96-130
Responses
August 27, 1996, December 2, 1996 and December 6, 1996 COMMISSION
Request
July
22, 1996
Utah
State Tax Commission
210
North 1950 West
Salt
Lake City, UT 84134
Dear
Sir:
Our
company provides ski slope grooming equipment and repair services to ski resorts
in the state of Utah. It is our
understanding that the Ski Resort Sales Tax Exemption that became effect July
1, 1996 only includes the sale of ski grooming tractors and attachments (blade
blowers, tillers) either new or used.
The exemption does not include the sale of repair parts or billable
service labor.
The
above is our understanding of what is exempt under Senate Bill 275. However, we have customers who believe that
the above exemption is also applicable to the purchase of replacement parts
(spare parts).
With
this letter, XXXXX formally requests a ruling in writing that will address the
above issues in detail. This would
ensure that we are following the rules as they were intended and that we will
have something in writing to provided to our customers when a conflict arises.
Thank-you
in advance for your cooperation in clarifying the above issues.
Sincerely,
XXXXX
August
27, 1996
XXXXX
Re: purchase of replacement parts for exempt ski resort
equipment
Dear XXXXX,
We
have received your request for an advisory opinion regarding the application of
sales and use tax to purchases of replacement parts for ski resort equipment
and machinery. As you indicated in your
letter, the senate bill did not specifically address replacement parts, so
representatives of the ski industry have asked the Commission to rule on this
issue. The Commission’s decision is
pending the outcome of a similar issue pertaining to manufacturing
equipment. Pending that decision, I
suggest that you treat the sale of replacement parts as taxable. If the Commission arrives at a different
decision in the future, your customers may request a refund at that time.
The
Commission will formally respond to your advisory opinion request after it has
made its final decision on this issue.
In the meantime, if you have questions, please feel free to contact me
at XXXXX.
Sincerely,
XXXXX
December
6, 1996
XXXXX
Advisory Opinion - Exemption for repair or
replacement parts.
Dear XXXXX,
The
Utah State Legislature recently met in special session to discuss the sales tax
exemption for certain purchases by manufacturers. The legislature determined that it would not address the ski
resort exemption during the special session.
Therefore, we offer you the following tax advice based on our
interpretation of the current statutory language.
Section
59-12-104 of the Utah Code exempts from sales tax:
(42)
sales to a ski resort of:
(a) snowmaking equipment;
(b) ski slope grooming equipment; and
(c) passenger tramways . . . .
We interpret this statute to include sales of repair
and replacement parts or equipment that are sold for qualifying uses. Lubricants, fluids and solvents are not
exempt. The exemption extends only to
the purchase of the item, not the labor to repair it. Under Utah law, labor to install or repair an item of tangible
personal property is taxable. If your
company sells repair or replacement parts and performs the repair or
replacement service, please itemize the
charges for labor separately on your bill or invoice.
We
will notify all Utah ski resorts of this decision. Please let us know if we can be of further assistance.
For
the Commission,
Joe
B. Pacheco,
Commissioner
Re: Ski
Resort Sales Tax Exemption
Dear
The
Utah State Legislature recently met in special session to discuss the sales tax
exemption for certain purchases by manufacturers. The question at issue was whether repair and replacement parts
qualify for exemption. A similar
question has arisen with respect to repair and replacement parts for snowmaking
equipment, grooming equipment and tramways.
The legislature significantly
narrowed the manufacturing exemption, but it did not address the ski resort
exemption. The Commission concluded,
therefore, that a broad interpretation of the ski equipment exemption is the
only legally defendable position. The
legislature may narrow the ski equipment exemption during the up coming session
to make it consistent with the manufacturing exemption. In the meantime, we offer you the following
tax advice pertaining to purchases of this nature:
Section 59-12-104 (42) of the Utah Code exempts from
sales tax:
sales
to a ski resort of:
(a) snowmaking equipment;
(b) ski slope grooming equipment; and
(c) passenger tramways . . . .
Sales of repair and replacement parts or equipment
for qualifying equipment are also exempt.
Lubricants, fluids and solvents are not considered equipment and they
are not exempt.
The
exemption extends only to the purchase of the item, not the labor to install or
repair it. Under Utah law labor to repair
an item of tangible personal property is taxable. Labor to install an item of tangible personal property in
connection with other tangible personal property is also taxable. If the vendor sells and installs or repairs
qualifying equipment, taxable labor changes be separately stated on the bill or
invoice.
Please
contact us if you have questions about this exemption.
For
the Commission,
Joe
B. Pacheco,
Commissioner