The board of governors of the Salt Lake Area Chamber of Commerce has approved a resolution supporting legislation that clearly defines the role of local entities in sales and use tax auditing.
At the same time, the board adopted a resolution opposing a proposed bill that would require certain sales tax exemptions be studied by the State Tax Commission every five years.The resolutions were presented by David Bird, chairman of the chamber's Legislative Action Committee.
Regarding the local option and sales and use tax resolution, Bird said a court ruling in 1991 determined that the State Tax Commission had improperly denied Salt Lake City and Salt Lake County access to confidential commission taxpayer records and suggested that Utah administrative law might allow local entitites to intervene in sales and use tax audit hearings.
The resolution says that if a broad judicial interpretation is issued in a pending court case, all 29 Utah counties and about 250 cities and towns could be allowed to participate in and appeal from the commission hearings.
Bird said that instead of being audited by only one entity, the commission, a business may be faced with multiple audits or interpretations on the same transaction from multiple local entities.
He said the legislation also will reverse the court's decision and clarify that these entities have no right to review taxpayer sales and use tax records except for the "very narrow purpose of determining whether a local entity has received its statutory share of local sales and use tax revenues actually collected."
Regarding SB6, the proposed bill on sales-tax exemption review, Bird said the bill would mandate the review and direct the commission to recommend to the Legislature's Revenue and Taxation Interim Committee if the exemption should be continued, modified or repealed.
The eight exemptions targeted by the bill include parts and equipment installed in aircraft; equipment in pollution control facilities; government-owned tooling equipment in the aerospace and electronics industry; tangible personal property used in farming operations; any container, label, shipping case or meat casing; steel mill equipment or replacement parts, aircraft manufactured in Utah; and amounts paid for purchase of telephone service.
Bird said if the proposed bill becomes law, the commission will be hard pressed to perform these major studies in the time allowed by the bill.