95-035

Response July 27, 1995

Request

June 22, 1995

Mr. Val Oveson

Chairman

Utah State Tax Commission

210 North 1950 West

Salt Lake City, UT 84134

Dear Mr. Oveson:

In order to clarify a sales tax issue, we would like to ask for a letter of determination on the following:

We have a XXXXX operation south of XXXXX, Utah. Some of our customers are out-of-state and arrange their own transportation, thus the F.O.B. point would be our plant site. Since the product goes out-of-state are these shipments subject to Utah sales tax? If the same customer asks that we prepay the freight to their out-of-state destination, thus making the F.O.B. point their place of business out-of-state, are these sales subject to sales tax?

If you would give us a ruling on this it would be appreciated.

Yours truly,

XXXXX

July 27, 1995

XXXXX

RE: Advisory Opinion - Applicability of sales tax to intrastate and interstate sales.

Dear XXXXX,

You requested an opinion regarding sales of your own product which may be delivered to the purchaser at your plant, or delivered to the purchaser at an out-of-state destination. We find as follows:

If the sales contract designates the f.o.b. point to be your plant near XXXXX, Utah, title to the product passes to the buyer and the sale is complete at that time. The sale is taxable, even if the buyer subsequently transports the product out of state.

Sales in interstate commerce are exempt from sales tax. A sale qualifies for exemption if it meets all three of the conditions set forth in Utah administrative Rule R865-19S-44 subsection (B) (copy enclosed). A sale of XXXXX product qualifies for exemption as a sale in interstate commerce if your contract with the purchaser requires you to physically deliver the product to an f.o.b. point outside of Utah. The movement across state lines must be an essential, rather than incidental part of the sale.

This opinion is bases upon the information presented in your letter. If additional facts arise which present you with new questions, please feel free to ask for another advisory opinion.

For the Commission,

Alice Shearer

Commissioner