DAR File No. 30841

Tax Commission, Auditing

R865-19S-121

Sales and Use Tax Exemptions for Certain Purchases by a Mining Facility Pursuant to Utah Code Ann. Section 59-12-104

NOTICE OF PROPOSED RULE

DAR File No.: 30841
Filed: 12/14/2007, 10:27
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The proposed section is drafted because language codified by S.B. 223 in the 2007 legislative session requires the Tax Commission to define the term "establishment" by rule. (DAR NOTE: S.B. 223 (2007) is found at Chapter 288, Laws of Utah 2007, and will be effective 01/01/2008.)

Summary of the rule or change:

The proposed section defines the terms "establishment" and "machinery and equipment"; and provides guidance for when the exemption applies that are consistent with the criteria for the sales tax exemption for a manufacturing facility.

State statutory or constitutional authorization for this rule:

Section 59-12-104

Anticipated cost or savings to:

the state budget:

None--Any costs were taken into effect in S.B. 223 (2007).

local governments:

None--Any costs were taken into effect in S.B. 223 (2007).

small businesses and persons other than businesses:

None--Any costs were taken into effect in S.B. 223 (2007).

Compliance costs for affected persons:

None--The sales tax exemption is for certain purchases by a mining facility. This proposed section defines an establishment that qualifies to take the sales tax exemption.

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

There is no anticipated impact. 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:

01/31/2008

This rule may become effective on:

02/07/2008

Authorized by:

D'Arcy Dixon, Commissioner

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-121. Sales and Use Tax Exemptions for Certain Purchases by a Mining Facility Pursuant to Utah Code Ann. Section 59-12-104.

(1) Definitions.

(a) "Establishment" means a unit of operations, that is generally at a single physical location in Utah, where qualifying activities are performed. If a business operates in more than one location (e.g., branch or satellite offices), each physical location is considered separately from any other locations operated by the same business.

(b) "Machinery and equipment" means electronic or mechanical devices having an economic life of three or more years including any accessory that controls the operation of the machinery and equipment.

(2) The exemptions do not apply to purchases of real property or items of tangible personal property that become part of the real property.

(3) Purchases of qualifying machinery and equipment are treated as purchases of tangible personal property under R865-19S-58, even if the item is affixed to real property upon installation.

(4) Machinery and equipment used for non-qualifying activities are eligible for the exemption if the machinery and equipment are primarily used in qualifying activities.

(5) The entity claiming the exemption shall retain records to support the claim that the machinery and equipment are qualified for exemption from sales and use tax under the provisions of this rule and Section 59-12-104.

(6) If a purchase consists of items that are exempt from sales and use tax under this rule and Section 59-12-104, and items that are subject to tax, the tax exempt items must be separately stated on the invoice or the entire purchase will be subject to tax.

 

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

Date of Enactment or Last Substantive Amendment: [October 9, 2007]2008

Notice of Continuation: March 13, 2007

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