97-008

Response February 28, 1997

January 24, 1997

Greetings,

Recently, our firm began doing accounting work for the COMPANY A Railroad, here in XXXXX City. I was astonished to find that the railroad had been paying sales tax on train fares and concession sales. I had always assumed that the railroad was exempt under title 9, Chapter 3, part 311 which states that “the authority and its operators are exempt of the tax commission that this means that the Authority is only exempt form paying sales and use tax, but not from collecting. However, Part 1 of title 59, chapter 12, deals specifically with tax collection. Does the above citation refer to all of chapter 12 or only part of it? Please reply by mail phone or fax.

Respectfully,

NAME

February 28, 1997

NAME

ADDRESS

CITY STATE ZIP

Advisory Opinion - Sales tax exemption for COMPANY A Railroad

Dear NAME,

We have received your request for an interpretation of the sales tax exemption set out in section 9-3-311 of the Utah Code. This section can be read narrowly to exempt the Authority from sales tax on its purchases, or it can be read broadly to exempt the Authority on both its purchases and its sales. After reviewing the legislative history of this exemption. We believe the legislature intended the broader interpretation.

In section 9-3-302, the Authority is identified as a governmental entity. As a governmental entity, the Authority is exempt from paying sales tax on its purchases. The legislature apparently enacted section 9-3-311 to provide a broader exemption than the exemption that would exist in the absence of section 9-3-311. We conclude, therefore, that the Authority’s sales are also tax exempt.

Charges for ride fares and other items sold by the Authority are exempt. We caution you that sales made by an independent concessionnaire do not qualify for this exemption, even if the concessionnaire pays the Authority a fee or commission.

Any refund of sales tax on past sales is due to the Authority’s customer who paid the tax, and not to the Authority itself. The customer would look to the Authority for the refund, and the Authorit, in turn, would request reimbursement of refunded tax from the Tax Commission.

Please let us know if you have other questions.

For the Commission,

Joe B. Pacheco,

Commissioner