DAR File No. 27826

Tax Commission, Auditing

R865-19S-60

Sales of Machinery, Fixtures and Supplies to Manufacturers, Businessmen and Others Pursuant to Utah Code Ann. Section 59-12-103

NOTICE OF PROPOSED RULE

DAR File No.: 27826
Filed: 04/15/2005, 02:12
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

Recent amendments to Section 59-12-102 provide that the installation of tangible personal property is not part of the item's purchase price if the installation is separately identified on the invoice. Section R865-19S-78 provided guidance on the tax consequences of installation.

Summary of the rule or change:

The proposed amendment removes the reference to Section R865-19S-78 since that section no longer contains the language referred to.

State statutory or constitutional authorization for this rule:

Section 59-12-103

Anticipated cost or savings to:

the state budget:

None--Any fiscal impacts were taken into account by H.B. 51 (2002) and S.B. 127 (2005). (DAR NOTE: H.B. 51 is found at UT L 2002 Ch 117, and was effective 07/01/2002. S.B. 127 is found at UT L 2005 Ch 158, and will be effective 07/01/2005.)

local governments:

None--Any fiscal impacts were taken into account by H.B. 51 (2002) and S.B. 127 (2005).

other persons:

None--Any fiscal impacts were taken into account by H.B. 51 (2002) and S.B. 127 (2005).

Compliance costs for affected persons:

None--The language is removed since it now appears in statute.

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

None--Language is removed because the statute, not the referred section, indicates the sales tax treatment for installations. Pam Hendrickson, Commission Chair

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:

Sheri McFall at the above address, by phone at 801-297-3901, by FAX at 801-297-3919, or by Internet E-mail at sherimcfall@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:

06/01/2005

This rule may become effective on:

06/02/2005

Authorized by:

Pam Hendrickson, Commissioner

RULE TEXT

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-60. Sales of Machinery, Fixtures and Supplies to Manufacturers, Businessmen and Others Pursuant to Utah Code Ann. Section 59-12-103.

A. Unless specifically exempted by statute, sales of machinery, tools, equipment, and supplies to a manufacturer or producer are taxable.

B. Sales of furniture, supplies, stationery, equipment, appliances, tools, and instruments to stores, shops, businesses, establishments, offices, and professional people for use in carrying on their business and professional activities are taxable.

C. Sales of trade fixtures to a business owner are taxable as sales of tangible personal property even if the fixtures are temporarily attached to real property.

1. Trade fixtures are items of tangible personal property used for the benefit of the business conducted on the property.

2. Trade fixtures tend to be transient in nature in that the fixtures installed in a commercial building may vary from one tenant to the next without substantial alteration of the building, and the building itself is readily adaptable to multiple uses.

3. Examples of trade fixtures include cases, shelves and racks used to store or display merchandise.

[D. Sales tax treatment or charges for installing trade fixtures to real property are dealt with in R865-19S-78.

E.]D. Sales described in A. through C. of this rule are sales to final buyers or ultimate consumers and therefore not sales for resale.

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

[December 21, 2004]2005

Notice of Continuation April 5, 2002

59-12-103

ADDITIONAL INFORMATION

PLEASE NOTE:

• Text to be deleted is struck through and surrounded by brackets (e.g., [example]). Text to be added is underlined (e.g., example). Some browsers may not depict some or any of these attributes on the screen or when the document is printed.
• Please see the DISCLAIMER regarding information available from state web pages.

For questions regarding the content or application of this rule, please contact Sheri McFall at the above address, by phone at 801-297-3901, by FAX at 801-297-3919, or by Internet E-mail at sherimcfall@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.