95-010

Response March 8, 1995

 

 

Request

March 8, 1995

 

Re: Advisory Opinion -- Sales or Use Tax Application to the Purchase of Amusement Devices

 

Dear XXXXX(**hand-written**)

 

You requested an advisory opinion as to whether purchases of amusement devices [the revenues from which are taxable under Utah Code Annotated §59-12-103(1)(g)(I) (copy attached)] are subject to the Utah sales or use tax.

 

Our research indicates as follows:

 

1. UCA §59-12-103(1)(g)(I) imposes the tax on amounts paid or charged for “use of amusement devices, including music machines, pinball machines, and mechanical or electronic games....”

 

2. UCA §59-12-104(27) allows exemption only for “property purchased for resales [including rental or lease] in this state, in the regular course of business, either in its original form or as an ingredient or component part of a manufactured or compounded product.”

 

3. The resale exemption referenced above would be applicable if the charges for use of the devices constituted charges for the rental or lease of tangible personal property which are taxable under UCA §59-12-103(1)(m). The fees or charges for the use of the subject amusement devices, however, are not being taxed for the sale, rental or lease of tangible personal property. Were this the case, since rentals of tangible personal property have been subject to the tax since 1933, the charges for “use” of the amusement devices would have been subject to the tax since 1933; and the new legislation would not have been necessary to impose the tax on the fees charged in connection with their use.

 

4. The purchase of a coin-operated or other amusement device does not constitute a purchase for resale, for lease, or for rental purposes. This treatment is consistent with the treatment of amusement ride equipment, ski lifts, billiard or pool tables, jeeps for jeep tours, telephone equipment used to provide telephone services, coin-operated laundry or dry cleaning machines, equipment used as part of or to provide various types of recreation, amusement, or entertainment which are now taxable under the statutes, etc.

 

5. Purchase of coin-operated or other amusement devices for the purpose of generating revenue from admissions or use fees are purchases at retail and are subject to the sales or use tax.

 

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 Supreme Court. A Notice of Appeal Rights and a copy of the Utah Taxpayer Bill of Rights are attached.

 

Respectfully,

 

Alice Shearer

Commissioner