DAR File No. 27831

Tax Commission, Auditing

R865-19S-71

Transportation Charges in Connection With the Sale of Tangible Personal Property Pursuant to Utah Code Ann. Sections 59-12-103 and 59-12-104

NOTICE OF PROPOSED RULE

DAR File No.: 27831
Filed: 04/15/2005, 07:32
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

S.B. 127 (2005) amended Section 59-12-102 to provide that delivery charges are not included in the purchase price, and accordingly, not subject to sales tax, if those charges are separately identified on the invoice. This new language is in conflict with the rule language, therefore, the section must be removed. (DAR NOTE: S.B. 127 is found at UT L 2005 Ch 158, and will be effective 07/01/2005.)

Summary of the rule or change:

This section is being removed.

State statutory or constitutional authorization for this rule:

Sections 59-12-103 and 59-12-104

Anticipated cost or savings to:

the state budget:

None--Any impacts should have been taken into account in S.B. 147 (2003) and S.B. 127 (2005). (DAR NOTE: S.B. 147 is found at UT L 2003 Ch 312, and was effective 07/01/2004.)

local governments:

None--Any impacts should have been taken into account in S.B. 147 (2003) and S.B. 127 (2005).

other persons:

None--Any impacts should have been taken into account in S.B. 147 (2003) and S.B. 127 (2005).

Compliance costs for affected persons:

Individuals will not pay sales tax on the delivery of items that they purchase.

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

Individuals will not pay sales tax on the delivery of items that they purchase. 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-71. Transportation Charges in Connection With the Sale of Tangible Personal Property Pursuant to Utah Code Ann. Sections 59-12-103 and 59-12-104.

A. To qualify for the sales tax exemption for movements of freight by common carrier, transportation charges must satisfy all of the following conditions:

1. Shipment must take place by means of common carrier.

2. Charges must be segregated and listed separately.

3. Charges must reflect the actual cost of shipping the particular tangible personal property by common carrier.

4. Shipment of the tangible personal property must take place after passage of title.

a) Shipment of the tangible personal property takes place after passage of title if the terms of the sale or lease are F.O. B. origin or F.O.B. shipping point.

b) If the invoice does not indicate an F.O.B. point, and a common carrier is used, it is assumed the terms are F.O.B. origin.

c) In all other cases, the shipment of tangible personal property takes place before passage of title.

B. If shipment of the tangible personal property occurs before the passage of title, shipping costs, to the extent included in the sales price of the item, and regardless of whether they are segregated on the invoice, shall be included in the sales and use tax base.

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

[December 21, 2004]2005

Notice of Continuation April 5, 2002

59-12-103

59-12-104

ADDITIONAL INFORMATION

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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.