95-028
Responses May 25, 1995 and June 5, 1995
Request
XXXXX
RE: Advisory
Opinion Request
Dear XXXXX;
Thank you for allowing me the opportunity to request
an advisory opinion regarding SB 191 and the current user tax imposed as a
result of its passage. As you are
already aware I would like an advisory opinion on our guide service to see if
it qualifies for exemption status. I
feel that our XXXXX falls under the definition of a lesson. It is definitely not a tour.
As per my conversations with your office I have been
instructed to give you a detailed description of how XXXXX guide services
operate and the role the guides play in the service. I believe that we qualify for an exemption based on the fact that
the service the guides are being hired for is teaching and instructing.
If you look up the definition of instruct in
Webster it says; to teach, to educate, to direct. This is the role of a XXXXX guide. The definition of a lesson is; an instance or experience
from which useful knowledge may be gained.
This is the end result of a guided XXXXX trip. The definition of a guide is: A person employed to guide a tour;
group. To round this out the definition
of a tourist; a brief trip through a place for the purpose of seeing
it. Our service is not retained for the
purpose of a tour nor does a fly-fishing guide transport customers through a
place for the purpose of seeing it.
They are there to teach their customers XXXXX techniques for the purpose
of becoming better anglers.
A XXXXX works with one to three clients per
trip. To quantify this we charge extra
if two anglers wish to add a third person to their group. Since there is a great deal of interaction
between the customer and the guide the size of the group is critical to the
success of the experience. It's not
possible to teach more that 3 anglers at a time effectively in these
situations.
We deal with anglers of all abilities, is a result a
guide must have the capabilities to teach students/customers of all
levels. Since the majority of our clients
are in the beginning stages of the sport most days begin with a lesson in
casting and learning certain techniques-pertinent to making for a productive
day. After this phase of the learning
experience is completed to the guides and customers satisfaction, the guide
will instruct the client on how to properly set up their equipment to begin the
days fishing.
During the day there are usually a variety of
different techniques the guide will teach their client/s. Each technique will require different skills
and changes to their equipment. The
techniques that are taught must also be consistent with the customers
abilities. Different water conditions
and types require additional explanations and adjustments as do weather and
responses to changing insect and fish activity as the day progresses.
On any given day a guide will teach their clients
how to cast, as we mentioned, the proper way to set up their equipment, reading
water, identifying insects and selecting the proper fly to match that
particular stage of an insect, ethics, conservation, and a variety of
techniques to properly present the fly ( dry fly, nymph, wet fly, or streamer
fishing).
For the most part a guide never fishes except to
demonstrate an aspect of a particular technique they are trying to teach. The guide is present with the customer for
the entire length of the trip or activity.
From the time the customer and guide meet it is the responsibility of
the guide to instruct and direct the most effective techniques necessary for
their customers to catch fish. From
start to finish the guide is constantly instructing the client on where to
cast, what flies to use, where to fish, try this, change that, etc .
The closest analogy I can draw would involve the
game of golf. Our service would be similar
to hiring a golf course pro to conduct a lesson for 18 holes, shot by shot,
hole by hole. That pro would accompany
you for the entire round working on every aspect of your game. As each new shot occurred the golf pro would
instruct you on the appropriate club, stance, grip and instruction on how to
improve your swing, shot by shot, hole by hole for 18 holes. If a golf cart was used for the day it would
be used in a similar manner as a XXXXX guide would use a boat. In golf, no two holes are the same, no two
shots are the same. That's why golf is
so hard for players to become proficient.
XXXXX is very similar. It takes
a lifetime to master the sport.
I've also enclosed several brochures of the services
we offer. You'll notice upon reading
them that they are designed to market a specific area and not the guides
themselves. When marketing an area you
are competing against other areas and rivers.
They are also designed to reach potential out of state customers.
I hope that I have given you enough information to
make an accurate assessment regarding the matter. These guides are teachers and instructors as l have related. They are with and involved in the process of
teaching and instructing the customer’s for the entire time there services have
been rendered. It is a class room
setting where the lessons are taught within the environment for which the sport
occurs. It's no different than a golf
or tennis lesson.
I thank you for your time in reviewing this
matter. I apologize if I made this too wordy. I couldn't come up with any other way to
convey the information. Please feel
free to contact me regarding this matter if you need any additional information
or have any questions.
Sincerely,
XXXXX
XXXXX
Re: Advisory Opinion - Sales Tax Application to
Charge for XXXXX As Described
Dear
XXXXX:
You
requested an advisory opinion as to whether sales tax applies to your charges
for XXXXX.
Our
research indicates as follows:
1. Utah Code Annotated Section 59-12-103(f)(i)
imposes the sales tax on amounts paid or charged for “admission or user fees
for . . . sports activities, or any other amusement, entertainment, recreation,
exhibition, cultural, or athletic activity.”
2. Administrative Rule R865-19S-33, indicates
that charges for “lessons, public or private” are not charges for activities
considered to be admission or user fees.
3. In promulgating the rule and Tax Bulletin
15-94, the Commission contemplated lessons, the essence of which is instruction
in development of skills, knowledge, and abilities to perform the related
activities. Specific examples
considered were golf and tennis lessons which provide basic or enhanced skill
training to benefit the student in future participation. In order to be considered as “lessons” under
the referenced bulletin and rule, the instruction must be active. The mere
presence or availability of instructors is not sufficient to meet the criteria
allowing exemption.
4. In the case of XXXXX, the essence of the
trips would appear to be instruction in the activity of XXXXX and the learning
of skills for future participation in the sport.
5. Consequently, the charges for active
instruction as described in your request are exempt from the sales tax. The exemption does not, however, extend
beyond reasonable charges for the instruction provided.
6. Any charges to your customers for camping,
lodging, meals, entrance onto private lands, access to private waters, or use
of facilities or equipment must be separately stated and taxed.
7. Any taxable charges should be recognized for
sales tax purposes as the revenue is recognized under generally accepted
accounting principles.
This
opinion is based upon the facts presented in your letter. Obviously, if there are deviation 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 judgement and be appealable to the
Utah State Supreme Court. A Notice of
Appeal Rights and a copy of the Utah Taxpayer bill of Rights
Respectfully,
Alice Shearer
Commissioner
RE: Advisory Opinion - Application of Sales Tax
to Charges for XXXXX
Dear
XXXXX,
You
requested an advisory opinion as to whether sales tax applies to your charges
for XXXXX.
Our
research indicates as follows:
1. Utah Code Annotated Section 59-12-103(f)(i)
imposes the sales tax on amounts paid or charged for “admission or user fees for...sports
activities, or any other amusement, entertainment, recreation, exhibition,
cultural, or athletic activity.”
2. Administrative Rule R-865-19S-33 (copy
attached) indicates that charges for “lessons, public or private” are not
charges for activities considered to be admission or user fees.
3. In promulgating the rule and Tax Bulletin
15-94, the Commission contemplated lessons, the essence of which is instruction
in development of skills, knowledge, and abilities to perform the related
activities. Specific examples
considered were golf and tennis lessons which provide basic or enhanced skill
training to benefit the student in future participation. In order to be considered as “lessons” under
the referenced bulletin and rule, the instruction must be active. The mere
presence or availability of instructors is not sufficient to meet the criteria
allowing exemption.
4. In the case of XXXXX service described, the
essence of the trips appear to be instruction in the activity of fly-fishing
and the learning of skills for future participation in the sport. Consequently, the charges for active
instruction as described in your request are exempt from sales tax. The exemption does not, however, extend
beyond reasonable charges for the instruction provided.
5. Charges to your customers for guide service,
camping, lodging, meals, entrance onto private lands, access to private waters,
or use of facilities or equipment are taxable.
Charges for taxable items or activities must be billed separately from
tax exempt lessons or the entire charge is subject to tax.
6. In claiming an exemption from sales tax, the
burden of proof is on the taxpayer and must be supported with contemporaneous
records.
7. Any taxable charges should be recognized for
sales tax purposes as the revenue is recognized under generally accepted
accounting principles.
This
opinion is based upon the facts presented in you letter. Obviously, 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 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