DAR File No. 30137

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.: 30137
Filed: 06/26/2007, 02:38
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

Section 59-12-104 requires the commission to promulgate a rule providing guidance to taxpayers regarding when the isolated or occasional sales tax exemption applies. The amendment further clarifies the rule that has been promulgated.

Summary of the rule or change:

The proposed amendment clarifies that the sales tax exemption for isolated or occasional sales applies: 1) regardless of the number of sales of the particular property by a person; and 2) to a series of sales that occur as part of a liquidation; the proposed amendment provides examples of sales that qualify for the exemption.

State statutory or constitutional authorization for this rule:

Section 59-12-104

Anticipated cost or savings to:

the state budget:

No impact--The proposed amendments clarify current Tax Commission practice.

local governments:

No impact--The proposed amendments clarify current Tax Commission practice.

other persons:

No impact--The proposed amendments clarify current Tax Commission practice.

Compliance costs for affected persons:

None--The proposed amendments clarify the current practice.

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

There are no anticipated impacts. D'Arcy Dixon, Commissioner

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

Tax Commission
Auditing
210 N 1950 W
SALT LAKE CITY UT 84134

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:

08/14/2007

This rule may become effective on:

08/21/2007

Authorized by:

D'Arcy Dixon, Commissioner

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-38. Isolated [and]or Occasional Sales and Use Tax Exemption Pursuant to Utah Code Ann. Section 59-12-104.

(1) "Isolated or occasional sales and use tax exemption" means a sale that qualifies for the sales and use tax exemption for the sale of tangible personal property by a person:

(a) regardless of the number of sales of that tangible personal property by that person; and

(b) not regularly engaged in the business of selling that type of property.

[A. 1.](2)(a) Except as provided in [A.2.]Subsection (2)(b), sales made by officers of a court, pursuant to court orders, [are]qualify for the isolated or occasional sales and use tax exemption.

[2.](b) [Notwithstanding A.1., sales]Sales made by trustees, receivers, or assignees in connection with the liquidation or conduct of a regularly established place of business [are]do not qualify for the isolated or occasional sales and use tax exemption.

[3.](c) Examples of [occasional ]sales made by officers of a court pursuant to court order, that qualify for the isolated or occasional sales and use tax exemption are [those]sales made by sheriffs in foreclosing proceedings and sales of confiscated property.

[B.](3) If a [sale is an integral part of a business the primary function of which is not the sale of tangible personal property, the sale is]business regularly sells a type of property, sales of that type of property do not qualify for the isolated or occasional sales and use tax exemption, even if the primary purpose of the business is not the sale of that type of property. For example, the sale of repossessed radios or refrigerators by a finance company [is]do not qualify for the isolated or occasional sales and use tax exemption.

[C. 1.](4)(a) Except as provided in [C.2.]Subsection (4)(b), sales of vehicles required to be titled or registered under the laws of this state [are]do not qualify for the isolated or occasional sales and use tax exemption.

[2.](b) [Notwithstanding C.1., a]The transfer of a vehicle where the ownership of the vehicle before and after the transfer is [substantially]at least 80 percent the same [is an]qualifies for the isolated or occasional [sale]sales and use tax exemption.

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

2. 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. The sale of an entire business to a single buyer is an isolated or occasional sale.

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

b) If a sale described in D.3. includes the sale of a vehicle subject to registration, that vehicle is subject to sales and use tax.](5) Sales that qualify for the isolated or occasional sales and use tax exemption include sales that occur as part of:

(a) the reorganization, sale, or liquidation of a business so long as those sales do not include items purchased exempt from sales tax as a sale for resale;

(b) a garage sale if:

(i) the person selling the items at the garage sale is not regularly engaged in selling that type of property; and

(ii) the items sold at the garage sale were not purchased exempt from sales tax as a sale for resale; and

(c) the sale of business assets that are:

(i) not purchased sales tax exempt by the business as a sale for resale; and

(ii) a type of property not regularly sold by the business.

(6) An example of a sale that qualifies for the sales and use tax exemption under Subsection (5)(a) is a sale, even if it is one of a series of sales, to liquidate the fixtures and equipment of a manufacturing company.

(7) Examples of sales that qualify for the sales and use tax exemption under Subsection (5)(c) include the sale by a:

(a) grocery store of its cash registers, shelves, and fixtures;

(b) law firm of its furniture; and

(c) manufacturer of its used manufacturing equipment.

[E. The sale of used fixtures, machinery, and equipment items is not an 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 those items.

F.](7) Sales of items at public auctions generally do not qualify [as]for the isolated or occasional sales and use tax exemption.[

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

 

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

Date of Enactment or Last Substantive Amendment: [November 17, 2006]2007

Notice of Continuation: March 13, 2007

Authorizing, and Implemented or Interpreted Law: 59-12-104