96-039
Response
February 26, 1996
Attention:
Alice Shearer
Commissioner
Re.:
Advisory Opinion: XXXXX for Sales/Use Tax Record-keeping Requirements.
Dear
Commissioner Shearer:
With
respect to the above referenced matter, thank you for your determination letter
dated December 8, 1995. We are very
pleased with the determination of the Commission.
As
you know, the December determination letter assumes the resolution of various
issues that were addressed in earlier correspondence from the Commission. Since we believe it is important for
taxpayers to refer to a single document to find all the Commission's views, we
offered to draft for your review such a determination letter. Following a telephone message left for you
and a follow-up conversation with XXXXX of your Office, you agreed to this
idea. Our draft is attached here.
We
hope that you find that this draft fairly reflects guidance presented by the
Commission throughout our correspondence.
For the most part, the draft follows the outline of the January 8
letter, although points raised previously by the Commission in other letters
are incorporated as well.
We
would appreciate it if you would call us to let us know your reaction to the
draft. Please call me at your earliest
convenience at XXXXX. Once again, we are very grateful for the attention that
you and your staff have given to our ruling request and we appreciate the
opportunity to present this draft to you.
Very
truly yours,
XXXXX
Tax
Attorney
XXXXX
Dear
XXXXX:
We
have reviewed your request for a ruling that the XXXXX are an acceptable
substitute for vendorenerated invoices for purposes of demonstrating purchaser
compliance with Utah's sales/use tax laws.
A
taxpayer is required to maintain sufficient sales tax documentation to
demonstrate the following:
1)
Transaction date (usually the purchase date for sales tax purposes and the
delivery date for use tax purposes).
2)
Vendor.
3)
Purchaser (Corporate Client/Cardholder).
4)
Total amount of sale and total amount of sales or use tax paid.
5)
Sufficient item detail to distinguish between taxable and nonaxable items.
6)
Delivery address.
7)
FOB information.
8)
After-sale adjustments for discounts, returns, allowances, etc. must be
traceable back to the original transaction.
As
we understand your system, your software will generate a Sales Tax Report based
on (1) information residing in your database; and (2) information supplied
electronically by the vendor at the point of sale. The information residing in your database will automatically
identify the vendor and the purchaser (items 2 and 3 above). The system allows the vendor to input the
total amount of the sale and the total amount of tax (item 4); the transaction
date or the processing date (item 1); and a shipping address zip code (which
may only partially satisfy item 6); and a 160 character free text field that is
used for description (item 5). At the
Cardmember's direction, the vendor can input additional information in a
optional field, called the Cardmember Reference field.
You
indicate that your system identifies the delivery point of shipped items by
city, state and zip code (based on either the vendor's zip code for “take”
transactions or the “ship to” zip code in “ship to” transactions). This information will not be sufficient to
identify the precise Utah taxing jurisdiction when there is more than one
taxing jurisdiction in a single zip code.
However, if the taxpayer (your corporate client) implements a policy
requiring that all card purchases be shipped to the mailing address, the policy
will satisfy Utah audit requirements so long as adherence to the policy is
properly documented. In the alternative, separate documentation of delivery
address must be maintained. (Item 6.)
After-sale
adjustments for discounts, returns, allowances, etc. must be traceable back to
the original transaction. The use of
the same “supplier reference number” for both the original transaction and any
subsequent adjustments for discounts, returns, allowances, etc. is acceptable.
(Item 8.)
You
indicate that in order to support your system's tax logic, nonaxable and
taxable purchases are to be processed as separate transactions i.e., no “mixed” purchases of taxable and
nontaxable items in the same transaction.
This is sufficient to meet the requirement of item 5 above. Note that
without this segregation, the total charge of any “mixed” transaction
(containing taxable and nontaxable charges) would have to be taxed, unless
separate documentation were retained by the taxpayer.
Based
on these facts and on the provisos contained in this letter, the Sales Tax
Report provided by your system will meet our data reporting requirements
provided that the vendor actually supplies the information described. If the Report does not adequately document the
required information, the taxpayer (i.e., your corporate client) will
have to supplement the report with evidence of compliance to avoid
assessment. Obviously, if there are
deviations from the facts provided here, this opinion may be negated.
Nothing
in this opinion is to be consi:rued as relieving the vendor of any of its tax
collection and recordeeping responsibilities as outlined under Utah law and
administrative rules.
For
The Commission,
Alice
Shearer
Commissioner
XXXXX
RE:
Advisory Opinion Purchasing Card Sales Tax Reports
Dear
XXXXX
We
have reviewed your request for a ruling that the XXXXX are an acceptable
substitute for vendorenerated invoices for purposes of demonstrating purchaser compliance
with Utah's sale and use tax laws. We
find as follows:
A
taxpayer is required to maintain sufficient sales tax documentation to
demonstrate the following:
1.
Transaction date (usually the purchase date for sales tax purposes and delivery
date for use tax purposes).
2.
Vendor.
3.
Purchaser (Corporate Client/Cardholder).
4.
Total amount of sale and total amount of sales or use tax paid.
5.
Sufficient item detail to distinguish between taxable and nonaxable items.
6.
Delivery address.
7.
FOB information
8.
After-sale adjustments for discounts, returns, allowances, etc. must be
traceable back to the original transaction.
As
we understand your system, your software will generate a Sales Tax Report based
on (1) information residing in your database, and (2) information supplied
electronically by the vendor at the point of sale. the information residing in
your database will automatically identify the vendor and the purchaser (items 2
and 3 above). The system allows the
vendor to input the total amount of the sale and the total amount of the tax
(item 4), the transaction date or the processing date (item I ), a shipping
address zip code (which may only partially satisfy item 6), and a 160 challcter
free text field that is used for description (item 5). At the Cardmember's direction the vendor can
input additional information in an optional field, called the Cardmember
Reference field.
You
indicate that your system identifies the delivery point of shipped items by
city, state and zip code (based on either the vendor's zip code for “take”
transactions or the “ship to” zip code in “ship to” transactions). This information is not sufficient to
identify the precise Utah taxing jurisdiction when the zip code covers more
than a single taxing jurisdiction.
However, if your corporate client implements a policy requiring that all
card purchases be shipped to the purchaser's mailing address, the policy will
satisfy Utah audit requirements to long as adherence to the policy is properly
documented. In the alternative,
separate documentation of delivery address must be maintained (item 6).
After-sale
adjustments for discounts. returns, allowances, etc. must be traceable back to
the original transaction. The use of
the same unique “supplier reference number” for both the original transaction
and any subsequent adjustments for discounts, returns, allowances, etc. is
acceptable (item 8).
You
indicate that in order to support your system's tax logic, nonaxable and
taxable purchases are to be processed as separate transactions -- i.e., no
“mixed purchases of taxable and nonaxable items in the same transaction. This is sufficient to meet the requirement
of item 5 above. Note that without this
segregation, the total charge of any “mixed transaction” (containing taxable
and nontaxable charges) is taxable unless separate documentation is retained by
your corporate client.
Based
on these facts and on the provisos contained in this letter, the Sales Tax
Report provided by your system will meet our data reporting requirements
provided that the vendor actually supplies the information described. If the Report does not adequately document
the required information, your corporate client must supplement the report with
evidence of compliance to avoid assessment.
Obviously, if there are deviations from the facts provided here, this
opinion may be negated.
Nothing
in this opinion is to be construed as relieving the vendor of any of its tax
collection and record-keeping responsibilities under Utah law.
For
the Commission,
Alice
Shearer
Commissioner