Tax Commission, Auditing

Section R865-19S-32

Leases and Rentals Pursuant to Utah Code Ann. Section 59-12-103

Notice of Proposed Rule

(Amendment)

DAR File No.: 35511
Filed: 12/08/2011 12:54:59 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The proposed amendment clarifies that optional charges for fuel in a transaction for the lease or rental of a motor vehicle are not subject, under certain conditions, to sales tax.

Summary of the rule or change:

The proposed amendment clarifies that fuel charges in a transaction for the lease or rental of a motor vehicle are not subject to sales tax if the fuel charges are optional and separately stated.

State statutory or constitutional authorization for this rule:

• Section 59-12-103

Anticipated cost or savings to:

the state budget:

None--The proposed amendment mirrors industry practice.

local governments:

None. The proposed amendment mirrors industry practice.

small businesses:

None--The proposed amendment mirrors industry practice.

persons other than small businesses, businesses, or local governmental entities:

None--The proposed amendment mirrors industry practice.

Compliance costs for affected persons:

None--The proposed amendment mirrors industry practice.

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

Because the amendment mirrors industry practice, the Division anticipates no fiscal impact.

Michael Cragun, 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:

• Christa Johnson at the above address, by phone at 801-297-3901, by FAX at 801-297-3907, or by Internet E-mail at cj@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:

01/31/2012

This rule may become effective on:

02/07/2012

Authorized by:

Michael Cragun, Tax Commissioner

R865. Tax Commission, Auditing.

R865-19S. Sales and Use Tax.

R865-19S-32. Leases and Rentals Pursuant to Utah Code Ann. Section 59-12-103.

(1) (a) [The]Subject to Subsection (1)(b), a lessor shall compute sales or use tax on all amounts received or charged in connection with a lease or rental of tangible personal property.

(b) Fuel charges in a transaction for the lease or rental of a motor vehicle are not subject to sales tax pursuant to Subsection 59-12-104(1) if the fuel charges are:

(i) optional; and

(ii) separately stated on the invoice.

(2) When a lessee has the right to possession, operation, or use of tangible personal property, the tax applies to the amount paid pursuant to the lease agreement, regardless of the duration of the agreement.

(3) Lessors of tangible personal property shall furnish an exemption certificate when purchasing tangible personal property subject to the sales or use tax on rental receipts. Costs of repairs and renovations to tangible personal property are exempt if paid for by the lessor since it is assumed that those costs are recovered by the lessor in his rental receipts.

(4) A person that furnishes tangible personal property along with an operator, as described in the definition of lease or rental in Section 59-12-102, provides a service and shall:

(a) pay sales and use tax at the time that person purchases the tangible personal property that is furnished under this Subsection (4); and

(b) collect sales and use tax at the time that person provides the service if the service is subject to sales and use tax.

 

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

Date of Enactment or Last Substantive Amendment: [August 11, 2011]2012

Notice of Continuation: March 13, 2007

Authorizing, and Implemented or Interpreted Law: 9-2-1702; 9-2-1703; 10-1-303; 10-1-306; 10-1-307; 10-1-405; 19-6-808; 26-32a-101 through 26-32a-113; 59-1-210; 59-12; 59-12-102; 59-12-103; 59-12-104; 59-12-105; 59-12-106; 59-12-107; 59-12-108; 59-12-118; 59-12-301; 59-12-352; 59-12-353