98-072

Response October 16, 1998

Request Letter

Dear Mr. Oveson:

I am the official responsible for the charge card program at the GOV. AGENCY . A letter dated March 24, 1998 advised you about our new purchase, travel, and fleet cards. In that letter, we provided the #####. We requested that you review your State's policy and provide this office with a letter confirming the tax exempt status as soon as possible, so that we may share your letter with all COMPANY employees. At the present, we have received responses from most states.

Effective November 30, 1998, GOV. AGENCY will use the new cards for travel and to purchase goods and services for official business. GOV. AGENCY BANK MasterCard will be imprinted with "For Official GOV. AGENCY Use Only" and the Tax Exempt Identification Number. This new card will replace previously used CARDS The GOV. AGECY card account numbers will begin with the number #####.

It is our understanding that the general rule among state tax officials is that if a transaction is billed to and paid by the GOV. AGENCY , it is tax exempt. Our card transactions will be centrally billed and paid directly by the government. Except for the DEPARTMENT, the only uses of the card that will not be centrally billed to GOV. AGENCY are hotels and miscellaneous and incidental expenses for travel. For the DEPARTMENT, all transactions will be centrally billed and paid by the GOV. AGENCY. Purchase and travel cards will contain the employee's name. Enclosed are images of the employee card and the card for fleet vehicles.

We found that many state regulations linked tax exempt status to the soon-to-be obsolete CARDS.. If necessary, it would be very helpful to us if your regulations were revised to reflect the changes in our charge card usage.

Thank you for your assistance in this matter. Should you wish to discuss any aspect of this program in greater detail, please contact PERSON of my staff at ##### or by e-mail at

ADDRESS.

Sincerely,

DIRECTOR

RESPONSE LETTER

November 30, 1998

NAME, Director

COMPANY

RE: Advisory Opinion - Sales Tax Exemption for U.S. Government Credit Card Purchases

Dear NAME,

We have received your request for an advisory opinion as to whether Utah sales tax will be charged on purchases made by the GOV. AGENCY (“Department”) new credit cards. Utah Admin. Code R865-19S-41(C) provides that “[s]ales made directly to the United States government or any authorized instrumentality thereof are not taxable, provided the sale is paid for directly by the federal government. If an employee of the federal government pays for the purchase with his own funds and is reimbursed by the federal government, that sale is not made to the federal government and does not qualify for the exemption.”

Accordingly, Utah sales tax should not be charged on those transactions that are billed directly to and paid directly by the Department. But for any transaction charge that is not billed directly to or paid directly by the Department, Utah sales tax is applicable.

Please contact us if you have any other questions.

For the Commission,

Joe B. Pacheco, CPA

Commissioner

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