95-009
Response
February 24, 1995
Request
Alice
Shearer
Commissioner
Utah
State Tax Commission
210
North 1950 West
Salt
Lake City, Utah 84134
Dear
Commissioner Shearer:
Regarding: Advisory opinion: Qualifications of
materials for plumbing and electrical connections to manufacturing equipment
under sales tax exemption for new or expanding manufacturing facilities.
Thank
you for taking the time to meet with us last Friday. We appreciate your attention to fairness and your willingness to
be so responsive to our concerns.
And
thank you for encouraging us to continue to make written requests for
clarification of issues. We thought it
would be helpful to summarize our understanding of Friday's discussion, and we
have enclosed a copy for your approval or correction. Of course, we have
focused on the areas of discussion that are relevant to this issue. We have not included other points that may
be relevant but were not discussed.
We
know this has already taken not only many hours of our time but also of your
time and that of your staff as well.
But we believe the nearer we can get to a clarification, the more it
will benefit everyone in the long run.
Again,
thank you for your help.
Sincerely,
XXXXX
XXXXX
Commissioner
Alice Shearer with XXXXX and XXXXX of XXXXX, XXXXX.
February
24, 1995
Subject
General
criteria for determining whether plumbing and electrical connections required for
the operation of manufacturing equipment are improvements to real property or
improvements to personal property.
1. The primary criteria for determining whether
plumbing or electrical connections to equipment are improvements to real
property or improvements to personal property are as follows:
a. When electrical and plumbing connections are
not attached to the real estate in such a manner as to become an integral part
of the building and which are not installed or attached to the realty in such a
manner that removal would substantially destroy the connections and damage the
realty, the improvement is most likely to personal property.
b. When electrical and plumbing connections are
attached to the real estate in such a manner as to become an integral part of
the building and which are installed or attached to the realty in such a manner
that removal would substantially destroy the connections and damage the realty,
the improvement is most likely to real property.
2. Secondary criteria for making this
determination are as follows:
a. When a contractor purchases materials to
complete a contract and pays sales tax on those purchases, it is an indication
of his or her intent to make improvements to real property.
b. When a contractor purchases materials to
complete a contract and does not pay sales tax on those purchases, it is an
indication that he or she plans to make improvements to personal property which
would qualify for the exemption from sales and use taxes for equipment for new
or expanding operations.
3. There was agreement on the following points
of discussion:
a. There is some difficulty involved in
obtaining a refund of sales tax that was initially paid by a contractor but is
being requested by that contractor's client.
That difficulty, however, is not a factor in whether or not the
purchases were legitimately tax exempt.
b. Although there are exceptions, contractors
often purchase materials according to their usual procedures rather than with
an awareness that purchases of materials for certain jobs would be exempt from
sales tax.
**
hand-written **
Alice
Shearer
**3/2/96
XXXXX
This
“Summary” seems to be generally in conformance with the series of advisory
opinions we have sent to XXXXX on this issue.
Are
there any significant differences that I should correct before I sign off?
Thanks.
Alice
**