Effective Date: January 1, 1996

Re:  Collection of Sales Tax by Transportation Providers, Jeep, Snowmobile, and Boat Tour Operators, River Runners, and Outfitters

The purpose of this Tax Bulletin is to inform transportation providers (other than rail and airline companies), jeep, snowmobile, and boat tour operators, river runners, outfitters, and other vendors providing similar services of a change in Utah sales tax law. This Tax Bulletin supersedes Tax Bulletin 28-94.

Effective January 1, 1996, transportation providers (other than rail and airline companies), jeep, snowmobile, and boat tour operators, river runners, outfitters, and other vendors providing similar services are required to collect sales tax on certain ticket sales for transportation services or recreational activities that occur outside the state. If the payment and delivery of some of the purchased services or activities occur in Utah, vendors must collect Utah sales tax on the entire amount of the transaction.

Sales tax must be collected on the entire amount of the transaction, including items otherwise not subject to sales tax, unless those nontaxable items are listed separately on the invoice. A nontaxable item listed separately on the invoice is not subject to Utah sales tax.
If payment is made in Utah and none of the services or activities provided occur in the state, vendors are not required to collect Utah sales tax on the transaction.

If payment is made outside Utah, vendors are not required to collect Utah sales tax on the transaction regardless of where the transportation services or recreational activities occur.
Transportation providers, jeep, snowmobile, and boat tour operators, river runners, outfitters and other vendors providing similar services that contract with tour promoters are responsible for collecting sales tax from the tour promoters on all charges incurred by the tour promoter for taxable transportation services and recreational activities provided to the tour promoter.

Prior Law
This change is the result of a recent United States Supreme Court decision, Oklahoma Tax Commission v. Jefferson Lines, Inc., decided April 3, 1995. Prior to the decision in Jefferson Lines, the Utah State Tax Commission was allowing an exemption from the collection of sales tax for transportation companies selling tickets in Utah for interstate travel. In addition, in Tax Bulletin 28-94, the commission allowed an exemption for jeep, snowmobile, and boat tour operators, river runners, and outfitters that contracted to provide services when the preponderance of those services occurred outside Utah.

These exemptions from sales tax were based on Utah Code Ann. Section 59-12-104(12), providing an exemption from state sales tax for property the state is prohibited from taxing under the Constitution or laws of the United States.

Because the decision in Jefferson Lines specifically provides that sales tax may be collected on the total amount of the sale of certain services when some portion of those services occur in the state, the Tax Commission no longer has the authority to allow exemptions for the transportation companies, tour operators, river runners, and outfitters described above when they collect the sale amount and provide some of the contracted-for services in Utah.

To ask questions about this Tax Bulletin, please call Taxpayer Services at (801) 297-2200 or call toll-free at 1-800-662-4335. To submit questions in writing, mail to Taxpayer Services, 210 North 1950 West, Salt Lake City, UT 84134. Those who have impaired hearing may call the Telecommunications Device for the Deaf (TDD) at 297-2020.