98-085
Response
February 10, 1999
November 24,1998
Attention: Kerry
Chapman
Dear Mr. Chapman:
I
recently had a conversation with INDIVIDUAL of your office regarding how HB171
of the 1998 session will impact our business. The portion of the bill lam
referring to is 59-2-1114, relating to the exemption of Manufactured Housing
from taxation as inventory. The new rule states: This exemption does not
apply to ... a manufactured home or mobile home which is not sited at a
dealer's lot or storage facility and which is sited at a location where
occupancy could take place.
In
the past all manufactured housing inventory was considered to be exempt
regardless of its location. The new rule fails to take a number of extenuating
circumstances into consideration.
My
firm, the COMPANY is a manufactured
housing dealer. We are also a Manufactured Home Community Owner. We own and
operate eight Mobile Home communities in the CITY and CITY areas. Our
communities (Parks) are our dealer lots. In these communities we sell new homes
on spaces that become vacant. We purchase homes from manufacturers, site them
on the vacant spaces, complete the installations with exterior accessories, and
sell the entire home as a package.
All
of our Community/Dealer Lot locations sell homes. All locations are registered
with the Department of Occupational Licensing who oversees the Manufactured
Housing Industry as Dealer locations. As such, any homes sited in our
communities are on Dealer lots and will be exempt from any inventory tax. (I
have discussed this matter with INDIVIDUAL of “DOPL” , and he will verify that
all locations are in fact recognized by the state as Dealer Lots.)
Clarification
is needed further to define the portion of the bill that says: where
occupancy could take place." The term "could" leaves the
finished status of the home to be defined. If the home is not complete and has
not received a final inspection and occupancy permit then the home is not fit
for occupancy and as such is not taxable because occupancy could not legally
take place. In addition, unless utilities and sanitation facilities are
installed, the home again is not one where occupancy could legally take place.
In
brief conversations with the COUNTY County Assessors, they have different
opinions as to how they plan on dealing with this issue. Clarification from the
Tax Commission will be necessary to avoid problems relating to "Tax Exempt
Inventory".
I
am requesting that the Tax Commission issue an "Advisory Opinion" as
it applies to our company and the existing ambiguities in the new law. I will
appreciate any opportunity to discuss this matter with you personally as well.
My phone number is #####.
Sincerely,
INDIVIDUAL
February
10, 1999
COMPANY ADDRESS
Re: Advisory
Opinion - Property Tax Exemption for Manufactured or Mobile Homes
Dear NAME
We
have received your request for an advisory opinion concerning the property tax
exemption for factory built homes held as inventory. You specifically ask whether manufactured homes that are owned by
your company and located in a manufactured or mobile home community are exempt
from property taxes prior to their sale.
Utah
Code Ann. §59-2-1114(2)(d) provides that the property tax exemption does not
extend to a manufactured or mobile home that: (1) is not sited at a dealer’s
lot or storage facility; and (2) is sited at a location where occupancy could
take place. These requirements are
conjunctive, so that the factory built home is taxable only if both
requirements are met; otherwise, it will be considered exempt inventory. Let us discuss each requirement separately.
Dealer’s
Lot. To be taxable, the
manufactured or mobile home must not be sited at a dealer’s lot. No definition of “dealer’s lot” is provided
in Utah law. You have asked if a
manufactured or mobile home park owned by a manufactured home dealer qualifies
as a “dealer’s lot” for purposes of the property tax exemption. Under Utah Code Ann. §58-56-16, each person
engaged in the sale of factory built housing must register with the Division of
Occupational and Professional Licensing (“DOPL”) as a dealer. To register, a dealer is required to submit
the physical location address for each location at which the dealer has factory
built housing for sale. DOPL recognizes
each location as the dealer’s place of business, without regard to its
commercial or residential setting.
Thus, if the dealer has registered a particular location with the state
as the physical location of his or her business, the Commission recognizes that
location as a dealer’s lot, even if that location is a residential manufactured
or mobile home park.
If
a manufactured or mobile home park is registered with DOPL as a physical business
location, that site is a dealer’s lot and any home located there does not meet
this first requirement. Accordingly,
any home in your inventory located in such a park would be exempt from
taxation. On the other hand, should a
park not be registered with DOPL as a physical business location, than any home
located there would meet this first requirement, and would be subject to
taxation, should the second requirement also be met.
Site
for Occupancy. The second requirement
is that the manufactured or mobile home must be “sited at a location where
occupancy could take place.” You have
asked whether this requirement is dependent upon having a final inspection and
obtaining an occupancy permit or upon the installation of utilities. The answer
is no. Whether or not the ordinary
steps that must be completed prior to occupancy have been completed are not
critical to this requirement. Instead,
the requirement is specific is its use of the terms “sited” and “location.” What is critical for this requirement is
whether the location is one on which factory built housing is allowed to be
occupied. The manufactured home parks
you describe are such sites where the occupancy of a factory built home can
occur, and thus each park meets this second requirement.
Any
factory built home located in one of your manufactured home parks is exempt
from taxation if that park is a dealer’s lot as set forth above. Otherwise, the factory built home is
taxable. Please contact us if you have
any other questions.
For
the Commission,
Joe
B. Pacheco, CPA
Commissioner
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