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