95-058
Response
September 15, 1995
Request
XXXXX
Mr. Val Oveson, Chairman
Utah State Tax Commission
210 North 1950 West
Salt Lake City, Utah 84134
Re: Request for an advisory
opinion
Dear XXXXX:
XXXXX, a California corporation, has offered to purchase from the
XXXXX, a California corporation, a wholly owned subsidiary of XXXXX, certain
assets owned by XXXXX and located at the XXXXX plant at XXXXX, XXXXX,
Utah. XXXXX would like to receive an
advisory opinion from the Utah State Tax Commission regarding the application
of the administrative rule on the issue of isolated or occasional sales, as it
would apply to the transaction described in this letter.
The assets that XXXXX will purchase from XXXXX are categorized, as
follows: machine tools, factory support equipment, customer program (product)
specific tooling, and inventory. The
approximate purchase price for assets is $$$$$. The assets XXXXX will purchase represents approximately $$$$$ of
the total assets currently located at the XXXXX facility. XXXXX will lease approximately 60,000 square
feet of manufacturing and office space at the XXXXX facility.
XXXXX intends to hire approximately 110 employees, from the employees
currently employed by XXXXX.
XXXXX and XXXXX are attempting to close this transaction before
September 30, 1995. XXXXX will expedite
the supply of any additional information you may require, at your request.
Thank you for the advise and rapid response already displayed. XXXXX is extremely pleased to have the
opportunity to establish operations in Utah and we feel that our presence will
be a positive benefit to the State.
Sincerely,
XXXXX
XXXXX
RE: Advisory Opinion - Sales tax implications
for XXXXX purchase of used business and manufacturing equipment.
Dear
XXXXX,
We
have received your request for an advisory opinion regarding the sales tax
liability attached to your proposed purchase of a portion of XXXXX Systems
business property and manufacturing equipment.
We find as follows:
Under
section 59-12-104(14) of the Utah Code, isolated or occasional sales by persons
not regularly engaged in business are exempt from sales tax. Utah Administrative Rule R865-19S-38 (D)
construes the term "business" as an enterprise engaged in selling
tangible personal property or taxable services. Read together, these regulations exempt an isolated sale when it
is made by a person who is not pursuing his regular course of business of
selling tangible personal property. The
sale by a business of its used fixtures, machinery, and equipment is considered
an isolated or occasional sale unless the sale is one of a series of sales
sufficient in number to indicate the seller deals in the sale of such
items. Utah Admin. R.
R865-19S-39(E). This exemption does not
apply to the sales of vehicles which are required by Utah law to be titled or
registered. Utah Admin. R.
R865-19S-39(C).
From
the facts presented in your letter.
XXXXX purchase of business property and equipment from XXXXX appears to
qualify for this exemption so long as XXXXX is not in the business of selling
this type of property. If we can answer
any other questions, please let us know.
For
the Commission,
Alice
Shearer
Commissioner