DAR File No. 28050

Tax Commission, Auditing

R865-19S-98

Sales to Nonresidents of Vehicles, Off-highway Vehicles, and Boats Required to be Registered, and Sales to Nonresidents of Boat Trailers and Outboard Motors Pursuant to Utah Code Ann. 59-12-104

NOTICE OF PROPOSED RULE

DAR File No.: 28050
Filed: 06/28/2005, 03:13
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

Although there is a sales tax exemption for certain vehicles purchased by nonresidents, there is no statutory definition of nonresident. The current rule definition of nonresident appears to be narrower than statute would allow.

Summary of the rule or change:

The proposed amendment provides that a person may own a residence in Utah and still qualify as a nonresident so long as that person does not occupy the residence; and provides that failure to meet the rule criteria is a rebuttable presumption that the exemption does not apply.

State statutory or constitutional authorization for this rule:

Section 59-12-104

Anticipated cost or savings to:

the state budget:

Immaterial cost since the amendments will slightly broaden the exemption to persons who own property in this state, so long as they don't occupy the property.

local governments:

Immaterial cost since the amendments will slightly broaden the exemption to persons who own property in this state, so long as they don't occupy the property.

other persons:

Immaterial savings since the amendment will slightly broaden the exemption to persons who own property in this state, so long as they don't own property.

Compliance costs for affected persons:

None--The amendment will allow people who own, but do not occupy property in this state to claim the exemption.

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

Since this amendment broadens the exemption slightly more than the rule currently in place, there is the possibility that more people will qualify for the nonresident exemption. 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:

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:

08/15/2005

This rule may become effective on:

08/16/2005

Authorized by:

Pam Hendrickson, Commission Chair

RULE TEXT

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-98. Sales to Nonresidents of Vehicles, Off-highway Vehicles, and Boats Required to be Registered, and Sales to Nonresidents of Boat Trailers and Outboard Motors Pursuant to Utah Code Ann. Section 59-12-104.

[A.](1) "Use" means mooring, slipping, and dry storage as well as the actual operation of vehicles.

[B.](2) In order to qualify as a nonresident for the purpose of exempting vehicles from sales tax under Subsections 59-12-104(9) and 59-12-104(31), a [person]vehicle owner may not:

[1. be a resident of this state. The fact that a person leaves the state temporarily is not sufficient to terminate residency;

2.](a) be engaged in intrastate business within this state;

[3.](b) maintain a vehicle with this state designated as the home state;

[4.](c) except in the case of a tourist temporarily within this state,[ own, lease, or rent a residence or a place of business within this state, or occupy or permit to be occupied a Utah residence or place of business];

(d) operate an interstate business that occupies real property within the state;

[5.](e) except in the case of an employee who can clearly demonstrate that the use of the vehicle in this state is to commute to work from another state, be engaged in a trade, profession, or occupation or accept gainful employment in this state;

[6.](f) allow the purchased vehicle to be kept or used by a resident of this state; or

[7.](g) declare residency in Utah to obtain privileges not ordinarily extended to nonresidents, such as attending school or placing children in school without paying nonresident tuition or fees, or maintaining a Utah driver's license.

(3) The fact that a resident leaves the state temporarily is not sufficient to terminate residency.

[C.](4) A nonresident owner of a vehicle described in Section 59-12-104(9) may continue to qualify for the exemption provided by that section if use of the vehicle in this state is infrequent, occasional, and nonbusiness in nature.

[D.](5) A nonresident owner of a vehicle described in Subsection 59-12-104(31) may continue to qualify for the exemption provided by that section if use of the vehicle in this state does not exceed 14 days in any calendar year and is nonbusiness in nature.

[E.](6) Vehicles are deemed not used in this state beyond the necessity of transporting them to the borders of this state if purchased by:

[1.](a) a nonresident student who will be permanently leaving the state within 30 days of the date of purchase; or

[2.](b) a nonresident member of the military stationed in Utah, but with orders to leave the state permanently within 30 days of the date of purchase.

(7)(a) Except as provided in Subsection (7)(b), there is a rebuttable presumption that a vehicle owner may not receive the sales tax exemption described in Subsections 59-12-104(9) or (31) if a vehicle owner does not satisfy:

(i) the requirements of a nonresident under Subsections R865-19S-98(2) and (3); and

(ii) the use limitations under Subsections R865-19S-98(4)-(6).

(b) Notwithstanding Subsection (7)(a), the commission may, pursuant to an appeal filed under Title 63, Chapter 46b, Administrative Procedures Act, allow an exemption to a vehicle owner if the vehicle owner presents evidence that the sales tax exemption under Subsections 59-12-104(9) or (31) should apply.

[F.](8) Each purchaser, both buyer and co-buyer, claiming this exemption must complete a nonresident affidavit. False, misleading, or incomplete responses shall invalidate the affidavit and subject the purchaser to tax, penalties, and interest.

[G.](9) A dealer of vehicles who accepts an incomplete affidavit, may be held liable for the appropriate tax, interest, and penalties.

[H.](10) A dealer of vehicles who accepts an affidavit with information that the dealer knows or should have known is false, misleading or inappropriate may be held liable for the appropriate tax, interest, and penalties.

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

[December 21, 2004]2005

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.