Responses
May 9, 1995 and June 8, 1995
Request
March 13, 1995
Dear State of Utah Dept. of Revenue/Taxation:
Our company is currently considering moving to a procurement card (i.e.
XXXXX) system of paying vendor's bills.
As part of this system, no invoices will be issued.
We are concerned about what regulations exist in your state regarding
sales and use taxes and auditing procedures.
Would you please enclose in the SASE, copies of any regulations that
have been established regarding this method of customer payment. It would be greatly appreciated.
A representative can contact me with any questions, at XXXXX.
Very truly yours,
XXXXX
XXXXX
Re: Advisory Opinion - - Sales
and Use Tax Record-Keeping Requirement
Dear XXXXX:
You requested an advisory opinion on record-keeping requirements as they
apply to procurement card systems for which no invoices will be issued.
Our research indicates as follows:
1. Administrative Rule
R865-19S-22 (copy attached) outlines record-keeping requirements for sales and
use tax purposes.
2. As a general rule, an
electronic data capturing system which is intended to be used in lieu of a
paper invoicing system should capture the same information that would normally
be required and found on the document that the system is intended to replace.
3. In addition to the
requirements of the above-referenced rule, Rule R865-21U-6 (copy attached)
states:
"When property is purchased from a registered retailer, the
purchaser is not relieved from the tax liability unless a receipt is obtained
from such retailer. This receipt need
not be in any particular form but must show the name of the purchaser, the date
of the sale, description of the property or reference to the sales invoice, the
purchase price, and amount of tax. A
sales invoice containing the above information, together with evidence of
payment of such invoice, will constitute a receipt. Payment of the tax to a registered retailer under these
conditions relieves the purchaser of any further liability."
4. Because of substantial known
problems of zip code areas crossing sales and use tax jurisdictional
delineations, the use of zip code alone to determine and verify tax rate and
distribution allocation is unacceptable. Data capture would therefore be
required to include normal street address for delivery point to the purchaser.
5. After-sale adjustments for
discounts, returns, allowances, etc. must be traceable back to the original
related transaction.
6. Reporting must allow for
segregation by description and amount of any charges claimed as exempt from
tax. In order for any nontaxable item
to be treated as such, it must be separately stated (normally on an
invoice). For example, actual shipping
charges on F.O.B. point of origin sales would be exempt from tax, but only if
separately stated. Without the
segregation, the total charge on any particular transaction containing taxable
charges would be considered taxable.
7. Because taxability of
certain charges, i.e. freight, depends on point of title passage, data must
include F.O.B. point or similar information.
A procurement card system will be acceptable in lieu of hard copies of
vendor generated invoices with regard to record keeping responsibilities of the
purchaser assuming the requirements stated above are met.
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.
For The Commission,
Alice Shearer
Commissioner
RE: Advisory Opinion - Sales and Use Tax Record
Keeping Requirement
Dear
XXXXX,
You
requested an advisory opinion on record-keeping requirements as they apply to
procurement card systems for which no invoices will be issued.
The
Commission recognizes that electronic data interchange (EDI) technology is
important to the future of every business.
Commissioner Oveson, is working with the Federation of Tax
Administrators and companies like yours to design standard data formats and access
procedures to satisfy tax record keeping requirements without imposing
unnecessary impediments to EDI. We
invite you to participate in this process through the Tax Executives Institute.
Once
the national standards are refined to capture essential tax data, we will
review our procedures to accommodate them.
In the meantime, we have evaluated your request for an advisory opinion
under current Utah law and Tax Commission procedures.
Our
research indicates as follows:
1. Administrative Rule R865-19S-22 (copy
attached) outlines record keeping requirements for sales and use tax purposes.
2. As a general rule, an electronic data
capturing system which is intended to be used in lieu of a paper invoicing
system should capture the same information that would normally be required and
found on the document that the system is intended to replace.
3. In addition to the requirements of the
above-referenced rule, Rule R865-21U-6 (copy attached) states that a purchaser
must have a receipt for the tax paid, or remain liable for the tax. Such receipt from the retailer must show the
name of the purchaser, date of the sale, and a description of the property or
reference to an invoice describing the property, the purchase price and amount
of tax paid. Payment of the tax to a
registered retailer relieves the purchaser of further liability for the tax.
4. Data captured in the sales tax report
generated by the procurement card system must show the normal street address
for delivery to the purchaser. The use
of city name and zip code alone is not sufficient to accurately identify the
appropriate taxing jurisdiction.
5. After-sale adjustments for discounts,
returns, allowances, etc. must be traceable to the original transaction.
6. Reporting must allow for segregation by
description and amount of any charges claimed as exempt from tax. In order for any nontaxable item to be
treated as such, it must be separately stated (normally on an invoice). For
example, actual shipping charges on F.O.B. point of origin sales would be
exempt from tax, but only if stated separately. Otherwise the total charge on any particular transaction
containing taxable charges is considered taxable.
7. Because taxability of certain charges, i.e.
freight, depends on point of title passage, data must include F.O.B. point or
similar information.
A
procurement card system is acceptable in lieu of hard copies of vendor
generated invoices with regard to record keeping responsibilities of the
purchaser assuming the requirements stated above are met.
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.
For
the Commission,
Alice
Shearer
Commissioner