95-046
Response
August 30, 1995
Request
To:
Alice Shearer
Date:
8/2/95
Subject:
Distribution of Sales to the Point of Service
I
received a call from XXXXX at XXXXX.
She has become aware of the fly fishing guide business and has realized
that the sales take place in Park City and Salt Lake City but the service
rendered is taking place in XXXXX. She
is also aware of the XXXXX sales for concerts in XXXXX County and XXXXX tickets
that are sold in a location other than where the service is performed.
Do
we have a policy on this issue? Could
we write an advisory opinion on the issue?
Would it be okay to have XXXXX call XXXXX back and talk about the issue? XXXXX’s number is XXXXX.
Thanks,
Val
Oveson
XXXXX
XXXXX
Clerk/Treasurer
XXXXX
Re:
Advisory Opinion - Distribution of Sales Tax Charged on Fly Fishing Guide
Services Sold Outside XXXXX
Dear
XXXXX,
You
requested an advisory opinion as to whether XXXXX is entitled to revenue from
the sales tax collected on fly fishing guide services when the activity takes
place in XXXXX, but the sales takes place outside XXXXX. After meeting with you and reviewing state
law on this issue, we offer the following guidance:
1. Under Utah Administrative Rule R865-12L-5,
when a retailer has only one place of business regardless of where the service
is performed the goods are delivered.
Therefore, if the guide services are sold from a shop doing business
only in Salt Lake, the sales tax is reported at that location, even if the
actual activity takes place in XXXXX.
An
exception to this rule arises if the vendor uses a third party agent to market
his product or services. For example,
when the XXXXX in Provo sells tickets to a XXXXX game in Salt Lake City, the
sales tax is reported by the XXXXX as if the sale took place in Salt Lake
City. In that case, the XXXXX is
selling the ticket, and XXXXX is merely an agent. Applying this exception to fly fishing in XXXXX, if a fly fishing
guide who has a fixed place of business in XXXXX pays a commission to a third
party in Salt Lake to sell the guide’s services in XXXXX, the sales tax must be
reported by the fly fishing guide in XXXXX.
However, the opposite is true if the guide is acting as a contract
employee of a Salt Lake City tackle shop.
In that case, the tackle shop sells the service which is merely
delivered by the guide in XXXXX, and the tackle shop must report the sale in Salt
Lake City.
Under
R865-12L-5 if the seller has more than one place of business in Utah and two or
more such locations participate in the sale, the sale occurs at the place of
business where the tangible property is located. Although the language of the rule does not address taxable
services, it is logically extended to the location where the service takes
place.
Assume
that a Salt Lake tackle shop has a place o business in Salt Lake and a business
licence in XXXXX. If the entire sale
takes place in the Salt Lake tackle shop, the sale must be reported in Salt
Lake even if the service is delivered in XXXXX. On the other hand, if the reservation takes place in the Salt
Lake tackle shop, but the money is exchanged and the service is delivered in
XXXXX, the sale should be reported in XXXXX.
3. Utah Administrative Rule R865-12L-9 states
that when the seller has no fixed place of business and makes sales at various
locations within the state, the seller is required to report all sales in the
county where they are made. For
instance, assume a guide does not have a fixed place of business. Instead he arranges his sales through third
party agents at a tackle shop in Salt Lake City, but he conducts business on
the shore at Flaming Gorge and in other locations around the state. He must report each sale in the county where
it took place.
4. The sales tax is distributed in the
following manner; 50% is distributed on the basis of point of sale as reported by
the seller, and the other 50% is distributed statewide on the basis of
population.
We
suggest you check your sales tax report against the business licence in your
county. If you find that fishing guides
or tackle shops licenced to do business in your county are not reporting sales
tax in your county, inquire into their business arrangements to determine if
they are reporting sales tax properly.
We
hope this opinion has clarified XXXXX’s rights with regard to the distribution
of sales tax. If you do not agree with
this determination, you may appeal to the Tax Commission for a formal
hearing. The results of that hearing
will constitute a declaratory judgement and be appealable to the Utah Supreme
Court.
Please
contact us if you have additional questions.
For
the Commission,
Alice Shearer