96-084
Response
May 23, 1996
Request
UTAH
STATE TAX COMMISSION
210
NORTH 1950 WEST
SALT
LAKE CITY
UTAH
84134
ATTENTION:
XXXXX
Dear
XXXXX
Re:
Responsibility for Remittance of Sales or Use Tax
This
letter seeks to clarify our position as a vendor in our responsibility for the
collection and remittance of sales/use tax. The following is the situation:
1. We are a out-of-state vendor registered to do business
in the State of Utah, filing regular sales tax returns.
2. We sold some equipment from our Denver, Colorado
location to our a customer who is registered to do business in the State of
Utah. The customer is doing a job there and the equipment purchased are NOT for
resale purpose.
3. Since the customer is taxable, we wanted to charge him
the Utah sales tax. However, he has given us a letter claiming that he will be
responsible for remitting the use tax to Utah State Tax Commission. Upon
further pursuit, the customer provided us with a copy of his Utah Sales/Use Tax
Registration Certificate.
4. On March 4, 1996, upon my inquiry, I was advised by
XXXXX of your Department that as a vendor, we should not report the transaction
as non-taxable just based on the customer's letter. He advised that we should
get the customer to obtain an exemption number from the Utah State Tax
Commission. We then pointed out that the customer is NOT an exempt customer and
therefore may have problem applying for such a number. It was then clarified
that the customer could apply for this number giving the reason that he will
handle the use tax himself Upon our mention that the customer already had a
sales/use tax registration number, we were advised that the exemption number
required is different from the sales/use tax registration number.
5. We took your Department's advice back to the customer
who then spoke with XXXXX recently. The customer had now got back to us that
they were told this time by your Department that the Utah Sales/Use Tax
Certificate is good enough support for us to report the transaction as non-taxable.
6. I have spoken to XXXXX today to get a tax position on
our situation. I had given him our customer's name as XXXXX of XXXXX with the
Sales Tax License and/or Use Tax Certificate of Registration Account No. XXXXX.
Based
on the above information, may we have a firm and final opinion from your
Department as to whether we can accept in good faith the customer's Certificate
above, and report the transaction as non-taxable. We want to be sure that we
are not liable for any Utah sales that we did not collect and in the event the
customer fails to report this taxable purchase and remit the use tax.
We
would appreciate your prompt reply so that we can settle this matter with our
customer.
Thank
you in advance for your assistance.
Respectfully,
XXXXX
XXXXX
Re: Advisory Opinion - sales tax on purchases by XXXXX
Dear XXXXX
We have received your request for an opinion as sales to XXXXX of
XXXXX. As we understand the
transaction, XXXXX of XXXXX purchased scaffolding and other items of tangible
personal property from your company for delivery to their job site in
Utah. XXXXX of XXXXX is not claiming an
exemption of any type, but they have declined to pay the use tax to you, and
they have informed you that they will accrue the use tax and remit it
themselves. You are concerned about the
type of documentation that we require to relieve your company of liability for
this tax. We find as follows:
Utah does not have a direct-pay option under which XXXXX of XXXXX can self-accrue
use tax and remit it directly to the Tax Commission. Because your company has a Utah sales tax license, XXXXX of XXXXX
is required to pay the use tax to your company. Likewise, your company is responsible for collecting, reporting
and remitting sales and use tax on items sold to Utah customers.
However, because of the attention that has been focused on this
particular transaction, we will make an exception if XXXXX of XXXXX continues
to refuse to remit the use tax to you.
You may place their signed letter in your tax records as evidence that
XXXXX has a Utah sales tax license and that XXXXX certifies it will remit the
use tax directly to Utah. The document
should include their tax license number and the invoice number or some other
means to linking the letter to the sales record. So long as you accept the letter in good faith and keep it in
your tax records, we will not hold you responsible for any use tax due on this
transaction.
We understand that you made several calls to the Tax Commission and
received confusing advice. We apologize
for the inconvenience, and we hope this letter will clear up the matter. Please let us know if we can be of further
assistance.
For the Commission,
Alice Shearer,
Commissioner