96-045
Response
March 8, 1996
Request
Re:
Sales & Use tax on Ski School packages
To
Whom It May Concern:
I
am writing to seek a ruling for the treatment of the sale of ski school
packages which include a taxable item.
An example of this would be the sale of a lesson which includes a lunch
or ski rental. It is our understanding,
that the lesson portion of this package is considered non taxable, only if it
is separately identified for the customer.
We
would like to know If the intent of the ruling would be met if packages are
broken down on our price boards at the point of purchase. For example the following, could be
displayed on the price board for the following package.
If
this is not a possibility, I would appreciate any suggestions which you might
have. A large percentage of our Ski
School sales include some item which would be considered taxable. In some instances this item can represent as
little as $5.00 in a $125.00 package.
It seems reasonable that there should be some way of selling these type
packages and complying with the intent of the Administrative Rule. Thank you for your consideration and suggestions.
Sincerely,
XXXXX
Area
Manager
XXXXX
RE:
Advisory Opinion - Sales tax records
Dear
XXXXX,
We
have received your request for information regarding your responsibility for separately
documenting taxable and nontaxable items in your tax records. Specifically, you asked if it is sufficient
to list taxable and nontaxable items on a price board at the point of sale. We find as follows:
Utah
Code Annotated Section 59-12-103 (f) (I) imposes the sales tax on amounts paid
or charged for “admission or user fees for . . . sports activities, or any
other amusement, entertainment, recreation, exhibition, cultural, or athletic
activity.” However, under
Administrative Rule R-865- 19S-33, charges for “lessons, public or private” are
not charges for activities considered to be admission or user fees. In promulgating the rule, the Commission
contemplated lessons, the essence of which is instruction in development of
skills, knowledge, and abilities to perform the related activities. In order to be considered as a “lesson”
under the referenced rule, the instruction must be active. The mere presence or availability of
instructors is not sufficient to meet the criteria allowing exemption. The exemption does not extend beyond
reasonable charges for the instruction provided.
Ski
lessons which meet the criteria describe above are not subject to sales tax if
the charge for ski lessons is separately stated on the invoice or receipt. It is not sufficient post a notice to that
effect on a price board at the point of sale because that price board is not a
part of your permanent tax records.
Furthermore, your customers are entitled to a receipt which specifies
the amount of tax collected on their purchases.
XXXXX
ski resort may take advantage of the sales tax exemption on lessons so long as
the charge for the lesson is separately stated on an invoice, receipt, or cash
register document. The exemptions must
be documented, and the information must be kept with XXXXX's sales tax
records. Otherwise the entire charge is
taxable.
If
you have other questions regarding this matter, please let us know.
Alice
Shearer
Commissioner