96-140
Response October 9, 1996
Request
September 9, 1996
Commissioner W. Val Oveson
Utah State Tax Commission
210 North 1950 Wes
Salt Lake City UT 84134
Dear Commissioner Oveson:
RE: Sales
Tax Exemption Certificates
Effective July 1, 1996 Utah Code Section 59-12-102
(8) was amended to include the definition for “Industrial use” of fuels, gas
and electricity. The Commission also
revised the sales tax exemption certificate (Form TC-721 Rev. 6/96) to include
this new definition of the exempt usage of natural gas (see attached).
The reference on the back of Form TC-721 states:
“NOTE TO PURCHASER:-- Keep a copy of this certificate for your records. You are responsible to notify the vendor of
cancellation, modification, or limitation of the exemption you have
claimed. Our interpretation of this
language is that it is the responsibility of the purchaser to notify the vendor
if their exempt status has changed. We,
therefore, believe that the current exemption certificates we have on file for
these customers are still valid.
We are concerned, however about the number of our
customers who are aware of this change in the tax code. The Tax Commission issued Tax Bulletin 6-96
referencing this code change, but the bulletin did not specifically reference
exemption certificates and not all taxpayers receive the Tax Bulletins.
Our question is whether this amendment to the code
requires XXXXX, as the vendor, to request a new sales tax exemption certificate
from our current tax exempt industrial customers.
We would appreciate guidelines from the Tax Commission
in this area.
Sincerely,
XXXXX
XXXXX
Advisory Opinion - Sales Tax Exemption Certificates
Dear XXXXX,
We
have received your request for guidance concerning exemption certificates
maintained on file by XXXXX. You are
concerned that some of your customers who claimed the fuel exemption in the
past may no longer be eligible. We
advise as follows:
State
law requires each vendor who makes sales of items or services that are subject
to sales tax to obtain an exemption certificate from a purchaser claiming an
exemption. §59-12-106 Utah Code
Ann. If the exemption certificate is
accepted in good faith, it releases the vendor from liability for uncollected
sales tax. Your company has apparently
maintained one master exemption certificate for each customer claiming the fuel
exemption. As a routine matter, we
suggest that new exemption certificates be obtained every three years. (See Tax Bulletin 17-87.) We also recommend
that you renew a master exemption certificate whenever you are aware that a
customer’s business activities have changed or whenever changes in the law are
likely to impact that customer’s exempt status. However, so long as you have an exemption certificate on file,
you are not liable for an exemption claimed in error. Instead, we will look to the party claiming the exemption for any
sales tax due.
Please
let us know if you have other questions.
For
the Commission,
Alice
Shearer,
Commissioner