98-009
Response
February 17, 1998
REQUEST
LETTER
January
6, 1998
Dear
Sir or Madam:
I
have just spoken to Diana, a Utah Sales Tax agent, who I had presented a sales
tax question to and she could not give me an answer and suggested I write a
letter to the Commissioners requesting a ruling on my tax question.
My
company, COMPANY A, has printed the season tickets for the COMPANY B basketball
team, which is a professional basketball team playing in the N.B.A. Attached is
a copy of the invoice for the printing of these tickets. COMPANY A is
registered with the State of Utah to collect sales tax on shipments made into
the state unless the customer we are shipping to has a valid Utah sales tax
exemption certificate. As you can see on the invoice(Exhibit A), we have
charged sales tax($$$$$) for this shipment of goods.
The
customer, COMPANY B, have deducted the amount of sales tax charged on this
invoice when remitting payment for this invoice. They have attached a
letter(Exhibit B) to their remittance check explaining that the reason they
deducted the sales tax charged was that the tickets were for resale and that
they charge sales tax in the ticket price(Exhibit C) people pay when attending
the games.
The
question I am asking the Utah Sate Tax Commissioners is if this is a valid
deduction on the part of the COMPANY B. Are they exempt from paying the sales
tax charged to them on COMPANY A invoice? If you do rule that they are exempt
from paying the sales tax charged, what
do I need from the COMPANYB to keep on file to validate this deduction in the
event I am audited by the State of Utah?
Please
send your ruling to my attention at the above listed address once a decision is
rendered by the Commissioners so that I may close this open issue with my
customer. Thank you for your immediate attention to this matter.
Sincerely,
NAME
February
17, 1998
NAME
ADDRESS
CITY
STATE ZIP
RE:
Advisory opinion - collecting sales tax on tickets printed and sold to Utah
companies
Dear
NAME,
We have received your request
concerning the collection of sales tax in Utah. From the facts presented, COMPANY A (“COMPANY A”)
prints and sells tickets to Utah companies that provide sporting and
entertainment events. The Utah
companies, in turn, sell these tickets to their customers who use the tickets
to gain access to the events. You
specifically ask whether COMPANY A sales to these Utah companies qualify for the
"property bought for resale" exemption, as found in Utah Code Ann.
§59-12-104(27).
The intention of this exemption
is to assess sales tax to the ultimate consumer of a product and not to those
who buy a product for resale. The Utah
companies sell tickets to their customers to attend a sporting or entertainment
event. As required under Utah Code
Ann. §59-12-103(1)(f), sales tax is collected on the price of admission to
these events.
However, for purposes of the
exemption, these Utah companies do not "resell" the tickets provided
by COMPANY A. Instead, what they are selling is the right
for the ticket holder to attend a sporting or entertainment event. The ticket itself is incidental to this
transaction and is used by the Utah companies only to confirm that their
customer has paid for the right to attend the event. The ultimate consumer is paying five or tens dollars, sometimes
much more, to buy the right to see the event, not to buy a ticket for which the
Utah company paid only a few cents.
Consequently, the Utah companies are the ultimate consumer of the
tickets you print, and sale tax should be collected on your ticket sales to
them.
Please contact us if you have any
other questions.
For
the Commission,
Joe
B. Pacheco,
Commissioner
^^