96-142
Response September 30, 1996
Request
September 4, 1996
Utah Department of Revenue
210 North 1950 West
Salt Lake City, UT 84134
Subject:
Request for an advisory opinion
Dear Madam/Sir,
XXXXX is respectfully requesting an advisory opinion
on the following situation. XXXXX leases
agricultural equipment in Utah and is currently charging sales tax on a truck
scale leased to a livestock producer.
The producer has informed us that neither he nor anybody he knows has
ever paid sales tax on this type of equipment in the past.
The truck scale is laid in a concrete pit with a
deck. Trucks or wagons containing hay
or alfalfa are then driven onto the scale and weighed, thus allowing the
producer to keep track of how much feed he has on hand for his livestock. The scale and feed are used exclusively
within the producers livestock operation and the scale is never used nor is the
feed ever sold in the commercial market.
No grain or any other commodities are weighed with the scale, only his livestock feed, which he
produces for his livestock.
While XXXXX understands that this type of equipment
would be subject to sales tax if used in a commercial operation, we request an
advisory opinion on whether it is taxable if used exclusively within a
producers operation.
If you need any more information or have any
questions please call me.
Sincerely,
XXXXX
XXXXX
Advisory opinion - Application of sales tax to lease
of truck scale used by an agricultural producer.
Dear XXXXX
We have
received your request for an opinion as the taxability of a truck scale by a
Utah agricultural producer. We find as
follows:
Under
section 59-12-104 (21) of the Utah Code, sales of tangible personal property
used or consumed primarily and directly in farming operations are exempt from
sales or use tax if they are used directly in agricultural production. The exemption applies whether the item
retains its character as tangible personal property or if it is converted to
real property upon installation. The
exemption does not cover items used only incidentally in a farming operation or
activities that are not directly involved in production, such as office
supplies or equipment used in storage, sale or distribution of agricultural
products.
The
question before us is whether use of the scale is consider directly related or
merely incidental to agricultural production.
As described, the scale seems to serve a tracking or inventory function
rather than production function.
However, we have in the past allowed the exemption for certain feed
storage facilities or containers.
Because the feed is essential to
agricultural production, the scale qualifies for exemption.
Please
let us know if you have further questions.
For
the Commission,
Alice
Shearer,
Commissioner