DAR File No. 28862

Tax Commission, Auditing

R865-19S-113

Sales Tax Obligations of Jeep, Snowmobile, and Boat Tour Operators, River Runners, Outfitters, and Other Sellers Providing Similar Services Pursuant to Utah Code Ann. Sections 59-12-103 and 59-12-107

NOTICE OF PROPOSED RULE

DAR File No.: 28862
Filed: 06/30/2006, 01:49
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The proposed amendment brings the rule into compliance with federal law.

Summary of the rule or change:

The proposed amendment indicates when, according to federal law, the sales tax on admission and user fees does not apply to aircraft and boat tours.

State statutory or constitutional authorization for this rule:

Sections 59-12-103 and 59-12-107

Anticipated cost or savings to:

the state budget:

Immaterial decrease in revenues. Almost all aircraft and boat tours are exempt from state taxation under federal law and do not effect local government.

local governments:

Immaterial decrease in revenues. Almost all aircraft and boat tours are exempt from state taxation under federal law.

other persons:

Unknown decrease in costs to persons who book aircraft and boat tours since these are no longer subject to state tax.

Compliance costs for affected persons:

None--Aircraft and boat tour businesses will no longer be required to collect state sales tax on their tours.

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

Any businesses to which this rule applies will no longer have to collect state sales tax for services exempt under federal law. D'Arcy Dixon Pignanelli, Commissioner

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:

08/14/2006

This rule may become effective on:

08/21/2006

Authorized by:

Pam Hendrickson, Commission Chair

RULE TEXT

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-113. Sales Tax Obligations of Jeep, Snowmobile, Aircraft, and Boat Tour Operators, River Runners, Outfitters, and Other Sellers Providing Similar Services Pursuant to Utah Code Ann. Sections 59-12-103 and 59-12-107.

(1) "Federal airway" shall be identical to the definition of Class E airspace in 14 C.F.R. 71.71 (2006), which is incorporated by reference.

[A.](2) [The]Except as provided in Subsections (3) and (4), the provisions of this rule apply to the imposition of sales and use tax under Section 59-12-103 on amounts paid or charged as admission or user fees by jeep, snowmobile, aircraft and boat tour operators, river runners, outfitters, and other sellers providing similar services.

(3) Amounts paid or charged for helicopter, airplane, or other aircraft tours that enter into airspace designated by the Federal Aviation Administration as a federal airway during the tour are exempt from the sales and use tax.

(a) The exemption described in Subsection (3) does not apply if the only time the aircraft enters a federal airway is prior to the commencement of the tour or after the tour ends.

(b) A tour is deemed to occur from the time a paying customer is picked up to the time the paying customer is dropped off at the final destination point.

(4) Amounts paid or charged for boat tours, scenic cruises, or other similar activities on the waters of the state are exempt from sales and use tax if the waters on which the tour, cruise, or other similar activity operates are used, by themselves or in connection with other waters, as highways for interstate commerce.

[B.](5) If payment for a service provided by a seller described in [A.](2) occurs in Utah and the service originates or terminates in Utah, the seller shall collect Utah sales and use tax on the entire amount of the transaction.

[C.](6) If payment for a service provided by a seller described in [A.](2) occurs outside Utah and the entire service occurs in Utah, the seller shall collect Utah sales and use tax on the entire amount of the transaction.

[D.](7) If payment for a service provided by a seller described in [A.](2) occurs outside Utah and the service originates or terminates outside Utah, the seller is not required to collect Utah sales and use tax on the transaction.

[E.](8) Payment occurs in Utah if the purchaser:

[1.](a) while at a business location of the seller in the state, presents payment to the seller; or

[2.](b) does not meet the criteria under [E.1.](8)(a) and is billed for the service at an address within the state.

[F.](9) For purposes of this rule, there is a rebuttable presumption that payment for a service provided by a seller described in [A.](2) occurs in Utah.

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

Date of Enactment or Last Substantive Amendment: [October 13, 2005]2006

Notice of Continuation: April 5, 2002

Authorizing, and Implemented or Interpreted Law: 59-12-103; 59-12-107

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.