95-038
Responses
July 13, 1995, July 13, 1995 and July 27, 1995
Request
TO: Val Oveson, Tax
Commission Chairman
FROM: XXXXX
THROUGH:
DATE: July 11, 1995
RE: Sales Exempt
Denial; Convention Correspondence
The XXXXX requested sales tax exemption as a religious or charitable institution.
The XXXXX is a nonprofit organization qualified under IRC Code section
501(c)(4). Because the sales tax exemption is limited to section 501(c)(3)
qualified entities, I had to deny their application.
The XXXXX is protesting the denial based on a letter they received from
the Salt Lake Convention & Visitors Bureau (owned by County but privately
managed - XXXXX). The bureau's XXXXX - listed as one of the SALT LAKE
INCENTIVES: "Utah tax exemption on master account." Please refer
to page 13 of the attached, partially copied letter.
XXXXX, the XXXXX national director, assured me that Utah could not have
been selected for it's August 10th convention site without exemption from sales
and related taxes. Apparently, Utah is the first state to deny them sales tax
exemption.
I feel XXXXX has a legitimate grievance. The XXXXX is a bona fide
nonprofit organization; it arranged the Utah convention site relying on
information it reasonably expected to be accurate and authoritative.
Could the Utah State Tax Commission authorize a for-this
convention-only exemption?
Dear XXXXX,
We recently received an application for Sales Tax Exemption Number from
the XXXXX. The application was denied because the organization does not qualify
as a religious or charitable organization. XXXXX, the association's president,
asked us to make an exception because the Salt Lake Convention and Visitors
Bureau represented to the organization that they were eligible for the
exemption. That information played a part in their decision to book the
convention in Salt Lake. Now they find themselves liable for sales tax.
We want to make sure you have good information about this sales tax exemption.
Only organizations which are recognized as religious or charitable
organizations under section 501(c)(3) of the IRS code qualify for this
exemption. The XXXXX is recognized as a 501(c)(4) organization. As a rule, the
officers or representatives of a non-profit organization should know whether
they are a 501(c)(3) organization. If you find that the organization's
representatives do not know their exempt status, please refer them to the Tax
Commission for help.
We are in the process of publishing new sales tax guidelines for the
tourist industry. We will be sure to include this information in that pamphlet.
For the Commission,
Alice Shearer
Commissioner
XXXXX
RE: Advisory Opinion - Request
for Sales Tax Exemption
Dear XXXXX,
XXXXX of our Internal Customer Support unit informed us of your request
for a sales tax exemption and he asked for an advisory opinion on your behalf.
As we understand the facts of your situation, the Salt Lake Convention and
Visitors Bureau represented to you that the XXXXX qualified for a sales tax
exemption as a charitable organization. That representation played a part in
your decision to hold your convention in Utah. Upon filing your application for
an exemption number, you learned that your organization is not eligible for the
exemption.
Under Utah Administrative Rule R865-19S-43, only organizations
recognized by the Internal Revenue Service as exempt from tax under section
501(c)(3) of the Internal Revenue Code qualify for this exemption. A 501(c)(4)
organization, such as yours, does not qualify. Absent compelling grounds for
doing so, the Commission has no discretion to ignore that administrative rule.
Although we recognize that the XXXXX Division Association has been
disadvantaged by the Convention and Visitors Bureau's erroneous
representations, that alone does not provide sufficient grounds to depart from
the rule.
The Tax Commission cannot put itself in the position of being bound by
the misrepresentations of other agencies. This rule safeguards the interests of
the public which expects evenhanded and consistent application of our tax laws.
Although we work closely with the Salt Lake Convention and Visitor's Bureau to
help its employees understand sales tax law, they are not so well versed on tax
issues that we view them as authorities on tax matters. We cannot accept
responsibility for their errors.
It is our opinion that the XXXXX does not qualify for a sales tax
exemption as a charitable organization. It is also our opinion that we have no
authority to grant the exception requested under the circumstances presented.
This opinion is based only on the facts outlined above and does not
extend to facts which are not before us. 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.
We will alert the Salt Lake Convention and Visitor's Bureau to this
situation. Hopefully, others will not find themselves in the same situation in
the future.
For the Commission,
Alice Shearer
Commissioner
XXXXX
RE: XXXXX
Dear XXXXX,
Thank you for locating the information on the XXXXX status. My staff’s
processing the association's application for exemption, and we have notified
XXXXX that we will fax the exemption information to him directly. We appreciate
your efforts in resolving this matter.
I am enclosing copies of the relevant statute and administrative rules
for your information. You may find them useful as exemption issues come up in
the future.
Sincerely,
Alice Shearer
Commissioner
FROM: XXXXX
DATE: 7-28-95
PAGES: 2
FAX NUMBER:
organization of the type described in section 509(a)(1) and
170()(1)(A)(vi).
Grantors and contributors may rely on this determination unless the
Internal Revenue Service publishes notice to the contrary. However, if you lose your section 509(a)(1)
status, a grantor or contributor may not rely on this determination if he or
she has in part responsible for; or was aware of, the act or failure to act, or
the substantial or material change on the part of the organization that resulted
in your loss of such status, or if he or she acquired knowledge that the
Internal Revenue Service had given notice that you would no longer be
classified as a section 509(a)(1) organization.
If we have indicated in the heading of this letter than an addendum
applies, the addendum enclosed is an integral part of this letter.
Because this letter could resolve any questions about your private
foundation status, please keep it in your permanent records.
If you have any questions, please contact the person whose name and
telephone number are shown above.
Sincerely yours,
XXXXX