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H.B. 255

             1     

SALES AND USE TAX ON PUBLIC

             2     
ACCOMMODATIONS AND SERVICES TAXED

             3     
BY TRIBES

             4     
2000 GENERAL SESSION

             5     
STATE OF UTAH

             6     
Sponsor: Keele Johnson

             7      AN ACT RELATING TO REVENUE AND TAXATION; PROVIDING AN EXEMPTION
             8      FROM STATE SALES AND USE TAX ON PUBLIC ACCOMMODATIONS AND SERVICES
             9      TAXED BY TRIBES; AND MAKING TECHNICAL CHANGES.
             10      This act affects sections of Utah Code Annotated 1953 as follows:
             11      AMENDS:
             12          59-12-104, as last amended by Chapters 63, 155, 195, 306, 313 and 362, Laws of Utah
             13      1999
             14      ENACTS:
             15          59-12-104.2, Utah Code Annotated 1953
             16      Be it enacted by the Legislature of the state of Utah:
             17          Section 1. Section 59-12-104 is amended to read:
             18           59-12-104. Exemptions.
             19          The following sales and uses are exempt from the taxes imposed by this chapter:
             20          (1) sales of aviation fuel, motor fuel, and special fuel subject to a Utah state excise tax
             21      under Title 59, Chapter 13, Motor and Special Fuel Tax Act;
             22          (2) sales to the state, its institutions, and its political subdivisions; however, this exemption
             23      does not apply to sales of construction materials except:
             24          (a) construction materials purchased by or on behalf of institutions of the public education
             25      system as defined in Utah Constitution Article X, Section 2, provided the construction materials
             26      are clearly identified and segregated and installed or converted to real property which is owned by
             27      institutions of the public education system; and


             28          (b) construction materials purchased by the state, its institutions, or its political
             29      subdivisions which are installed or converted to real property by employees of the state, its
             30      institutions, or its political subdivisions;
             31          (3) sales of food, beverage, and dairy products from vending machines in which the
             32      proceeds of each sale do not exceed $1 if the vendor or operator of the vending machine reports
             33      an amount equal to 150% of the cost of items as goods consumed;
             34          (4) sales of food, beverage, dairy products, similar confections, and related services to
             35      commercial airline carriers for in-flight consumption;
             36          (5) sales of parts and equipment installed in aircraft operated by common carriers in
             37      interstate or foreign commerce;
             38          (6) sales of commercials, motion picture films, prerecorded audio program tapes or
             39      records, and prerecorded video tapes by a producer, distributor, or studio to a motion picture
             40      exhibitor, distributor, or commercial television or radio broadcaster;
             41          (7) sales of cleaning or washing of tangible personal property by a coin-operated laundry
             42      or dry cleaning machine;
             43          (8) (a) except as provided in Subsection (8)(b), sales made to or by religious or charitable
             44      institutions in the conduct of their regular religious or charitable functions and activities, if the
             45      requirements of Section 59-12-104.1 are fulfilled;
             46          (b) the exemption provided for in Subsection (8)(a) does not apply to the following sales,
             47      uses, leases, or rentals relating to the Olympic Winter Games of 2002 made to or by an
             48      organization exempt from federal income taxation under Section 501(c)(3), Internal Revenue
             49      Code:
             50          (i) retail sales of Olympic merchandise;
             51          (ii) admissions or user fees described in Subsection 59-12-103 (1)(f);
             52          (iii) sales of accommodations and services as provided in Subsection 59-12-103 (1)(i),
             53      except for accommodations and services:
             54          (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter Games
             55      of 2002;
             56          (B) exclusively used by:
             57          (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
             58      Olympic Winter Games of 2002; or


             59          (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
             60      Games of 2002; and
             61          (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
             62      does not receive reimbursement; or
             63          (iv) a lease or rental of a vehicle as defined in Section 41-1a-102 , except for a lease or
             64      rental of a vehicle:
             65          (A) paid for in full by the Salt Lake Organizing Committee for the Olympic Winter Games
             66      of 2002;
             67          (B) exclusively used by:
             68          (I) an officer, a trustee, or an employee of the Salt Lake Organizing Committee for the
             69      Olympic Winter Games of 2002; or
             70          (II) a volunteer supervised by the Salt Lake Organizing Committee for the Olympic Winter
             71      Games of 2002; and
             72          (C) for which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002
             73      does not receive reimbursement;
             74          (9) sales of vehicles of a type required to be registered under the motor vehicle laws of this
             75      state which are made to bona fide nonresidents of this state and are not afterwards registered or
             76      used in this state except as necessary to transport them to the borders of this state;
             77          (10) sales of medicine;
             78          (11) sales or use of property, materials, or services used in the construction of or
             79      incorporated in pollution control facilities allowed by Sections 19-2-123 through 19-2-127 ;
             80          (12) sales of meals served by:
             81          (a) churches, charitable institutions, and institutions of higher education, if the meals are
             82      not available to the general public; and
             83          (b) inpatient meals provided at medical or nursing facilities;
             84          (13) isolated or occasional sales by persons not regularly engaged in business, except the
             85      sale of vehicles or vessels required to be titled or registered under the laws of this state in which
             86      case the tax is based upon:
             87          (a) the bill of sale or other written evidence of value of the vehicle or vessel being sold;
             88      or
             89          (b) in the absence of a bill of sale or other written evidence of value, the then existing fair


             90      market value of the vehicle or vessel being sold as determined by the commission;
             91          (14) (a) the following purchases or leases by a manufacturer on or after July 1, 1995:
             92          (i) machinery and equipment:
             93          (A) used in the manufacturing process;
             94          (B) having an economic life of three or more years; and
             95          (C) used:
             96          (I) to manufacture an item sold as tangible personal property; and
             97          (II) in new or expanding operations in a manufacturing facility in the state; and
             98          (ii) subject to the provisions of Subsection (14)(b), normal operating replacements that:
             99          (A) have an economic life of three or more years;
             100          (B) are used in the manufacturing process in a manufacturing facility in the state;
             101          (C) are used to replace or adapt an existing machine to extend the normal estimated useful
             102      life of the machine; and
             103          (D) do not include repairs and maintenance;
             104          (b) the rates for the exemption under Subsection (14)(a)(ii) are as follows:
             105          (i) beginning July 1, 1996, through June 30, 1997, 30% of the sale or lease described in
             106      Subsection (14)(a)(ii) is exempt;
             107          (ii) beginning July 1, 1997, through June 30, 1998, 60% of the sale or lease described in
             108      Subsection (14)(a)(ii) is exempt; and
             109          (iii) beginning July 1, 1998, 100% of the sale or lease described in Subsection (14)(a)(ii)
             110      is exempt;
             111          (c) for purposes of this Subsection (14), the commission shall by rule define the terms
             112      "new or expanding operations" and "establishment"; and
             113          (d) on or before October 1, 1991, and every five years after October 1, 1991, the
             114      commission shall:
             115          (i) review the exemptions described in Subsection (14)(a) and make recommendations to
             116      the Revenue and Taxation Interim Committee concerning whether the exemptions should be
             117      continued, modified, or repealed; and
             118          (ii) include in its report:
             119          (A) the cost of the exemptions;
             120          (B) the purpose and effectiveness of the exemptions; and


             121          (C) the benefits of the exemptions to the state;
             122          (15) sales of tooling, special tooling, support equipment, and special test equipment used
             123      or consumed exclusively in the performance of any aerospace or electronics industry contract with
             124      the United States government or any subcontract under that contract, but only if, under the terms
             125      of that contract or subcontract, title to the tooling and equipment is vested in the United States
             126      government as evidenced by a government identification tag placed on the tooling and equipment
             127      or by listing on a government-approved property record if a tag is impractical;
             128          (16) intrastate movements of:
             129          (a) freight by common carriers; and
             130          (b) passengers:
             131          (i) by taxicabs as described in SIC Code 4121 of the 1987 Standard Industrial
             132      Classification Manual of the federal Executive Office of the President, Office of Management and
             133      Budget; or
             134          (ii) transported by an establishment described in SIC Code 4111 of the 1987 Standard
             135      Industrial Classification Manual of the federal Executive Office of the President, Office of
             136      Management and Budget, if the transportation originates and terminates within a county of the
             137      first, second, or third class;
             138          (17) sales of newspapers or newspaper subscriptions;
             139          (18) tangible personal property, other than money, traded in as full or part payment of the
             140      purchase price, except that for purposes of calculating sales or use tax upon vehicles not sold by
             141      a vehicle dealer, trade-ins are limited to other vehicles only, and the tax is based upon:
             142          (a) the bill of sale or other written evidence of value of the vehicle being sold and the
             143      vehicle being traded in; or
             144          (b) in the absence of a bill of sale or other written evidence of value, the then existing fair
             145      market value of the vehicle being sold and the vehicle being traded in, as determined by the
             146      commission;
             147          (19) sprays and insecticides used to control insects, diseases, and weeds for commercial
             148      production of fruits, vegetables, feeds, seeds, and animal products, but not those sprays and
             149      insecticides used in the processing of the products;
             150          (20) (a) sales of tangible personal property used or consumed primarily and directly in
             151      farming operations, including sales of irrigation equipment and supplies used for agricultural


             152      production purposes, whether or not they become part of real estate and whether or not installed
             153      by farmer, contractor, or subcontractor, but not sales of:
             154          (i) machinery, equipment, materials, and supplies used in a manner that is incidental to
             155      farming, such as hand tools with a unit purchase price not in excess of $250, and maintenance and
             156      janitorial equipment and supplies;
             157          (ii) tangible personal property used in any activities other than farming, such as office
             158      equipment and supplies, equipment and supplies used in sales or distribution of farm products, in
             159      research, or in transportation; or
             160          (iii) any vehicle required to be registered by the laws of this state, without regard to the use
             161      to which the vehicle is put;
             162          (b) sales of hay;
             163          (21) exclusive sale of locally grown seasonal crops, seedling plants, or garden, farm, or
             164      other agricultural produce if sold by a producer during the harvest season;
             165          (22) purchases of food as defined in 7 U.S.C. Sec. 2012(g) under the Food Stamp
             166      Program, 7 U.S.C. Sec. 2011 et seq.;
             167          (23) sales of nonreturnable containers, nonreturnable labels, nonreturnable bags,
             168      nonreturnable shipping cases, and nonreturnable casings to a manufacturer, processor, wholesaler,
             169      or retailer for use in packaging tangible personal property to be sold by that manufacturer,
             170      processor, wholesaler, or retailer;
             171          (24) property stored in the state for resale;
             172          (25) property brought into the state by a nonresident for his or her own personal use or
             173      enjoyment while within the state, except property purchased for use in Utah by a nonresident living
             174      and working in Utah at the time of purchase;
             175          (26) property purchased for resale in this state, in the regular course of business, either in
             176      its original form or as an ingredient or component part of a manufactured or compounded product;
             177          (27) property upon which a sales or use tax was paid to some other state, or one of its
             178      subdivisions, except that the state shall be paid any difference between the tax paid and the tax
             179      imposed by this part and Part 2, and no adjustment is allowed if the tax paid was greater than the
             180      tax imposed by this part and Part 2;
             181          (28) any sale of a service described in Subsections 59-12-103 (1)(b), (c), and (d) to a person
             182      for use in compounding a service taxable under the subsections;


             183          (29) purchases of supplemental foods as defined in 42 U.S.C. Sec. 1786(b)(14) under the
             184      special supplemental nutrition program for women, infants, and children established in 42 U.S.C.
             185      Sec. 1786;
             186          (30) beginning on July 1, 1999, through June 30, 2004, sales or leases of rolls, rollers,
             187      refractory brick, electric motors, or other replacement parts used in the furnaces, mills, or ovens
             188      of a steel mill described in SIC Code 3312 of the 1987 Standard Industrial Classification Manual
             189      of the federal Executive Office of the President, Office of Management and Budget;
             190          (31) sales of boats of a type required to be registered under Title 73, Chapter 18, State
             191      Boating Act, boat trailers, and outboard motors which are made to bona fide nonresidents of this
             192      state and are not thereafter registered or used in this state except as necessary to transport them to
             193      the borders of this state;
             194          (32) sales of tangible personal property to persons within this state that is subsequently
             195      shipped outside the state and incorporated pursuant to contract into and becomes a part of real
             196      property located outside of this state, except to the extent that the other state or political entity
             197      imposes a sales, use, gross receipts, or other similar transaction excise tax on it against which the
             198      other state or political entity allows a credit for taxes imposed by this chapter;
             199          (33) sales of aircraft manufactured in Utah if sold for delivery and use outside Utah where
             200      a sales or use tax is not imposed, even if the title is passed in Utah;
             201          (34) amounts paid for the purchase of telephone service for purposes of providing
             202      telephone service;
             203          (35) fares charged to persons transported directly by a public transit district created under
             204      the authority of Title 17A, Chapter 2, Part 10, Utah Public Transit District Act;
             205          (36) sales or leases of vehicles to, or use of vehicles by an authorized carrier;
             206          (37) (a) 45% of the sales price of any new manufactured home; and
             207          (b) 100% of the sales price of any used manufactured home;
             208          (38) sales relating to schools and fundraising sales;
             209          (39) sales or rentals of home medical equipment and supplies;
             210          (40) (a) sales to a ski resort of electricity to operate a passenger ropeway as defined in
             211      Section 72-11-102 ; and
             212          (b) the commission shall by rule determine the method for calculating sales exempt under
             213      Subsection (40)(a) that are not separately metered and accounted for in utility billings;


             214          (41) sales to a ski resort of:
             215          (a) snowmaking equipment;
             216          (b) ski slope grooming equipment; and
             217          (c) passenger ropeways as defined in Section 72-11-102 ;
             218          (42) sales of natural gas, electricity, heat, coal, fuel oil, or other fuels for industrial use;
             219          (43) sales or rentals of the right to use or operate for amusement, entertainment, or
             220      recreation a coin-operated amusement device as defined in Section 59-12-102 ;
             221          (44) sales of cleaning or washing of tangible personal property by a coin-operated car wash
             222      machine;
             223          (45) sales by the state or a political subdivision of the state, except state institutions of
             224      higher education as defined in Section 53B-3-102 , of:
             225          (a) photocopies; or
             226          (b) other copies of records held or maintained by the state or a political subdivision of the
             227      state; and
             228          (46) (a) amounts paid:
             229          (i) to a person providing intrastate transportation to an employer's employee to or from the
             230      employee's primary place of employment;
             231          (ii) by an:
             232          (A) employee; or
             233          (B) employer; and
             234          (iii) pursuant to a written contract between:
             235          (A) the employer; and
             236          (B) (I) the employee; or
             237          (II) a person providing transportation to the employer's employee; and
             238          (b) in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             239      commission may for purposes of Subsection (46)(a) make rules defining what constitutes an
             240      employee's primary place of employment;
             241          (47) amounts paid for admission to an athletic event at an institution of higher education
             242      that is subject to the provisions of Title IX of the Education Amendments of 1972, 20 U.S.C. Sec.
             243      1681 et seq.;
             244          (48) sales of telephone service charged to a prepaid telephone calling card;


             245          (49) (a) sales of hearing aids; and
             246          (b) sales of hearing aid accessories; [and]
             247          (50) (a) sales made to or by:
             248          (i) an area agency on aging; or
             249          (ii) a senior citizen center owned by a county, city, or town; or
             250          (b) sales made by a senior citizen center that contracts with an area agency on aging; and
             251          (51) an amount paid by or charged to a purchaser for accommodations and services
             252      described in Subsection 59-12-103 (1)(i) to the extent the amount is exempt under Section
             253      59-12-104.2 .
             254          Section 2. Section 59-12-104.2 is enacted to read:
             255          59-12-104.2. Exemption for accommodations and services taxed by an Indian Tribe.
             256          (1) As used in this section:
             257          (a) "Indian tribe" means a federally recognized Indian tribe.
             258          (b) "Tribal taxing area" means the geographical area that:
             259          (i) is subject to the taxing authority of the tribe; and
             260          (ii) consists of:
             261          (A) notwithstanding the issuance of a patent, all land:
             262          (I) within the limits of an Indian reservation under the jurisdiction of the federal
             263      government; and
             264          (II) including any rights-of-way running through the reservation; and
             265          (B) all Indian allotments the Indian titles to which have not been extinguished, including
             266      any rights-of-way running through an Indian allotment.
             267          (2) (a) Beginning July 1, 2000, amounts paid by or charged to a purchaser for
             268      accommodations and services described in Subsection 59-12-103 (1)(i) are exempt from the tax
             269      imposed by Subsection 59-12-103 (2)(c) to the extent permitted under Subsection (2)(b) if:
             270          (i) the accommodations and services described in Subsection 59-12-103 (1)(i) are provided
             271      within:
             272          (A) the state; and
             273          (B) a tribal taxing area;
             274          (ii) an Indian tribe imposes and collects a tax on the amounts paid by or charged to the
             275      purchaser for the accommodations and services described in Subsection 59-12-103 (1)(i);


             276          (iii) the Indian tribe imposes the tax described in Subsection (2)(a)(ii) without regard to
             277      whether or not the purchaser that pays or is charged for the accommodations and services is an
             278      enrolled member of the Indian tribe; and
             279          (iv) meets the requirements of Subsection (4).
             280          (b) If but for Subsection (2)(a) the amounts paid by or charged to a purchaser for
             281      accommodations and services described in Subsection (2)(a) are subject to a tax imposed by
             282      Subsection 59-12-103 (2)(c):
             283          (i) the vendor shall collect and pay to the state the difference described in Subsection (3)
             284      if that difference is greater than $0; and
             285          (ii) a person may not require the state to provide a refund, a credit, or similar tax relief if
             286      the difference described in Subsection (3) is equal to or less than $0.
             287          (3) The difference described in Subsection (2)(b) is equal to the difference between:
             288          (a) the amount of tax imposed by Subsection 59-12-103 (2)(c) on the amounts paid by or
             289      charged to a purchaser for accommodations and services described in Subsection 59-12-103 (1)(i);
             290      less
             291          (b) the tax imposed and collected by an Indian tribe on the amounts paid by or charged to
             292      a purchaser for the accommodations and services described in Subsection 59-12-103 (1)(i).
             293          (4) (a) (i) If, on or after May 1, 2000, an Indian tribe enacts a tax on amounts paid by or
             294      charged to a purchaser for accommodations and services described in Subsection 59-12-103 (1)(i),
             295      the exemption provided in Subsection (2) is not effective until the first day of the calender quarter
             296      after a 60-day period beginning on the date the commission receives notice meeting the
             297      requirements of Subsection (4)(a)(ii) from the Indian tribe.
             298          (ii) The notice described in Subsection (4)(a)(i) shall state:
             299          (A) that the Indian tribe has enacted or will enact a tax on amounts paid by or charged to
             300      a purchaser for accommodations and services described in Subsection 59-12-103 (1)(i);
             301          (B) the effective date of the tax described in Subsection (4)(a)(ii)(A); and
             302          (C) the rate of the tax described in Subsection (4)(a)(ii)(A).
             303          (b) (i) If, on or after May 1, 2000, an Indian tribe changes the tax rate of a tax imposed on
             304      amounts paid by or charged to a purchaser for accommodations and services described in
             305      Subsection 59-12-103 (1)(i), any change in the amount of the exemption under Subsection (2) as
             306      a result of the change in the tax rate is not effective until the first day of the calender quarter after


             307      a 60-day period beginning on the date the commission receives notice meeting the requirements
             308      of Subsection (4)(b)(ii) from the Indian tribe.
             309          (ii) The notice described in Subsection (4)(b)(i) shall state:
             310          (A) that the Indian tribe has changed or will change the tax rate of a tax imposed on
             311      amounts paid by or charged to a purchaser for accommodations and services described in
             312      Subsection 59-12-103 (1)(i);
             313          (B) the effective date of the rate change on the tax described in Subsection (4)(b)(ii)(A);
             314      and
             315          (C) the new rate of the tax described in Subsection (4)(b)(ii)(A).




Legislative Review Note
    as of 1-21-00 10:20 AM


A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel


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