98-035
REQUEST
LETTER
May
6, 1998
By
fax: 801-297-3899
Re:
REQUEST FOR ADVISORY OPINION
COMPANY A
COMPANY
A is a STATE corporation that is doing business in STATE and Utah. The company provides landscape maintenance
services to corporate clients in Utah using local subcontractors. All equipment is provided by the
subcontractors. The company provides
only services and has no employees, no stock of goods and has no office or
place of business in Utah. All billings
and collection are done from the corporation's main office in STATE.
I
have been told by an agent at the Utah State Tax Commission at 800-662-4334,
that revenue from landscaping services is specifically exempted from sales tax
under Utah Tax Code section R865-19S-58, paragraph B. However I received conflicting advice a few weeks earlier.
Please
advise us in writing if the company is subject to Utah Sales Tax or State
Income Tax on the income from Utah Sources.
The company has filed certificate of Authority and Utah Business and Tax
Registration forms and received the account number #####. If you need further information, please
contact me at #####.
Sincerely,
NAME
May
26, 1998
NAME
ADDRESS
CITY,
STATE ZIP
RE: Advisory
Opinion - Utah Tax Liability for a STATE State Landscaping Company
Dear
NAME,
We have received your request for an
advisory opinion concerning the Utah tax liability for a STATE corporation that
supplies landscape services (“landscape company”). Your letter addresses two issues, specifically: (1) does the
company have nexus with Utah for sales and income tax purposes; and (2) does
Utah law impose a sales tax on the services provided by the landscape
company. Let us address each of these
issues separately.
Nexus. The landscape company has a contract with a
bank located in STATE to supply landscape maintenance services to its branches,
some of which are located in Utah. The
landscape company then enters into contracts with Utah-based subcontractors to
actually perform the landscape services at the bank branches located in
Utah. Entering into contracts with Utah
entities and earning revenue from contracts that are carried out in Utah
subject the landscape company to both sales tax and income tax nexus with Utah.
Sales Tax Liability. Utah Admin. Code 865-19S-58(B) does provide
that labor performed on real property is not subject to sales tax. As you have indicated, the services provided
through your subcontractors include mowing lawns, watering the grass, and
planting flowers. As long as these
services are performed on real property, there is no sales tax liability. However, please be aware that sales tax is
due on the purchase of personal property, such as plants or flowers, that may
be bought in connection with the landscape services. We have enclosed for your review the Tax Commission’s Publication
#45, Sales Tax Guidelines for Horticulture Specialty Trades, which addresses
tax situations relevant to a landscape business.
Please contact us if you have any
other questions.
For
the Commission,
Joe
B. Pacheco
Commissioner
^^