charter buses, ignoring similar issues with trains, airlines, and trucks? Does the Commission’s ruling conflict with
section R865-19-44S of the Utah Administration Code? It appears from my reading of this section that we comply with
all criteria in order to qualify as interstate commerce.
XXXXX frequently hires buses from other companies
to transport passengers to XXXXX to help with our busy periods. These companies, I assume under your
proposal, are obligated to collect taxes from us for these interstate
moves. I assume the state also wishes
us to pay sales tax on the tickets we sell to each passenger on these
buses. Frequently a XXXXX bus will be
parked next to a bus hired from another company, loading a two bus move. In this case, will I be paying sales tax on
just the ticket price for the passengers on our bus, but paying both sales tax
on the ticket price paid by passengers in the hired bus plus the sales tax
charged by the hired bus company even though the passengers on both buses
should pay the same fare for the same trip?
Since I understand that I am required to pass these taxes along to the
consumer rather than absorb the cost, should I collect just the sales tax on
the fare from the passengers boarding our bus, but both the sales tax on the
fare and the sales tax on the taxes charged by the hired bus company on
passengers boarding their bus. I would
appreciate some guidance on this issue.
It
is clear that there are many issues regarding the sales taxes on XXXXX, XXXXX
buses that require further legal investigation. It is not possible for us to change our newspaper ad and
brochures on such short notice. We have
commitments to groups for tours at prices we have guaranteed. May I suggest that a more reasonable course
of action would be to delay implementation of sales taxes on XXXXX, XXXXX buses
until the “Transportation Summit” mentioned by Mr. Val Oveson in a conversation
held XXXXX. On behalf of our
passengers, the majority of which are senior citizens, the least likely group
able to absorb additional taxes, I await your advisory opinion on the issues
noted above.
Sincerely,
XXXXX
TO: ALICE SHEARER, Commissioner
FROM:
XXXXX, Executive Director
DATE: February 22, 1995
RE: Advisory Opinion for XXXXX
Auditing
Division has prepared an advisory opinion for XXXXX. I have reviewed this opinion an am forwarding it to you for your
review and signature.
Thank
you!
Re: Advisory Opinion - Utah Sales Tax
Application to Bus Charters to Various XXXXX Locations
Dear
XXXXX:
You
requested an advisory opinion as to whether the Utah sales tax applies to
charges for bus charters involving round trips to various XXXXX locations.
Our
research indicated as follows:
1. Utah Code Annotated Section 59-12-103
imposes the tax on charges by common carriers for “all transportation.” U.C.A. Section 59-12-104 exempts “intrastate
movements of freight by common carriers.”
U.C.A. Section 59-12-104 also exempts transaction” ...which the state is
prohibited from taxing under the Constitution or laws of the United States....”
2. Charges for transportation of persons across
state boundary lines are considered as charges for interstate transportation
and are considered as exempt from the Utah sales or use tax under interstate
commerce theory. Consequently, your
charges for bus charters involving round trips from Utah locations to XXXXX,
XXXXX, XXXXX, XXXXX, XXXXX, XXXXX, XXXXX and XXXXX are exempt from the sales
tax. Rule R865-19S-44 covers exemption
from sales of tangible personal property in interstate commerce, not charges
for transportation of persons.
3. There is currently a case before the U.S.
Supreme Court on this same issue of whether a state may tax the purchase price
of bus tickets for interstate transportation.
The outcome of this case could change the answer given above. Any change would be prospective after the
notice was given to transportation providers.
4. Tax Bulletin 22-94 (copy attached) provides
guidance for trips not crossing state boundaries. If you collect the money for the tickets from your passengers,
then you must also collect the tax. If,
to fulfill your obligations from those tickets sales, you hire buses from
another company, you should provide a resales exemption certificate to the
other bus company so they will not collect tax from you.
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 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.
Respectfully,
Alice
Shearer
Commissioner