FIACCT 05-14_00 Payments – Sales tax exception

Effective: July 1, 1994
Revised: November 1, 2017
Reviewed: November 1, 2017

Purpose

This policy clarifies the sales tax exemption for purchases by state government.

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Policy

A. Most purchases by state departments or institutions are exempt from state sales and use taxes in accordance with Section 59-12-104 Utah Code Annotated 1953, as amended.

B. The State is now assigned tax number 11736850-092-STC. State agencies should use this number on all purchase orders and departmental purchasing documents and should give it to vendors when purchasing items for state use.

C. The state sales tax exemption applies only to purchases of items for official state use.

D. A purchase qualifies for the sales tax exemption for purchases made by state and local governments (including school districts) if the purchaser:
1. makes payments by state or local government check, purchase order, or voucher
OR
2. regardless of the amount of the purchase, provides a copy of form TC721G, Exemption Certificate, properly completed and signed, at the time of the transaction. (This provision supersedes previous tax regulation that required state government entities and schools making purchases in excess of $100 to
produce a check, purchase order, or voucher at the time of the sale).

E. The sales tax exemption for purchases by state and local government entities does not apply to purchases by a state other than Utah or to purchases by a local government entity located outside of Utah.

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Background

UCA 59-12-104 (2)(a) and (b), state:

“The following sales and uses are exempt from the taxes imposed by this chapter:

(2) sales to the state, its institutions, and its political subdivisions; however, this exemption does not apply to sales of construction materials except:

(a) construction materials purchased by or on behalf of institutions of the public education system as
defined in Utah Constitution Article X, Section 2, provided the construction materials are clearly identified and segregated and installed or converted to real property which is owned by institutions of the public
education system; and

(b) construction materials purchased by the state, its institutions or its political subdivisions which are installed or converted to real property by employees of the state, its institutions, or its political subdivisions.

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