99-010

Response February 10, 1999

REQUEST LETTER

January 13, 1999

Dear Sir or Madam:

On behalf of our client, COMPANY , we hereby request a Tax Commission ruling with respect to the proposal described below. The number of COMPANY stores, the volume of daily tax-exempt transactions, and the numerous forms provided by each state create a recordkeeping burden for COMPANY . Accordingly, to facilitate compliance with state tax law and regulations, COMPANY has created an exemption application for use in all stores to facilitate recordkeeping. The proposed standard exemption application is attached.

Facts

COMPANY is a multistate corporation engaged in the business of retail sale of home improvement merchandise, specifically tools and hardware supplies. During the course of its business, COMPANY makes tax-exempt sales to its customers pursuant to statutory sales tax exemptions. In the states where COMPANY conducts business, the various tax-exempt sales include sales for resale, sales to Native Americans, sales to non-profit organizations, sales to Mexican merchants, and sales to the state, local and federal governments. In Utah, COMPANY tax-exempt sales include sales for resale, sates charitable or religious organizations and sales to the state and federal governments.

Issue

Will the proposed application meet the documentation requirements if complete and accompanied by the statutorily required documentation?

Conclusion

We hereby respectfully request that the Tax Commission approve the attached COMPANY Resale/Exemption Application. In the event the Resale/Exemption Application is not approved, we request the Tax Commission advise HomeBase of the necessary modifications or requirements needed to gain approval.

If you have any questions, please feel free to contact me at (213) 614-8156. Very truly yours, COMPANY

NAME

RESPONSE LETTER

February 10, 1999

COMPANY

ADDRESS

RE: Advisory Opinion - Exemption Certificate for COMPANY

Dear Mr. Stites,

We have received your request for an advisory opinion concerning the use of a multijurisdictional exemption certificate by your client, COMPANY , instead of the exemption certificate that has developed for use in Utah by the Tax Commission.

We are happy to approve any form that meets COMPANY needs so long as it also meets our recordkeeping requirements. We assume from your description that the generic exemption certificate is sufficiently tied to the sales transaction to establish an audit trail. If so, that answers our major concern.

Another concern that we have with multijurisdictional forms in general is that they overlook the opportunity to alert the vendor and the purchaser to the conditions imposed on a purchaser who claims a sales tax exemption. Our exemption certificate is designed to provide the vendor and the purchaser with a general summary of the legal parameters of each of Utah=s sales tax exemptions. By signing our form, the purchaser verifies that he or she understands the exemption and verifies that the transaction qualifies for the exemption under the limitations imposed by law. Multijurisdictional forms do not contain that kind of detail, and we are concerned that purchasers may subject themselves to penalty situations by claiming exemptions in error. However, we concede that it is equally important to be flexible with retailers who are moving toward a paperless accounting environment and have similar reporting duties in many jurisdictions. For that reason, we encourage you to consider this issue as you develop COMPANY exemption certificate system, but we do not require that you adapt COMPANY system to Utah=s specific exemption certificate system. Therefore, we approve the generic form you have provided.

Please contact us if you have further questions or comments.

For the Commission,

Joe B. Pacheco, CPA

Commissioner

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