Tax Commission, Auditing

Rule R865-21U

Use Tax

Five-Year Notice of Review and Statement of Continuation

DAR File No.: 34177
Filed: 10/28/2010 04:25:31 PM

NOTICE OF REVIEW AND STATEMENT OF CONTINUATION

Concise explanation of the particular statutory provisions under which the rule is enacted and how these provisions authorize or require the rule:

Section 59-12-103 imposes a tax on sales and uses of tangible personal property and services, but leaves unclear how the two taxes work together. Section 59-12-103 also imposes a use tax on tangible personal property stored in the state, but does not define when goods are stored in the state, nor does it address the issue of incidental first use of the property outside the state. Section 59-12-107 places responsibility for collecting use tax upon vendors, but does not provide adequate detail to determine if a taxable use has occurred, and is silent on the issue of whether the vendor should collect use tax on goods purchased in interstate commerce but stored, used, or consumed within the state. Section 59-12-107 also imposes a use tax upon users if a sales or use tax was not collected by the vendor, but does not provide detail on how the user should pay or account for those payments. Section 59-12-118 gives the Tax Commission rulemaking authority to administer the sales and use tax.

Summary of written comments received during and since the last five-year review of the rule from interested persons supporting or opposing the rule:

No written comment have been received.

Reasoned justification for continuation of the rule, including reasons why the agency disagrees with comments in opposition to the rule, if any:

Section R865-21U-1 clarifies the purpose of the use tax and when the use tax applies. Section R865-21U-2 clarifies that all rules promulgated for sales taxes are applicable to use taxes. Section R865-21U-3 clarifies when vendors are required to collect use tax. Section R865-21U-6 sets forth a purchaser's responsibilities with regard to payment of and accounting for use tax. Section R865-21U-15 clarifies that incidental first use of tangible personal property outside the state will be subject to Utah use tax. Section R865-21U-16 clarifies that use tax is required on goods sold in interstate commerce but stored, used, or consumed within the state. Therefore, this rule should be continued.

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

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 [email protected]

Authorized by:

R. Bruce Johnson, Tax Commission Chair

Effective:

10/28/2010