98-053
Response
August 11, 1998
Request
Letter
Mr.
Chapman,
I
want to request an advisory opinion on a Sales and Use Tax matter. In regards to COMPANY s sales of
petroleum products, if any of the following taxes and fees are charged on its
invoice, should those taxes and fees be included in the taxable base for Sales
and Use Tax calculation?
Federal Excise Tax on Gasoline, Jet Fuel, Diesel Fuel
Utah State Motor Gasoline Tax
Utah State Aviation Fuel Tax
Utah State Special Fuel Tax
Utah Environmental Assurance Fee
You
may fax reply to#####, or mail your reply to:
COMPANY
Please
contact me at ##### if you need additional information. Thank you.
Sincerely,
NAME
September
29, 1998
NAME
COMPANY
RE: Taxable base on petroleum products for purposes
of the Utah sales and use tax
Dear
NAME,
We have received your request for an
advisory opinion concerning which taxes and fees on petroleum products should
be included in the taxable base when calculating the Utah sales and use
tax. You have specifically asked about
five separate taxes and fees, which we will address individually below.
1. Federal Excise Tax on Petroleum Products. This tax is not included in the taxable
base when calculating the Utah sales and use tax. For purposes of the sales and use tax, Utah Code Ann.
§59-12-102(17) excludes from the definition of “purchase price” any excise tax
imposed on the purchase price by the federal government. To be excluded from the purchase price, the
federal tax must be separately stated on the invoice or sales ticket and
collected from the purchaser.
2., 3., and 4. Utah State Motor Gasoline, Aviation Fuel,
and Special Fuel Taxes. Utah Code
Ann. §59-12-104(1) exempts from the sales and use tax all sales of aviation
fuel, motor fuel, and special fuel subject to a Utah state excise tax under
Title 59, Chapter 13, Motor and Special Fuel Tax Act. As there is no sales or use tax on these products, there is no
need to establish a taxable base on these products for sales and use tax purposes.
5. Utah Environmental Assurance Fee. Utah Code Ann. §19-6-410.5(4) imposes an environmental assurance
fee of ¼ cent per gallon on the first sale or use of petroleum products in
Utah. The Tax Commission has issued a
tax bulletin identifying the first sale as the one generally occurring at the
refinery level or upon import into the state.
Upon these and subsequent sales, the environmental assurance fee should
be included as part of the taxable base when calculating the Utah sales and use
tax.
In conclusion, of the taxes and fee
you ask about, only the environmental assurance fee should be included as part
of the taxable base when calculating the Utah sales and use tax. Please contact us if you have any other
questions.
For
the Commission,
Joe
B. Pacheco, CPA
Commissioner
____________________________________________________________________________
Notes
to Consider:
There
is a 1990 advisory opinion issued on the “old” environmental assurance fee (the
new law was passed in 1998). This
advisory said not to include the fee in the tax base because (1) as an excise
tax, the fee was not subject to sales tax; and (2) Rule 865-19S-93 states that
the waste tire recycling fee, another excise tax, should not be included in the
tax base.
First
issue: The definition of purchase price for purposes of the sales tax is the
amount paid or charged for the personal property, “excluding only cash
discounts taken or any excise tax imposed on the purchase price by the federal
government.” Utah Supreme Court cases
have held that federal excise taxes cannot be part of the tax base, but not
because it is an excise tax. They have
stated that our statute did not the give the Tax Commission the statutory
authority necessary to include the federal tax in the tax base.
Sales tax is a tax on the
transaction, not a tax on the personal property. Were it a tax on the latter, it would appear that the fee would
not be included. But it is a tax on the
transaction. Part of the transaction
price is the fee. The definition of
purchase price in 59-12-102(17) would seem to include everything paid except
for the two exceptions.
Second
issue: The waste tire recycling fee and the environmental assurance fee have not
been included in the sales tax base in the past. I am recommending the new environmental fee be included in the
sales tax base. A tax bulletin on the
oil recycling fee directs the taxpayer not to include that fee in the sales tax
base of the first sale, but to include it in the tax base for all subsequent
sales. I talked with Lynn and Barry
about the difference between the first and subsequent sales for oil fee, and
none of us could see a point to this.
Anyway, we should probably handle all these excise taxes in the same
way, not in various ways. If changes
are made, we’ll need Rod and Lynn to implement any rule changes, tax bulletins,
etc.
^^