Utah – Exemptions for Sales or Leases of Property and for Machinery and Equipment

SALT Report 2332 – The Utah State Legislature enacted legislation that creates a sales and use tax exemption for sales or leases of tangible personal property that is used in the preparation of prepared food, and for machinery and equipment used in amusement activities.

Sale or Lease of Property

The exemption for purchased property used to prepare food applies if the ownership of the seller and the purchaser is identical, and the seller or the purchaser paid tax on the purchase prior to making the sale. The exemption for leased property applies if the ownership of the lessor and the lessee is identical, and the lessor or the lessee paid tax on the purchase prior to making the lease.

The exemption is effective July 1, 2013.

Machinery and Equipment

The exemption applies to purchases of machinery and equipment purchased by an Amusement, Gambling and Recreation Industries establishment as described in North American Industry Classification System (NAICS) Subsector 713 of the 2012 NAICS. All qualified machinery or equipment must:

  • Have an economic life of three or more years,
  • Be used by one or more persons who pay admission or user fees to the purchaser for the amusement activities, such as theaters, movies, operas or museums, and
  • 51% or more of the purchaser’s sales revenue for the previous calendar quarter must be admissions or user fees subject to sales tax

The Utah State Tax Commission will be required to establish rules to verify that 51% of a purchaser’s sales revenue meets this requirement. Also, the Commission must, on or before the November 2018 interim meeting review the exemption and make a report to the Revenue and Taxation Interim Committee on:

  • The revenue lost to the state and local tax jurisdictions as a result of the exemption,
  • The purposes and effectiveness of the exemption, and
  • Whether the exemption benefits Utah

The exemption is effective July 1, 2013.

For Further Information

Utah State Legislature – Senate Bill 33, Laws 2013

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