97-033
Response
June 13, 1997
May
15, 1997
VIA
FEDERAL EXPRESS
Ms.
Anna Anderson
Audit
Supervisor
Utah
State Tax Commission
Internal
Customer Support
210
North, 1950 West
Salt
Lake City, Utah 84134
Dear
Ms. Anderson:
Please confirm the opinion that you
provided us over the telephone that the services provided by our client to a
financial institution are not subject to tax.
Our client, a corporation
headquartered outside of Utah, is negotiating a contract to provide certain
back office services to a financial institution. Under the contract, our client
will provide the following services on behalf of the financial institution:
Sorting checks written by depositary
customers of the financial institution;
Preparing depositary account statements with
financial data provided by the financial institution; and
Distributing the statements and cashed checks
to the financial institution's customers.
Initially, our client will perform the
majority of its services at the bank's print and statement preparation centers,
one of which is located in the State of Utah. In the future, our client may
elect to perform some or all of its services at outside locations.
Please confirm that the services to
be provided by our client would not be subject to the sales and use tax
because our client will be acting as a contract employee by providing what is
essentially a banking service not subject to sales and use tax.
We would appreciate a response at
your earliest convenience because the parties have not yet finalized the
contract and may need to revise it based on your ruling. Please send any
correspondence to me at the above address. Thank you for ruling on these
issues.
Very
Truly Yours,
NAME
June
13, 1997
NAME
ADDRESS
CITY
STATE ZIP
Advisory
Opinion - Application of sales tax to charges for bookkeeping, banking
functions and other office services.
Dear
NAME,
Your letter to XXXXX was forwarded to us for a formal advisory
opinion. Your letter does not provide
adequate description of the services that your client will provide to financial
institutions. Therefore, we offer the
following general tax guidance. If this
response does not correctly address
your concerns, please contact us again with a more detailed description of your
client’s transactions.
Charges paid for bookkeeping or
accounting services are not taxable.
However, in our experience, the kind of services that financial
institutions typically purchase from outside vendors are printing and mailing
services. That is, the outside vendor
gathers financial records from the institution, uses computer software to
manipulate the information, prints customer statements and either returns the
statements to the financial institution for mailing or mails the statements on
behalf of the institution. If this is
the kind of service that your client is performing, the charges are taxable. Utah sales tax applies to charges for printing
and to services in connection with the sale of printed material (such as
cutting, folding, binding, addressing, and mailing). Actual postage charges are not taxable. The sale of computer generated output or other items of tangible
personal property are taxable in Utah.
For instance, if your client were to produce or acquire mailing lists or
statistical reports , either in electronic or printed form, for sale to
customers, the sales may be taxable.
Please let us know if you have other
questions.
For
the Commission,
Joe
B. Pacheco,
Commissioner