97-039

Response July 10, 1997

REQUEST LETTER

June 10,1997

REQUEST FOR ADVISORY OPINION

Re: Sales Tax Exemption for purchase of Manufacturing Equipment COMPANY A (dba AKA) Sales Tax License Number #####

Dear Commissioner:

COMPANY A is an XXXXX Corporation licensed to do business in Utah and publishes the COMPANY A, a daily newspaper in CITY, Utah. As a publisher, XXXXX has a SIC Code of ##### which designates it as a manufacturing facility. XXXXX, therefore, qualifies for the Sales Tax Exemption for Purchase or Lease of Machinery and Equipment for use in the manufacturing process.

Beginning August 1,1998, XXXXX will be acquiring new press equipment replacing the old press for a value of (for purposes of this opinion) $$$$$. Please confirm to XXXXX in a formal Advisory Opinion, that this purchase of replacement manufacturing equipment will be 100% exempt from Utah Sales or Use Tax.

Call me at ##### if you need additional information.

Sincerely,

NAME

RESPONSE LETTER

July 10, 1997

NAME

ADDRESS

CITY STATE ZIP

Advisory Opinion - Replacement equipment

Dear NAME

We have received your request for sales tax information pertaining to the purchase of a new press. We offer the following tax guidance:

A 100% sales tax exemption applies to machinery purchased or leased for “new or expanding” operations. A partial exemption applies to normal operating replacements. Normal operating replacements include machinery purchased and used for the same or a similar function as the machinery that it replaces. From the information provided in your letter, the press replaces old equipment, so it is considered a normal operating replacement.

The partial exemption for normal operating replacements increases each year until it equals a 100% exemption beginning July 1, 1998. If your company purchases the press after that date, you will be eligible for the 100% exemption.

You will find a copy of Tax Bulletin 17-96 and Utah Administrative Rule R865-19S-85 enclosed, as well as copies of two proposed amendments to the rule that are currently in public comment. These materials more fully explain the manufacturing exemption rules. Please let us know if you have other questions.

For the Commission,

Joe B. Pacheco,

Commissioner