96-169
Response
November 21, 1996
Request
Utah
State Tax Commission
Sales
& Use Tax
Advisory
Committee
Request
for Advisory
He
are hereby requesting a written confirmation, faxed to #####, regarding:
1) Should
this company charge sales tax to their clients?
2) If
“Yes,” what about out-of-state; should Utah Sales Tax be charged, or the sales
tax for the state in which the client is located be charged? (We have an
Invoice that needs to be mailed ASAP)
This
company takes paper documents (such as Architectural or Engineering Documents, Prints
and Plans) and scans them into the computer to create an “Electronic File.”
Sometimes the files are manipulated for different usage or software
compatibility. The client receives back
to them either a disk CD or “modemed” electronic files, and possibly a printed
copy of what is on the above stated electronic data/media storage, along with
the original paper documents. As a
standard they do not resell this electronic information. When applicable we retain the copyright on
the said electronic files.
The
Utah State Tax Commission has been called on numerous occasions to ask whether
or not sales tax should be charged, and every time there has been a different
answer. Today has been the first
mention of this Advisory Committee.
This seems to be a very “gray” area as to whether or not we are
classified as a “Service” company, such as an architect or engineering firm
would be.
If
you need any further information or clarification of anything, please do
not hesitate to call, as we are well aware this is a confusing industry. (There are only about ten (10) companies in
the Western United States that are close to doing what we do, and even
then, they are not exactly the same).
I
look forward to a rapid response, whereas, our billing is on hold until we hear
from you. I can be reached at #####, FAX #####.
Sincerely,
XXXXX
XXXXX
XXXXX
Advisory
opinion - sales tax on services to make electronic files.
We have received your request for an
opinion as to the application of sales tax to charges to scan drawings or other
documents for the purpose of making an electronic copy of the drawings or
documents. Under Utah Administrative
Rule R865-19S-92, the sale of computer- generated output is taxable if the
primary object of the sale is the output and not the services rendered in
producing the output.”
Computer-generated output may come in many forms, including paper,
discs, tapes or other tangible media, such as a physical prototype. It may also come in the form of
computer-readable instructions that may be downloaded from one computer to
another. Unlike the design or
consulting services sold by an architect or engineer, your company sells
taxable computer-generated output.
If you sell your product in
interstate commerce, the sale is not subject to Utah sales tax. An interstate sale is a transaction in
which:
1. the seller is bound by express terms of the
transaction to make delivery across state lines,
2. the out-of-state delivery is essential and
not incidental to the sale, and
3. the seller actually physically delivers the
item outside of Utah.
If you make a sale in interstate
commerce, the transaction may be subject to sales or use tax in another
state. Check with the taxing authority in
that state to determine your responsibilities in that regard.
Please let us know if you have other
questions.
For
the Commission,
Joe
B. Pacheco,
Commissioner