No. 27029 (Amendment): R81-1-22. Diplomatic Embassy Shipments and Purchases .

DAR File No.: 27029
Filed: 04/01/2004, 10:15
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

The Utah Administrative Rulemaking Act was amended in 2003 to provide that an agency's written statements that restrict the legal rights of a public class of persons or another agency must be in rule and go through the rulemaking process. Originally established by internal department policy, the provisions of this rule amendment are being proposed as an administrative rule to conform with the Rulemaking Act. (DAR NOTE: The Utah Administrative Rulemaking Act was amended by S.B. 30 (2003), which is found at UT L 2003 Ch 197, and was effective May 5, 2003.)

 

Summary of the rule or change:

During the 2002 Winter Olympics it became necessary for the Department of Alcoholic Beverage Control (DABC) to established a policy by which foreign countries could obtain specific alcoholic beverages to be consumed in diplomatic functions involving their constituency and invited guests. This proposed rule amendment relocates into administrative rule the guidelines for the importation, special order, and/or purchase of specific alcoholic beverage products, exempt from state sales taxes, by the diplomatic missions of foreign countries. (The tax exempt status is a provision of the Vienna Conventions on Diplomatic and Consular Relations.)

 

State statutory or constitutional authorization for this rule:

Section 32A-1-107

 

Anticipated cost or savings to:

the state budget:

Since this proposed rule amendment will allow the diplomatic missions of foreign countries an exemption from paying Utah's state sales tax of 6.6% when purchasing alcoholic beverages for use in official diplomatic functions, the state will lose those revenues. If the foreign country opts to import the alcoholic beverages directly, they will be assessed a $1 per unit (bottle, can, or keg) handling fee, but no other state mark-ups. It is anticipated, however, that this rule will be implemented only rarely.

 

local governments:

None--The proposed rule amendment establishes guidelines for the importation and sale of alcoholic beverages normally handled by the Department of Alcoholic Beverage Control and does not affect revenues or costs to local governments.

 

other persons:

The only other persons fiscally affected by this proposed rule amendment are the diplomatic missions of the foreign counties involved. Those persons would be exempt from paying state sales taxes or the usual state mark-up depending on how they choose to obtain the alcoholic beverages they will use at their private functions.

 

Compliance costs for affected persons:

If the diplomatic missions of foreign countries who obtain alcoholic beverages for use at their private functions choose to have their own products shipped into the state of Utah, they will be assessed a $1 per unit handling fee only. However, if they special order the product or choose products carried in state liquor stores, they will save the cost of state sales taxes.

 

Comments by the department head on the fiscal impact the rule may have on businesses:

Passage of this proposed rule amendment will have no fiscal impact on businesses. Alcoholic beverage manufacturers will receive the full payments for their products.

 

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Alcoholic Beverage Control
Administration
1625 S 900 W
SALT LAKE CITY UT 84104-1630

 

Direct questions regarding this rule to:

Sharon Mackay at the above address, by phone at 801-977-6800, by FAX at 801-977-6889, or by Internet E-mail at [e-mail]

 

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

05/17/2004

 

This rule may become effective on:

05/18/2004

 

Authorized by:

Kenneth F. Wynn, Director

 

 

RULE TEXT

R81. Alcoholic Beverage Control, Administration.

R81-1. Scope, Definitions, and General Provisions.

R81-1-22. Diplomatic Embassy Shipments and Purchases.

(1) Purpose. The Vienna Conventions on Diplomatic and Consular Relations grant foreign diplomatic missions certain exemptions from federal, state and local taxes. The United States, by treaty, is a party to the Vienna Conventions, and is obligated under international law to grant these exemptions under these agreements to accredited diplomatic missions of those countries that grant the United States reciprocal privileges. These privileges include the purchase of alcoholic beverages duty and tax free subject to certain exceptions such as indirect taxes normally incorporated in the price of goods or services, and charges levied for specific services rendered to benefit the mission.

This rule establishes department guidelines for shipments and purchases of alcohol by a foreign diplomatic mission with an accredited embassy having full diplomatic privileges under the Vienna Conventions that establishes an embassy presence in the state of Utah (hereafter "accredited foreign diplomatic mission").

(2) Application of Rule.

(a) Shipments. An accredited foreign diplomatic mission that establishes an embassy presence in Utah may have or possess, for official diplomatic use, and not for sale or resale, alcoholic beverages that have not been purchased in the state of Utah. Such products may be shipped or transported into the state of Utah under the following conditions:

(i) The embassy must first obtain the approval of this department prior to shipping or transporting its alcoholic beverages into the state.

(ii) Alcoholic beverages shipped or transported into the state must clear U.S. Customs duty free.

(iii) The department shall affix the official state label to the alcoholic beverages.

(iv) The embassy shall pay the department an administrative handling fee of $1.00 per smallest unit (bottle, can, or keg). Payment of handling fees shall be made by the embassy using an official embassy check or embassy credit card.

(v) The alcoholic beverages may be used by the embassy only for official diplomatic functions, and may not be sold or resold.

(b) Purchases.

(i) Special Orders. An accredited foreign diplomatic mission that establishes an embassy presence in Utah may special order from the department alcoholic beverage products not presently sold in the state of Utah under the following procedures:

(A) The company or importer supplying the product must submit a price quotation to the department indicating the case price (in US dollars) for which it will sell the product to the state.

(B) The quoted case price must be reasonable (a minimum of $10.00 per case).

(C) The product will be marked up using the department's standard pricing formula (less the state sales tax).

(D) Special orders must be placed by the embassy at least two months in advance to allow the department sufficient time to purchase and receive the product for the embassy.

(E) The product must be paid for by the embassy using an official embassy check or embassy credit card.

(F) The product may be used by the embassy only for official diplomatic functions, and may not be sold or resold.

(ii) Presently Available Merchandise. An accredited foreign diplomatic mission that establishes an embassy presence in Utah may purchase alcoholic beverages that are presently sold in the state of Utah under the following procedures:

(A) Alcoholic beverage product purchases, other than large quantity purchases, may be made by the embassy at any state store. The store shall deduct state sales tax from the purchase price.

(B) Large quantity purchase orders must be placed by the embassy at the department's licensee warehouse. The warehouse shall deduct state sales tax from the purchase price.

(C) The products must be paid for by the embassy using an official embassy check or embassy credit card.

(D) The product may be used by the embassy only for official diplomatic functions, and may not be sold or resold.

 

KEY: alcoholic beverages

[August 1, 2003]2004

Notice of Continuation December 26, 2001

32A-1-107

32A-1-119(5)(c)

32A-3-103(1)(a)

32A-4-103(1)(a)

32A-4-203(1)(a)

32A-5-103(3)(c)

32A-6-103(2)(a)

32A-7-103(2)(a)

32A-8-103(1)(a)

32A-9-103(1)(a)

32A-10-203(1)(a)

32A-11-103(1)(a)