S.B. 59

1

SALES AND USE TAX - TAXATION OF
2 AMOUNTS PAID TO A TELEPHONE SERVICE
3 PROVIDER OR TELEGRAPH CORPORATION
4 2002 GENERAL SESSION
5 STATE OF UTAH
6 Sponsor: Curtis S. Bramble
7 This act modifies the Revenue and Taxation Code to amend definitions, to address the
8 applicability of the sales and use tax to amounts paid to telephone service providers or
9 telegraph corporations, and to make technical changes. This act takes effect on July 1, 2002.
10 This act affects sections of Utah Code Annotated 1953 as follows:
11 AMENDS:
12 59-12-102, as last amended by Chapter 11, Laws of Utah 2001, First Special Session
13 59-12-103, as last amended by Chapter 11, Laws of Utah 2001, First Special Session
14 Be it enacted by the Legislature of the state of Utah:
15 Section 1. Section 59-12-102 is amended to read:
16 59-12-102. Definitions.
17 As used in this chapter:
18 (1) (a) "Admission or user fees" includes season passes.
19 (b) "Admission or user fees" does not include annual membership dues to private
20 organizations.
21 (2) "Area agency on aging" is as defined in Section 62A-3-101 .
22 (3) "Authorized carrier" means:
23 (a) in the case of vehicles operated over public highways, the holder of credentials
24 indicating that the vehicle is or will be operated pursuant to both the International Registration
25 Plan and the International Fuel Tax Agreement;
26 (b) in the case of aircraft, the holder of a Federal Aviation Administration operating
27 certificate or air carrier's operating certificate; or

28 (c) in the case of locomotives, freight cars, railroad work equipment, or other rolling stock,
29 the holder of a certificate issued by the United States Interstate Commerce Commission.
30 (4) (a) For purposes of Subsection 59-12-104 (43), "coin-operated amusement device"
31 means:
32 (i) a coin-operated amusement, skill, or ride device;
33 (ii) that is not controlled through vendor-assisted, over-the-counter, sales of tokens; and
34 (iii) includes a music machine, pinball machine, billiard machine, video game machine,
35 arcade machine, and a mechanical or electronic skill game or ride.
36 (b) For purposes of Subsection 59-12-104 (43), "coin-operated amusement device" does
37 not mean a coin-operated amusement device possessing a coinage mechanism that:
38 (i) accepts and registers multiple denominations of coins; and
39 (ii) allows the vendor to collect the sales and use tax at the time an amusement device is
40 activated and operated by a person inserting coins into the device.
41 (5) "Commercial use" means the use of gas, electricity, heat, coal, fuel oil, or other fuels
42 that does not constitute industrial use under Subsection (13) or residential use under Subsection
43 (22).
44 (6) (a) "Common carrier" means a person engaged in or transacting the business of
45 transporting passengers, freight, merchandise, or other property for hire within this state.
46 (b) (i) "Common carrier" does not include a person who, at the time the person is traveling
47 to or from that person's place of employment, transports a passenger to or from the passenger's
48 place of employment.
49 (ii) For purposes of Subsection (6)(b)(i), in accordance with Title 63, Chapter 46a, Utah
50 Administrative Rulemaking Act, the commission may make rules defining what constitutes a
51 person's place of employment.
52 (7) "Component part" includes:
53 (a) poultry, dairy, and other livestock feed, and their components;
54 (b) baling ties and twine used in the baling of hay and straw;
55 (c) fuel used for providing temperature control of orchards and commercial greenhouses
56 doing a majority of their business in wholesale sales, and for providing power for off-highway type
57 farm machinery; and
58 (d) feed, seeds, and seedlings.

59 (8) "Construction materials" means any tangible personal property that will be converted
60 into real property.
61 (9) (a) "Fundraising sales" means sales:
62 (i) (A) made by a school; or
63 (B) made by a school student;
64 (ii) that are for the purpose of raising funds for the school to purchase equipment,
65 materials, or provide transportation; and
66 (iii) that are part of an officially sanctioned school activity.
67 (b) For purposes of Subsection (9)(a)(iii), "officially sanctioned school activity" means a
68 school activity:
69 (i) that is conducted in accordance with a formal policy adopted by the school or school
70 district governing the authorization and supervision of fundraising activities;
71 (ii) that does not directly or indirectly compensate an individual teacher or other
72 educational personnel by direct payment, commissions, or payment in kind; and
73 (iii) the net or gross revenues from which are deposited in a dedicated account controlled
74 by the school or school district.
75 (10) (a) "Hearing aid" means:
76 (i) an instrument or device having an electronic component that is designed to:
77 (A) (I) improve impaired human hearing; or
78 (II) correct impaired human hearing; and
79 (B) (I) be worn in the human ear; or
80 (II) affixed behind the human ear;
81 (ii) an instrument or device that is surgically implanted into the cochlea; or
82 (iii) a telephone amplifying device.
83 (b) "Hearing aid" does not include:
84 (i) except as provided in Subsection (10)(a)(i)(B) or (10)(a)(ii), an instrument or device
85 having an electronic component that is designed to be worn on the body;
86 (ii) except as provided in Subsection (10)(a)(iii), an assistive listening device or system
87 designed to be used by one individual, including:
88 (A) a personal amplifying system;
89 (B) a personal FM system;

90 (C) a television listening system; or
91 (D) a device or system similar to a device or system described in Subsections
92 (10)(b)(ii)(A) through (C); or
93 (iii) an assistive listening device or system designed to be used by more than one
94 individual, including:
95 (A) a device or system installed in:
96 (I) an auditorium;
97 (II) a church;
98 (III) a conference room;
99 (IV) a synagogue; or
100 (V) a theater; or
101 (B) a device or system similar to a device or system described in Subsections
102 (10)(b)(iii)(A)(I) through (V).
103 (11) (a) "Hearing aid accessory" means a hearing aid:
104 (i) component;
105 (ii) attachment; or
106 (iii) accessory.
107 (b) "Hearing aid accessory" includes:
108 (i) a hearing aid neck loop;
109 (ii) a hearing aid cord;
110 (iii) a hearing aid ear mold;
111 (iv) hearing aid tubing;
112 (v) a hearing aid ear hook; or
113 (vi) a hearing aid remote control.
114 (c) "Hearing aid accessory" does not include:
115 (i) a component, attachment, or accessory designed to be used only with an:
116 (A) instrument or device described in Subsection (10)(b)(i); or
117 (B) assistive listening device or system described in Subsection (10)(b)(ii) or (iii); or
118 (ii) a hearing aid battery.
119 (12) (a) "Home medical equipment and supplies" means equipment and supplies that:
120 (i) a licensed physician prescribes or authorizes in writing as necessary for the treatment

121 of a medical illness or injury or as necessary to mitigate an impairment resulting from illness or
122 injury;
123 (ii) are used exclusively by the person for whom they are prescribed to serve a medical
124 purpose; and
125 (iii) are listed as eligible for payment under Title XVIII of the federal Social Security Act
126 or under the state plan for medical assistance under Title XIX of the federal Social Security Act.
127 (b) "Home medical equipment and supplies" does not include:
128 (i) equipment and supplies purchased by, for, or on behalf of any health care facility, as
129 defined in Subsection (12)(c), doctor, nurse, or other health care provider for use in their
130 professional practice;
131 (ii) eyeglasses, contact lenses, or equipment to correct impaired vision; or
132 (iii) hearing aids or hearing aid accessories.
133 (c) For purposes of Subsection (12)(b)(i), "health care facility" includes:
134 (i) a clinic;
135 (ii) a doctor's office; and
136 (iii) a health care facility as defined in Section 26-21-2 .
137 (13) "Industrial use" means the use of natural gas, electricity, heat, coal, fuel oil, or other
138 fuels:
139 (a) in mining or extraction of minerals;
140 (b) in agricultural operations to produce an agricultural product up to the time of harvest
141 or placing the agricultural product into a storage facility, including:
142 (i) commercial greenhouses;
143 (ii) irrigation pumps;
144 (iii) farm machinery;
145 (iv) implements of husbandry as defined in Subsection 41-1a-102 (23) that are not
146 registered under Title 41, Chapter 1a, Part 2, Registration; and
147 (v) other farming activities;
148 (c) in manufacturing tangible personal property at an establishment described in SIC Codes
149 2000 to 3999 of the 1987 Standard Industrial Classification Manual of the federal Executive Office
150 of the President, Office of Management and Budget; or
151 (d) by a scrap recycler if:

152 (i) from a fixed location, the scrap recycler utilizes machinery or equipment to process one
153 or more of the following items into prepared grades of processed materials for use in new products:
154 (A) iron;
155 (B) steel;
156 (C) nonferrous metal;
157 (D) paper;
158 (E) glass;
159 (F) plastic;
160 (G) textile; or
161 (H) rubber; and
162 (ii) the new products under Subsection (13)(d)(i) would otherwise be made with
163 nonrecycled materials.
164 (14) "Manufactured home" means any manufactured home or mobile home as defined in
165 Title 58, Chapter 56, Utah Uniform Building Standards Act.
166 (15) For purposes of Subsection 59-12-104 (14), "manufacturing facility" means:
167 (a) an establishment described in SIC Codes 2000 to 3999 of the 1987 Standard Industrial
168 Classification Manual of the federal Executive Office of the President, Office of Management and
169 Budget; or
170 (b) a scrap recycler if:
171 (i) from a fixed location, the scrap recycler utilizes machinery or equipment to process one
172 or more of the following items into prepared grades of processed materials for use in new products:
173 (A) iron;
174 (B) steel;
175 (C) nonferrous metal;
176 (D) paper;
177 (E) glass;
178 (F) plastic;
179 (G) textile; or
180 (H) rubber; and
181 (ii) the new products under Subsection (15)(b)(i) would otherwise be made with
182 nonrecycled materials.

183 (16) (a) "Medicine" means:
184 (i) insulin, syringes, and any medicine prescribed for the treatment of human ailments by
185 a person authorized to prescribe treatments and dispensed on prescription filled by a registered
186 pharmacist, or supplied to patients by a physician, surgeon, or podiatric physician;
187 (ii) any medicine dispensed to patients in a county or other licensed hospital if prescribed
188 for that patient and dispensed by a registered pharmacist or administered under the direction of a
189 physician; and
190 (iii) any oxygen or stoma supplies prescribed by a physician or administered under the
191 direction of a physician or paramedic.
192 (b) "Medicine" does not include:
193 (i) any auditory, prosthetic, ophthalmic, or ocular device or appliance; or
194 (ii) any alcoholic beverage.
195 (17) "Olympic merchandise" means tangible personal property bearing an Olympic
196 designation, emblem, insignia, mark, logo, service mark, symbol, terminology, trademark, or other
197 copyrighted or protected material, including:
198 (a) one or more of the following terms:
199 (i) "Olympic";
200 (ii) "Olympiad"; or
201 (iii) "Citius Altius Fortius";
202 (b) the symbol of the International Olympic Committee, consisting of five interlocking
203 rings;
204 (c) the emblem of the International Olympic Committee Corporation;
205 (d) a United States Olympic Committee designation, emblem, insignia, mark, logo, service
206 mark, symbol, terminology, trademark, or other copyrighted or protected material;
207 (e) any emblem of the Olympic Winter Games of 2002 that is officially designated by the
208 Salt Lake Organizing Committee of the Olympic Winter Games of 2002; or
209 (f) the mascot of the Olympic Winter Games of 2002.
210 (18) (a) "Other fuels" means products that burn independently to produce heat or energy.
211 (b) "Other fuels" includes oxygen when it is used in the manufacturing of tangible personal
212 property.
213 (19) "Person" includes any individual, firm, partnership, joint venture, association,

214 corporation, estate, trust, business trust, receiver, syndicate, this state, any county, city,
215 municipality, district, or other local governmental entity of the state, or any group or combination
216 acting as a unit.
217 (20) "Purchase price" means the amount paid or charged for tangible personal property or
218 any other taxable transaction under Subsection 59-12-103 (1), excluding only cash discounts taken
219 or any excise tax imposed on the purchase price by the federal government.
220 (21) "Regularly rented" means:
221 (a) rented to a guest for value three or more times during a calendar year; and
222 (b) advertised or held out to the public as a place that is regularly rented to guests for
223 value.
224 (22) "Residential use" means the use in or around a home, apartment building, sleeping
225 quarters, and similar facilities or accommodations.
226 (23) (a) "Retail sale" means any sale within the state of tangible personal property or any
227 other taxable transaction under Subsection 59-12-103 (1), other than resale of such property, item,
228 or service by a retailer or wholesaler to a user or consumer.
229 (b) "Retail sale" includes sales by any farmer or other agricultural producer of poultry,
230 eggs, or dairy products to consumers if the sales have an average monthly sales value of $125 or
231 more.
232 (c) "Retail sale" does not include, and no additional sales or use tax shall be assessed
233 against, those transactions where a purchaser of tangible personal property pays applicable sales
234 or use taxes on its initial nonexempt purchases of property and then enters into a sale-leaseback
235 transaction by which title to such property is transferred by the purchaser-lessee to a lessor for
236 consideration, provided:
237 (i) the transaction is intended as a form of financing for the property to the
238 purchaser-lessee; and
239 (ii) pursuant to generally accepted accounting principles, the purchaser-lessee is required
240 to capitalize the subject property for financial reporting purposes, and account for the lease
241 payments as payments made under a financing arrangement.
242 (24) (a) "Retailer" means any person engaged in a regularly organized retail business in
243 tangible personal property or any other taxable transaction under Subsection 59-12-103 (1), and
244 who is selling to the user or consumer and not for resale.

245 (b) "Retailer" includes commission merchants, auctioneers, and any person regularly
246 engaged in the business of selling to users or consumers within the state.
247 (c) "Retailer" does not include farmers, gardeners, stockmen, poultrymen, or other growers
248 or agricultural producers producing and doing business on their own premises, except those who
249 are regularly engaged in the business of buying or selling for a profit.
250 (d) For purposes of this chapter the commission may regard as retailers the following if
251 they determine it is necessary for the efficient administration of this chapter: salesmen,
252 representatives, peddlers, or canvassers as the agents of the dealers, distributors, supervisors, or
253 employers under whom they operate or from whom they obtain the tangible personal property sold
254 by them, irrespective of whether they are making sales on their own behalf or on behalf of these
255 dealers, distributors, supervisors, or employers, except that:
256 (i) a printer's facility with which a retailer has contracted for printing shall not be
257 considered to be a salesman, representative, peddler, canvasser, or agent of the retailer; and
258 (ii) the ownership of property that is located at the premises of a printer's facility with
259 which the retailer has contracted for printing and that consists of the final printed product, property
260 that becomes a part of the final printed product, or copy from which the printed product is
261 produced, shall not result in the retailer being deemed to have or maintain an office, distribution
262 house, sales house, warehouse, service enterprise, or other place of business, or to maintain a stock
263 of goods, within this state.
264 (25) "Sale" means any transfer of title, exchange, or barter, conditional or otherwise, in any
265 manner, of tangible personal property or any other taxable transaction under Subsection
266 59-12-103 (1), for consideration. It includes:
267 (a) installment and credit sales;
268 (b) any closed transaction constituting a sale;
269 (c) any sale of electrical energy, gas, services, or entertainment taxable under this chapter;
270 (d) any transaction if the possession of property is transferred but the seller retains the title
271 as security for the payment of the price; and
272 (e) any transaction under which right to possession, operation, or use of any article of
273 tangible personal property is granted under a lease or contract and the transfer of possession would
274 be taxable if an outright sale were made.
275 (26) (a) "Sales relating to schools" means the following sales by, amounts paid to, or

276 amounts charged by a school:
277 (i) sales that are directly related to the school's educational functions or activities
278 including:
279 (A) the sale of:
280 (I) textbooks;
281 (II) textbook fees;
282 (III) laboratory fees;
283 (IV) laboratory supplies; or
284 (V) safety equipment;
285 (B) the sale of clothing that:
286 (I) a student is specifically required to wear as a condition of participation in a
287 school-related event or school-related activity; and
288 (II) is not readily adaptable to general or continued usage to the extent that it takes the
289 place of ordinary clothing;
290 (C) sales of food if the net or gross revenues generated by the food sales are deposited into
291 a school district fund or school fund dedicated to school meals; or
292 (D) transportation charges for official school activities; or
293 (ii) amounts paid to or amounts charged by a school for admission to a school-related
294 event or school-related activity.
295 (b) "Sales relating to schools" does not include:
296 (i) bookstore sales of items that are not educational materials or supplies;
297 (ii) except as provided in Subsection (26)(a)(i)(B), clothing; or
298 (iii) amounts paid to or amounts charged by a school for admission to a school-related
299 event or school-related activity if the amounts paid or charged are passed through to a person:
300 (A) other than a:
301 (I) school;
302 (II) nonprofit organization authorized by a school board or a governing body of a private
303 school to organize and direct a competitive secondary school activity; or
304 (III) nonprofit association authorized by a school board or a governing body of a private
305 school to organize and direct a competitive secondary school activity; and
306 (B) that is required to collect sales and use taxes under this chapter.

307 (c) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
308 commission may make rules defining the term "passed through."
309 (27) For purposes of this section and Section 59-12-104 , "school" means:
310 (a) an elementary school or a secondary school that:
311 (i) is a:
312 (A) public school; or
313 (B) private school; and
314 (ii) provides instruction for one or more grades kindergarten through 12; or
315 (b) a public school district.
316 (28) (a) "Semiconductor fabricating or processing materials" means tangible personal
317 property:
318 (i) used primarily in the process of:
319 (A) (I) manufacturing a semiconductor; or
320 (II) fabricating a semiconductor; or
321 (B) maintaining an environment suitable for a semiconductor; or
322 (ii) consumed primarily in the process of:
323 (A) (I) manufacturing a semiconductor; or
324 (II) fabricating a semiconductor; or
325 (B) maintaining an environment suitable for a semiconductor.
326 (b) "Semiconductor fabricating or processing materials" includes a chemical, catalyst, or
327 other material used to:
328 (i) produce or induce in a semiconductor a:
329 (A) chemical change; or
330 (B) physical change;
331 (ii) remove impurities from a semiconductor; or
332 (iii) improve the marketable condition of a semiconductor.
333 (29) "Senior citizen center" means a facility having the primary purpose of providing
334 services to the aged as defined in Section 62A-3-101 .
335 (30) "State" means the state of Utah, its departments, and agencies.
336 (31) "Storage" means any keeping or retention of tangible personal property or any other
337 taxable transaction under Subsection 59-12-103 (1), in this state for any purpose except sale in the

338 regular course of business.
339 (32) (a) "Tangible personal property" means:
340 (i) all goods, wares, merchandise, produce, and commodities;
341 (ii) all tangible or corporeal things and substances which are dealt in or capable of being
342 possessed or exchanged;
343 (iii) water in bottles, tanks, or other containers; and
344 (iv) all other physically existing articles or things, including property severed from real
345 estate.
346 (b) "Tangible personal property" does not include:
347 (i) real estate or any interest or improvements in real estate;
348 (ii) bank accounts, stocks, bonds, mortgages, notes, and other evidence of debt;
349 (iii) insurance certificates or policies;
350 (iv) personal or governmental licenses;
351 (v) water in pipes, conduits, ditches, or reservoirs;
352 (vi) currency and coinage constituting legal tender of the United States or of a foreign
353 nation; and
354 (vii) all gold, silver, or platinum ingots, bars, medallions, or decorative coins, not
355 constituting legal tender of any nation, with a gold, silver, or platinum content of not less than
356 80%.
357 [(34)] (33) (a) For purposes of Subsection [(33)] (34) and Section 59-12-103 , "telephone
358 service" means a two-way transmission:
359 (i) by:
360 (A) wire;
361 (B) radio;
362 (C) lightwave; or
363 (D) other electromagnetic means; and
364 (ii) of one or more of the following:
365 (A) a sign;
366 (B) a signal;
367 (C) writing;
368 (D) an image;

369 (E) sound;
370 (F) a message;
371 (G) data; or
372 (H) other information of any nature.
373 (b) "Telephone service" includes:
374 (i) cellular telephone service;
375 (ii) private communications service; or
376 (iii) automated digital telephone answering service.
377 (c) "Telephone service" does not include a service or a transaction that a state or a political
378 subdivision of a state is prohibited from taxing as of July 1, 2001, under the Internet Tax Freedom
379 Act, Pub. L. No. 105-277.
380 [(33)] (34) (a) "Telephone [corporation] service provider" means a [corporation] person
381 that:
382 (i) owns, controls, operates, or manages a telephone service; and
383 (ii) engages in an activity described in Subsection [(33)] (34)(a)(i) for the shared use with
384 or resale to any person of the telephone service.
385 (b) A [corporation] person described in Subsection [(33)] (34)(a) is a telephone
386 [corporation] service provider whether or not the Public Service Commission of Utah regulates:
387 (i) [the corporation] that person; or
388 (ii) the telephone service that the [corporation] person owns, controls, operates, or
389 manages.
390 (35) (a) "Use" means the exercise of any right or power over tangible personal property
391 under Subsection 59-12-103 (1), incident to the ownership or the leasing of that property, item, or
392 service.
393 (b) "Use" does not include the sale, display, demonstration, or trial of that property in the
394 regular course of business and held for resale.
395 (36) "Vehicle" means any aircraft, as defined in Section 72-10-102 ; any vehicle, as defined
396 in Section 41-1a-102 ; any off-highway vehicle, as defined in Section 41-22-2 ; and any vessel, as
397 defined in Section 41-1a-102 ; that is required to be titled, registered, or both. "Vehicle," for
398 purposes of Subsection 59-12-104 (36) only, also includes any locomotive, freight car, railroad
399 work equipment, or other railroad rolling stock.

400 (37) "Vehicle dealer" means a person engaged in the business of buying, selling, or
401 exchanging vehicles as defined in Subsection (36).
402 (38) (a) "Vendor" means any person receiving any payment or consideration upon a sale
403 of tangible personal property or any other taxable transaction under Subsection 59-12-103 (1), or
404 to whom the payment or consideration is payable.
405 (b) "Vendor" does not mean a printer's facility described in Subsection (24)(d).
406 Section 2. Section 59-12-103 is amended to read:
407 59-12-103. Sales and use tax base -- Rate -- Use of sales and use tax revenues.
408 (1) A tax is imposed on the purchaser as provided in this part for amounts paid or charged
409 for the following transactions:
410 (a) retail sales of tangible personal property made within the state;
411 (b) amounts paid:
412 (i) (A) to a common [carriers or to] carrier; or
413 (B) whether the following are municipally or privately owned, to a:
414 (I) telephone [corporations] service provider; or
415 (II) telegraph [corporations, whether the corporations are municipally or privately owned,]
416 corporation as defined in Section 54-2-1 ; and
417 (ii) for:
418 [(i)] (A) all transportation;
419 [(ii)] (B) intrastate telephone service; or
420 [(iii)] (C) telegraph service;
421 (c) sales of the following for commercial use:
422 (i) gas;
423 (ii) electricity;
424 (iii) heat;
425 (iv) coal;
426 (v) fuel oil; or
427 (vi) other fuels;
428 (d) sales of the following for residential use:
429 (i) gas;
430 (ii) electricity;

431 (iii) heat;
432 (iv) coal;
433 (v) fuel oil; or
434 (vi) other fuels;
435 (e) sales of meals;
436 (f) except as provided in Section 59-12-104 , amounts paid or charged as admission or user
437 fees for theaters, movies, operas, museums, planetariums, shows of any type or nature, exhibitions,
438 concerts, carnivals, amusement parks, amusement rides, circuses, menageries, fairs, races, contests,
439 sporting events, dances, boxing matches, wrestling matches, closed circuit television broadcasts,
440 billiard parlors, pool parlors, bowling lanes, golf, miniature golf, golf driving ranges, batting cages,
441 skating rinks, ski lifts, ski runs, ski trails, snowmobile trails, tennis courts, swimming pools, water
442 slides, river runs, jeep tours, boat tours, scenic cruises, horseback rides, sports activities, or any
443 other amusement, entertainment, recreation, exhibition, cultural, or athletic activity;
444 (g) amounts paid or charged for services:
445 (i) for repairs or renovations of tangible personal property; or
446 (ii) to install tangible personal property in connection with other tangible personal
447 property;
448 (h) except as provided in Subsection 59-12-104 (7), amounts paid or charged for cleaning
449 or washing of tangible personal property;
450 (i) amounts paid or charged for tourist home, hotel, motel, or trailer court accommodations
451 and services that are regularly rented for less than 30 consecutive days;
452 (j) amounts paid or charged for laundry or dry cleaning services;
453 (k) amounts paid or charged for leases or rentals of tangible personal property if:
454 (i) the tangible personal property's situs is in this state;
455 (ii) the lessee took possession of the tangible personal property in this state; or
456 (iii) within this state the tangible personal property is:
457 (A) stored;
458 (B) used; or
459 (C) otherwise consumed;
460 (l) amounts paid or charged for tangible personal property if within this state the tangible
461 personal property is:

462 (i) stored;
463 (ii) used; or
464 (iii) consumed; and
465 (m) amounts paid or charged for prepaid telephone calling cards.
466 (2) (a) Except as provided in Subsections (2)(b) and (c), beginning on July 1, 2001, a state
467 tax and a local tax is imposed on a transaction described in Subsection (1) equal to the sum of:
468 (i) a state tax imposed on the transaction at a rate of 4.75%; and
469 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
470 transaction under this chapter other than this part.
471 (b) Notwithstanding Subsection (2)(a), beginning on July 1, 2001, a state tax and a local
472 tax is imposed on a transaction described in Subsection (1)(d) equal to the sum of:
473 (i) a state tax imposed on the transaction at a rate of 2%; and
474 (ii) a local tax equal to the sum of the tax rates a county, city, or town imposes on the
475 transaction under this chapter other than this part.
476 (c) Notwithstanding Subsections (2)(a) and (b), beginning on July 1, 2001, if a vendor
477 collects a tax under Subsection 59-12-107 (1)(b) on a transaction described in Subsection (1), a
478 state tax and a local tax is imposed on the transaction equal to the sum of:
479 (i) a state tax imposed on the transaction at a rate of:
480 (A) 4.75% for a transaction other than a transaction described in Subsection (1)(d); or
481 (B) 2% for a transaction described in Subsection (1)(d); and
482 (ii) except as provided in Subsection (2)(d), a local tax imposed on the transaction at a rate
483 equal to the sum of the following tax rates:
484 (A) (I) the lowest tax rate imposed by a county, city, or town under Section 59-12-204 , but
485 only if all of the counties, cities, and towns in the state impose the tax under Section 59-12-204 ;
486 or
487 (II) the lowest tax rate imposed by a county, city, or town under Section 59-12-205 , but
488 only if all of the counties, cities, and towns in the state impose the tax under Section 59-12-205 ;
489 and
490 (B) the tax rate authorized by Section 59-12-1102 , but only if all of the counties in the state
491 impose the tax under Section 59-12-1102 .
492 (d) Tax rates authorized under the following do not apply to Subsection (2)(c)(ii):

493 (i) Subsection (2)(a)(i);
494 (ii) Subsection (2)(b)(i);
495 (iii) Subsection (2)(c)(i);
496 (iv) Section 59-12-301 ;
497 (v) Section 59-12-352 ;
498 (vi) Section 59-12-353 ;
499 (vii) Section 59-12-401 ;
500 (viii) Section 59-12-402 ;
501 (ix) Section 59-12-501 ;
502 (x) Section 59-12-502 ;
503 (xi) Section 59-12-603 ;
504 (xii) Section 59-12-703 ;
505 (xiii) Section 59-12-802 ;
506 (xiv) Section 59-12-804 ;
507 (xv) Section 59-12-1001 ;
508 (xvi) Section 59-12-1201 ; or
509 (xvii) Section 59-12-1302 .
510 (3) (a) Except as provided in Subsections (4) through (9), the state taxes described in
511 Subsections (2)(a)(i), (2)(b)(i), and (2)(c)(i) shall be deposited into the General Fund.
512 (b) The local taxes described in Subsections (2)(a)(ii) and (2)(b)(ii) shall be distributed to
513 a county, city, or town as provided in this chapter.
514 (c) (i) Notwithstanding any provision of this chapter, each county, city, or town in the state
515 shall receive the county's, city's, or town's proportionate share of the revenues generated by the
516 local tax described in Subsection (2)(c)(ii) as provided in Subsection (3)(c)(ii).
517 (ii) The commission shall determine a county's, city's, or town's proportionate share of the
518 revenues under Subsection (3)(c)(i) by:
519 (A) calculating an amount equal to:
520 (I) the population of the county, city, or town; divided by
521 (II) the total population of the state; and
522 (B) multiplying the amount determined under Subsection (3)(c)(ii)(A) by the total amount
523 of revenues generated by the local tax under Subsection (2)(c)(ii) for all counties, cities, and towns.

524 (iii) (A) Except as provided in Subsection (3)(c)(iii)(B), population figures for purposes
525 of this section shall be derived from the most recent official census or census estimate of the
526 United States Census Bureau.
527 (B) Notwithstanding Subsection (3)(c)(iii)(A), if a needed population estimate is not
528 available from the United States Census Bureau, population figures shall be derived from the
529 estimate from the Utah Population Estimates Committee created by executive order of the
530 governor.
531 (C) For purposes of this section, the population of a county may only include the
532 population of the unincorporated areas of the county.
533 (4) (a) Notwithstanding Subsection (3)(a), there shall be deposited in an Olympics special
534 revenue fund or funds as determined by the Division of Finance under Section 51-5-4 , for the use
535 of the Utah Sports Authority created under Title 63A, Chapter 7, Utah Sports Authority Act:
536 (i) from January 1, 1990, through December 31, 1999, the amount of sales and use tax
537 generated by a 1/64% tax rate on the taxable transactions under Subsection (1);
538 (ii) from January 1, 1990, through June 30, 1999, the amount of revenue generated by a
539 1/64% tax rate under Section 59-12-204 or Section 59-12-205 on the taxable transactions under
540 Subsection (1); and
541 (iii) interest earned on the amounts under Subsections (4)(a)(i) and (ii).
542 (b) These funds shall be used:
543 (i) by the Utah Sports Authority as follows:
544 (A) to the extent funds are available, to transfer directly to a debt service fund or to
545 otherwise reimburse to the state any amount expended on debt service or any other cost of any
546 bonds issued by the state to construct any public sports facility as defined in Section 63A-7-103 ;
547 (B) to pay for the actual and necessary operating, administrative, legal, and other expenses
548 of the Utah Sports Authority, but not including protocol expenses for seeking and obtaining the
549 right to host the Winter Olympic Games;
550 (C) as otherwise appropriated by the Legislature; and
551 (D) unless the Legislature appropriates additional funds from the Olympics Special
552 Revenue Fund to the Utah Sports Authority, the Utah Sports Authority may not expend, loan, or
553 pledge in the aggregate more than:
554 (I) $59,000,000 of sales and use tax deposited into the Olympics Special Revenue Fund

555 under Subsection (4)(a);
556 (II) the interest earned on the amount described in Subsection (4)(b)(i)(D)(I); and
557 (III) the revenues deposited into the Olympics Special Revenue Fund that are not sales and
558 use taxes deposited under Subsection (4)(a) or interest on the sales and use taxes;
559 (ii) to pay salary, benefits, or administrative costs associated with the State Olympic
560 Officer under Subsection 63A-10-103 (3), except that the salary, benefits, or administrative costs
561 may not be paid from the sales and use tax revenues generated by municipalities or counties and
562 deposited under Subsection (4)(a)(ii).
563 (c) A payment of salary, benefits, or administrative costs under Subsection 63A-10-103 (3)
564 is not considered an expenditure of the Utah Sports Authority.
565 (d) If the Legislature appropriates additional funds under Subsection (4)(b)(i)(D), the
566 authority may not expend, loan, pledge, or enter into any agreement to expend, loan, or pledge the
567 appropriated funds unless the authority:
568 (i) contracts in writing for the full reimbursement of the monies to the Olympics Special
569 Revenue Fund by a public sports entity or other person benefitting from the expenditure; and
570 (ii) obtains a security interest that secures payment or performance of the obligation to
571 reimburse.
572 (e) A contract or agreement entered into in violation of Subsection (4)(d) is void.
573 (5) (a) Notwithstanding Subsection (3)(a), beginning on July 1, 2001, the amount of sales
574 and use tax generated annually by a 1/16% tax rate on the taxable transactions under Subsection
575 (1) shall be used as provided in Subsections (5)(b) through (g).
576 (b) (i) Beginning on July 1, 2001, $2,300,000 each year shall be transferred as dedicated
577 credits to the Department of Natural Resources to:
578 (A) implement the measures described in Subsections 63-34-14 (4)(a) through (d) to protect
579 sensitive plant and animal species; or
580 (B) award grants, up to the amount authorized by the Legislature in an appropriations act,
581 to political subdivisions of the state to implement the measures described in Subsections
582 63-34-14 (4)(a) through (d) to protect sensitive plant and animal species.
583 (ii) Money transferred to the Department of Natural Resources under Subsection (5)(b)(i)
584 may not be used to assist the United States Fish and Wildlife Service or any other person to list or
585 attempt to have listed a species as threatened or endangered under the Endangered Species Act of

586 1973, 16 U.S.C. Sec. 1531 et seq.
587 (iii) At the end of each fiscal year:
588 (A) 50% of any unexpended dedicated credits shall lapse to the Water Resources
589 Conservation and Development Fund created in Section 73-10-24 ;
590 (B) 25% of any unexpended dedicated credits shall lapse to the Utah Wastewater Loan
591 Program Subaccount created in Section 73-10c-5 ; and
592 (C) 25% of any unexpended dedicated credits shall lapse to the Drinking Water Loan
593 Program Subaccount created in Section 73-10c-5 .
594 (c) Five hundred thousand dollars each year shall be deposited in the Agriculture Resource
595 Development Fund created in Section 4-18-6 .
596 (d) (i) One hundred thousand dollars each year shall be transferred as dedicated credits to
597 the Division of Water Rights to cover the costs incurred in hiring legal and technical staff for the
598 adjudication of water rights.
599 (ii) At the end of each fiscal year:
600 (A) 50% of any unexpended dedicated credits shall lapse to the Water Resources
601 Conservation and Development Fund created in Section 73-10-24 ;
602 (B) 25% of any unexpended dedicated credits shall lapse to the Utah Wastewater Loan
603 Program Subaccount created in Section 73-10c-5 ; and
604 (C) 25% of any unexpended dedicated credits shall lapse to the Drinking Water Loan
605 Program Subaccount created in Section 73-10c-5 .
606 (e) Fifty percent of the remaining amount generated by the 1/16% tax rate shall be
607 deposited in the Water Resources Conservation and Development Fund created in Section
608 73-10-24 for use by the Division of Water Resources. In addition to the uses allowed of the fund
609 under Section 73-10-24 , the fund may also be used to:
610 (i) provide a portion of the local cost share, not to exceed in any fiscal year 50% of the
611 funds made available to the Division of Water Resources under this section, of potential project
612 features of the Central Utah Project;
613 (ii) conduct hydrologic and geotechnical investigations by the Department of Natural
614 Resources in a cooperative effort with other state, federal, or local entities, for the purpose of
615 quantifying surface and ground water resources and describing the hydrologic systems of an area
616 in sufficient detail so as to enable local and state resource managers to plan for and accommodate

617 growth in water use without jeopardizing the resource;
618 (iii) fund state required dam safety improvements; and
619 (iv) protect the state's interest in interstate water compact allocations, including the hiring
620 of technical and legal staff.
621 (f) Twenty-five percent of the remaining amount generated by the 1/16% tax rate shall be
622 deposited in the Utah Wastewater Loan Program Subaccount created in Section 73-10c-5 for use
623 by the Water Quality Board to fund wastewater projects.
624 (g) Twenty-five percent of the remaining amount generated by the 1/16% tax rate shall be
625 deposited in the Drinking Water Loan Program Subaccount created in Section 73-10c-5 for use
626 by the Division of Drinking Water to:
627 (i) provide for the installation and repair of collection, treatment, storage, and distribution
628 facilities for any public water system, as defined in Section 19-4-102 ;
629 (ii) develop underground sources of water, including springs and wells; and
630 (iii) develop surface water sources.
631 (6) (a) Notwithstanding Subsection (3)(a), beginning on July 1, 2001, the amount of sales
632 and use tax generated annually by a 1/16% tax rate on the taxable transactions under Subsection
633 (1) shall be used as provided in Subsections (6)(b) through (d).
634 (b) (i) Five hundred thousand dollars each year shall be deposited in the Transportation
635 Corridor Preservation Revolving Loan Fund created in Section 72-2-117 .
636 (ii) At least 50% of the money deposited in the Transportation Corridor Preservation
637 Revolving Loan Fund under Subsection (6)(b)(i) shall be used to fund loan applications made by
638 the Department of Transportation at the request of local governments.
639 (c) From July 1, 1997, through June 30, 2006, $500,000 each year shall be transferred as
640 nonlapsing dedicated credits to the Department of Transportation for the State Park Access
641 Highways Improvement Program created in Section 72-3-207 .
642 (d) The remaining amount generated by the 1/16% tax rate shall be deposited in the class
643 B and class C roads account to be expended as provided in Title 72, Chapter 2, Transportation
644 Finances Act, for the use of class B and C roads.
645 (7) (a) Notwithstanding Subsection (3)(a), beginning on January 1, 2000, the Division of
646 Finance shall deposit into the Centennial Highway Fund created in Section 72-2-118 a portion of
647 the state sales and use tax under Subsection (2) equal to the revenues generated by a 1/64% tax rate

648 on the taxable transactions under Subsection (1).
649 (b) Except for sales and use taxes deposited under Subsection (8), beginning on July 1,
650 1999, the revenues generated by the 1/64% tax rate:
651 (i) retained under Subsection 59-12-204 (7)(a) shall be retained by the counties, cities, or
652 towns as provided in Section 59-12-204 ; and
653 (ii) retained under Subsection 59-12-205 (4)(a) shall be distributed to each county, city, and
654 town as provided in Section 59-12-205 .
655 (8) Notwithstanding Subsection (3)(a), beginning on July 1, 1999, the commission shall
656 deposit into the Airport to University of Utah Light Rail Restricted Account created in Section
657 17A-2-1064 the portion of the sales and use tax under Sections 59-12-204 and 59-12-205 that is:
658 (a) generated by a city or town that will have constructed within its boundaries the Airport
659 to University of Utah Light Rail described in the Transportation Equity Act for the 21st Century,
660 Pub. L. No. 105-178, Sec. 3030(c)(2)(B)(i)(II), 112 Stat. 107; and
661 (b) equal to the revenues generated by a 1/64% tax rate on the taxable items and services
662 under Subsection (1).
663 (9) (a) Notwithstanding Subsection (3)(a), for fiscal years beginning on or after fiscal year
664 2002-03, the commission shall on or before September 30 of each year deposit the difference
665 described in Subsection (9)(b) into the Remote Sales Restricted Account created in Section
666 59-12-103.2 if that difference is greater than $0.
667 (b) The difference described in Subsection (9)(a) is equal to the difference between:
668 (i) the total amount of revenues under Subsection (2)(c)(i) the commission received from
669 vendors collecting a tax under Subsection 59-12-107(1)(b) for the fiscal year immediately
670 preceding the September 30 described in Subsection (9)(a); and
671 (ii) the total amount of revenues under Subsection (2)(c)(i) the commission estimates that
672 the commission received from vendors described in Subsection 59-12-107(1)(b) for fiscal year
673 2000-01.
674 (10) (a) For purposes of amounts paid or charged as admission or user fees relating to the
675 Olympic Winter Games of 2002, the amounts are considered to be paid or charged on the day on
676 which the Salt Lake Organizing Committee for the Olympic Winter Games of 2002 or a person
677 designated by the Salt Lake Organizing Committee for the Olympic Winter Games of 2002 sends
678 a purchaser confirmation of the purchase of an admission or user fee described in Subsection

679 (1)(f).
680 (b) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
681 commission shall make rules defining what constitutes sending a purchaser confirmation under
682 Subsection (10)(a).
683 Section 3. Effective date.
684 This act takes effect on July 1, 2002.




Legislative Review Note
as of 1-8-02 3:14 PM

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

Office of Legislative Research and General Counsel