No. 29705: R865-12L. Local Sales and Use Tax

DAR File No.: 29705
Filed: 03/16/2007, 11:14
Received by: NL

NOTICE OF REVIEW AND STATEMENT OF CONTINUATION

Concise explanation of the particular statutory provisions under which the rule is enacted and how these provisions authorize or require the rule:

Section 59-1-403 requires that all individuals with access to information from tax returns maintain strict confidentiality with regard to that information. It also provides instances when information may be disclosed or shared. Section 59-12-109 requires the confidentiality of taxpayer documents in accordance with Section 59-1-403. Section 59-12-202 states purpose and intent of local sales and use tax. Section 59-12-204 allows local governments to impose a local sales and use tax and sets forth the provisions that must be included in the ordinance imposing the local sales and use tax. Section 59-12-205 provides that the distribution of local sales and use taxes to local governments shall be based on location where the transaction is consummated and population. Section 59-12-207 requires that a vendor report all sales and use taxes collected to the Tax Commission on forms accurately depicting where the sale was consummated. The Tax Commission is to create rules to determine where sales take place for businesses with no permanent place of business or more than one place of business in Utah. Section 59-12-302 provides that the transient room tax shall be levied at the same time and collected in the same manner as the local sales and use tax. Section 59-12-354 indicates that the governing body of a municipality may choose to collect the municipality transient room tax or have the Tax Commission collect that tax for it. Section 59-12-401 establishes a resort community tax of up to 1% for towns and cities whose transient room capacity equals or exceeds 66% of the permanent census population and provides certain exemptions to that tax. Section 59-12-602 defines "convention facility", "cultural facility", "recreation facility", and "restaurant" -- all terms necessary for the administration of the tourism, recreation, cultural, and convention facilities tax. Section 59-12-603 provides for the creation of a tourism, recreation, cultural, and convention facilities tax: 1) not to exceed 3% on all short-term rentals of motor vehicles not exceeding 30 days; 2) not exceeding 1/2% of the rent for every occupancy of a suite room or rooms; and 3) not to exceed 1% of all sales of prepared foods and beverages sold by restaurants.

Summary of written comments received during and since the last five-year review of the rule from interested persons supporting or opposing the rule:

No written comments have been received.

Reasoned justification for continuation of the rule, including reasons why the agency disagrees with comments in opposition to the rule, if any:

Section R865-12L-1 provides that all rules made with respect to the state sales and use tax shall apply to the local sales and use tax. Section R865-12L-3 permits use of sales tax rate charts to determine sales tax due on a taxable sale. Section R865-12L-4 requires that the local sales and use tax be reported to the Tax Commission on a combined return with the state sales and use tax. Section R865-12L-5 provides that retail sales shall be deemed to occur at the place of business of the retailer, regardless of where tangible personal property is delivered. This section also establishes that if a seller has more than one location, and at least two locations are involved in the sale, the sale shall be deemed to occur at the location from which the property is shipped or delivered. This section will be amended to refer to the correct statutory authority. Section R865-12L-6 outlines the responsibilities of a vendor to collect local use tax when that vendor is located outside Utah and ships to places within Utah. It also states that if the vendor is not required to collect local use taxes it is the consumers' responsibility to pay the use tax. Section R865-12L-9 defines "combined sales tax rate"; states that sellers with no fixed or determinable place of business in Utah shall report sales on the basis of the county in which the sales are made and shall report purchases on the basis of the county in which the tangible personal property is initially delivered; indicates the transactions that shall be reported in the various sales tax schedules; and indicates how sales reported on various sales tax schedules shall be allocated to counties and municipalities. Section R865-12L-11 outlines the sales tax liability of a person who purchases a motor vehicle from someone other than a licensed dealer. Section R865-12L-12 sets forth responsibilities of in-state and out-of-state lessors to collect local sales tax and states the location at which that sales tax shall accrue. Section R865-12L-13 provides that charges for repairs, renovations, or other taxable services to tangible personal property shall accrue to the business location out of which the repairman works. Section R865-12L-14 provides procedures for local governing bodies' review of local sales and use taxes remitted by businesses located within that political subdivision. This section also provides procedures for corrections for firms omitted from the list of a particular political subdivision or firms listed but not doing business in the jurisdiction of the political subdivision. Section R865-12L-16 clarifies the notice required to the Tax Commission when a county or municipality imposing the transient room tax changes the responsibility to collect the tax from the Tax Commission to the county or municipality or vice versa. Section R865-12L-17 defines "primary business", and "retail establishment", and provides guidance necessary to administer the restaurant tax. Section R865-12L-18 clarifies the Tax Commission's exclusive authority to administer and enforce the local sales and use tax, and lists the circumstances under which local governments: 1) shall have access to the Tax Commission records; and 2) may intervene in or appeal from a proposed final Tax Commission action. Therefore, this rule should be continued.

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

Tax Commission
Auditing
210 N 1950 W
SALT LAKE CITY UT 84134

Direct questions regarding this rule to:

Cheryl Lee at the above address, by phone at 801-297-3900, by FAX at 801-297-3919, or by Internet E-mail at [e-mail]

Authorized by:

D'Arcy Dixon, Commissioner