96-069
Response
May 3, 1996
Request
XXXXX
Sales
Tax
State
Tax Commission
210
North 1950 West
Salt
Lake City, UT 84134
Dear
XXXXX
I
would like to get an official opinion on sales tax that we are being charged
with regard to certain services provided to us by our vendor XXXXX.
Specifically,
we rent semi-trailers (not the tractors just the trailers) from XXXXX for
storage purposes. XXXXX is charging us sales tax on the delivery of the
trailers which is a separate line item on the invoice (see Exhibit I ). In
addition, XXXXX is charging us sales tax when we have them move the trailers
from one location to another (see Exhibit 2).
Is
this tax treatment correct, or are these particular items exempt from sales
tax? You input would be most helpful. If you need any additional information
regarding these specific issues, please call me.
Sincerely,
XXXXX
XXXXX
Re: Advisory opinion -- sales tax related to
rentals of trailers
Dear
XXXXX
We have received your request for an
opinion regarding the application of sales tax to your company’s rentals of
trailers from XXXXX. We find as
follows:
Sales or leases of vehicles are subject
to sales tax unless the lessee is an “authorized carrier.” An authorized carrier is one who holds
credentials indicating that the vehicle is operated pursuant to the XXXXX
(XXXXX) and the XXXXX (XXXXX). We
assume from the information provided in your letter, XXXXX is not an
“authorized carrier.” However, if XXXXX
is an authorized carrier, it operates these trailers under their operating
authority, and it reports these trailers as part of a qualified fleet for
purposes of XXXXX and XXXXX, the lease to XXXXX is exempt. Nothing in the documents accompanying your
request suggests that XXXXX is an authorized carrier or, if it is, that it is
reporting these trailers as part of their XXXXX and XXXXX qualified fleets. You may wish to check with them for
clarification.
Assuming that the rental of the
trailers is taxable, we view the delivery charge as just part of the taxable rental cost, even if XXXXX itemizes the
delivery charge on the invoice.
Subsequent charges to move the
trailer from one location to another are not subject to taxation if:
1. the trailer is moved by a carrier
operating as a common carrier, and
2. the charges are unrelated to the lease
itself.
A
common carrier is a carrier that holds itself out to the public as engaging in
commercial transportation of people or property for hire. We cannot tell from your letter whether
XXXXX is a common carrier that hauls for others or whether it is just in the
business of selling or renting motor carrier vehicles. Assuming that XXXXX is a common carrier, the
charges for moving the trailers are exempt from sales tax if the charges
represent independent transactions that are completely separate from the rental
transaction.
Please contact us if you have
additional questions.
For the Commission,
Alice Shearer,
Commissioner