Tax Type
Retail Sales and Use Tax
Description
Sales made to tax-exempt governmental agencies
Topic
Accounting Periods and Methods
Date Issued
11-01-1982
November l, 1982
Re: 58-1118 Application/Sales & Use Tax
Dear **************
This responds to your application of January 21, 1982, petitioning for correction of a sales tax assessment of $ **** for the period August 1, 1978, to December 31, 1980, on certain supplies purchased during that period.
FACTS
*************is primarily in the microfilm business. It receives records from business and government agencies, converts these records to microfilm and microfiche, and returns the records and film to the customers. There has been no consistency in ******** application of sales tax to the materials and/or services sold. The taxpayer claims that the inconsistency was caused by inconsistent advice given by the********* District Office.
****was registered as a dealer for sales tax purposes primarily for the sale of certain pieces of equipment throughout the year. Viewed as a service business by both auditor and taxpayer, was assessed for all supplies upon which sales tax had not been paid when purchased.
DETERMINATION
After careful review of the nature of ******* business, it is my opinion that the taxpayer is a retailer of microfilm products similar to those categorized under §1-82 of Sales and Use Tax Regulations as "photographs, photostats, blueprints, etc." As a retailer selling tangible personal property, you should collect sales tax on the total sales price of furnishing the microfilm or microfiche to the customers. However, unlike the development of film, the production of microfilm and microfiche records does not involve a physical conversion of the actual written records supplied by the customer. Therefore, you may not separately state a charge for the services of producing microfilm or microfiche from a charge for the tangible film or fiche.
As the sales of the microfilm and microfiche are taxable, purchases of supplies that become component parts of the finished product may be purchased under a resale certificate of exemption. This determination letter, therefore, although relieving ********of the assessment made on the supplies, will necessarily require that the taxpayer be reaudited as a retailer for the same audit period. We understand that most of ********* sales are made to tax-exempt governmental agencies.
For the future, please be advised that you are to collect sales tax on your total charges for furnishing microfilm and microfiche.
By copy of this letter, we are requesting the ********** *District Office to adjust the audit assessment in accordance with this determination.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner