DAR File No. 27383

Tax Commission, Auditing

R865-19S-38

Isolated and Occasional Sales Pursuant to Utah Code Ann. Section 59-12-104

NOTICE OF PROPOSED RULE

DAR File No.: 27383
Filed: 09/01/2004, 01:00
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

Section 59-12-104 provides a sales tax exemption for isolated or occasional sales.

Summary of the rule or change:

The proposed amendments clarify that the provisions for transferring a vehicle as an isolated or occasional sale include a transfer in which the ownership of the vehicle before and after the transfer is substantially the same.

State statutory or constitutional authorization for this rule:

Section 59-12-104

Anticipated cost or savings to:

the state budget:

Minimal decrease in revenues as the amendment slightly expands the universe of transfers that are isolated or occasional sales from transfers between organizations to include transfers from an individual to that individiual's trust.

local governments:

Minimal decrease in revenues as the amendment slightly expands the universe of transfers that are isolated or occasional sales from transfers between organizations to include transfers from an individual to that individiual's trust.

other persons:

Minimal savings for individuals, who transfer a vehicle to a trust in their name.

Compliance costs for affected persons:

None--The amendment clarifies that the transfer of a vehicle from an individual to a trust in that individual's name is an isolated or occasional sale and exempt from sales tax.

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

There will be no impact on businesses.

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

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 clee@utah.gov

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:

10/15/2004

This rule may become effective on:

10/16/2004

Authorized by:

Pam Hendrickson, Commissioner

RULE TEXT

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-38. Isolated and Occasional Sales Pursuant to Utah Code Ann. Section 59-12-104.

A.1. [Sales]Except as provided in A.2., sales made by officers of a court, pursuant to court orders, are occasional sales[, with the exception of].

2. Notwithstanding A.1., sales made by trustees, receivers, or assignees [and the like, ]in connection with the liquidation or conduct of a regularly established place of business are not occasional sales.

3. Examples of [casual]occasional sales are those made by sheriffs in foreclosing proceedings and sales of confiscated property.

B. If a sale is an integral part of a business [whose]the primary function of which is not the sale of tangible personal property, [then such]the sale is not isolated or occasional. For example, the sale of repossessed radios[,] or refrigerators[, etc.,] by a finance company is not isolated or occasional.

C.1. [Sales]Except as provided in C.2., sales of vehicles required to be titled or registered under the laws of this state are not isolated or occasional sales[, except that any].

2. Notwithstanding C.1., a transfer of a vehicle [in a business reorganization ]where the ownership of the vehicle before and after the transfer[transferee organization] is substantially the same [as the ownership of the transferor organization shall be considered]is an isolated or occasional sale.

D.1. Isolated or occasional sales made by persons not regularly engaged in business are not subject to [the]sales and use tax.

2. [The word]For purposes of D.1., "business" refers to an enterprise engaged in selling tangible personal property or taxable services notwithstanding the fact that the sales may be few or infrequent.

3. [Any]The sale of an entire business to a single buyer is an isolated or occasional sale[ and].

a) Except as provided in D.3.b), no tax applies to the sale of any assets [made]that are part of [such ]a sale described in D.3.

b) If a sale described in D.3. includes the [(with the exception]sale of [vehicles]a vehicle subject to registration[)], that vehicle is subject to sales and use tax.

E. The sale of used fixtures, machinery, and equipment items is not an [exempt ]occasional sale if the sale is one of a series of sales sufficient in number, amount, and character to indicate that the seller deals in the sale of [such]those items.

F. Sales of items at public auctions do not qualify as [exempt ]isolated or occasional sales.

G. Wholesalers, manufacturers, and processors [who]that primarily sell at other than retail are not making isolated or occasional sales when they sell [such ]tangible personal property for use or consumption.

KEY: charities, tax exemptions, religious activities, sales tax

2004

Notice of Continuation April 5, 2002

59-12-104

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Cheryl Lee at the above address, by phone at 801-297-3900, by FAX at 801-297-3919, or by Internet E-mail at clee@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.