Response June 20, 1995
Request
March 23, 1995
Utah Tax Commission
Salt Lake City, UT
Commission Members,
I recently spoke with XXXXX in your office and he recommended I write
you to request an advisory opinion. My
question relates to the newly implemented state sales tax on river rafting
outfitter sales. Some of my competitors
are not charging clients any sales tax, which makes them 6% less expensive than
I am. In Tax Bulletin 28-94 you state
that “If the preponderance of a recreational activity takes place outside of
Utah, admissions and user fees charged are not subject to Utah sales tax.” There is confusion among rafting outfitters
as to what you mean by “preponderance.”
Let me give you my specific situation.
We run rafting trips in XXXXX on the XXXXX and XXXXX Rivers. Our 1 day trips are entirely within Utah and
we collect sales tax for this trip. Our
MULTIDAY trips all start in Colorado and end in Utah. Each MULTIDAY trip spend the majority of days
and miles within the state of Colorado.
For example, a typical 4 day trip is in Colorado for the first 2 nights
and the last nights is spent in Utah.
On our 3 and 5 day trips, over 50% of the time is spent in Colorado.
My first question is: Do we need to collect Utah sales tax at all for
our MULTIDAY trips? If so, how
much? My second question relates to
payments made in 1994. I assumed I would
need to pay Utah sales tax on our MULTIDAY trips in 1994, and since our
brochure was already printed, I paid Utah sales tax on MULTIDAY trips booked
after July 1, even though I did not collect any sales tax from clients. Can I get a refund on sales tax I paid on
MULTIDAY trips last year?
I would appreciate an answer to my questions. If you need verification of the times and distances in XXXXX try
calling XXXXX concessions specialist, at XXXXX.
Sincerely,
XXXXX
RE:
Advisory Opinion - Application of Sales Tax to One-day and Multi-day River
Rafting Trips.
Dear
XXXXX,
You
requested an advisory opinion as to the application of sales tax to river
rafting trips which may be wholly within Utah or in Utah and at least one other
state. You also asked whether you are
entitled to a refund of excess sales tax charged since XXXXX
Our
research indicates:
1. Under section 59-12-103(l)(f)(I) of the Utah
Code, river runs sold in Utah are subject to Utah sales tax.
2. In Tax Bulletin 28-94, the Commission
clarified its interpretation of the application of sales tax applies to river
trips which cross state lines. There
the Commission stated that a river trip is exempt from Utah sales tax if a
preponderance of the activity takes place outside Utah. “Preponderance of the activity” means 51% or
more of the entire trip, including camping, lodging, meals, and transportation
to and from the beginning or termination point of the river trip, if
transportation is provided by the river run outfitter or guide service.
3. Under the Commission’s interpretation set
out in Tax Bulletin 28-94, a raft trip which is conducted entirely within Utah
is subject to Utah sales tax. A
multiday raft trip through Utah and Colorado is subject to Utah sales tax if
more than half of the activity, when viewed as a whole, takes place in Utah.
4. Section 59-12-110 of the Utah Code allows
for a credit or refund of an overpayment of sales tax to the person who paid
it. A written claim for refund may be filed
with XXXXX of the Customer Service Division of the Tax Commission. Your claim must be supported by
contemporaneous records which show you, and not your clients, paid sales tax on
exempt activities.
This
opinion is based on current Utah law as interpreted by the Commission in its
administrative rules and associated publications. However, the Commission is evaluating a recent United States
Supreme Court decision on the applicability of sales and use tax to river trips
that cross state lines. The Commission
anticipates amending its rules in the near future.
This
opinion is based on the facts presented.
If there are deviations from these facts, the 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.
For
the Commission
Alice
Shearer
Commissioner