What does this Idaho AG opinion (1991-04-29) say about City of Sun Valley may require vendor of ski lift tickets and retailer of building materials to collect local option sales tax at time of sale to remit same to city.?

Subject

Opinion 91-6

City of Sun Valley may require vendor of ski lift tickets and retailer of building materials to collect local option sales tax at time of sale to remit same to city.

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP91-06.pdf

Original opinion text

STATE O F iDAHO
OFFICE OF THE AlTORNEY GENERAL

BOISE 83720.1000

ORNEY GENERAL

TELEPHONE
(208) 336.2400

TELECOPIER
(208) 334.2530
NATURAL RESOURCES
TELECOPlER
(208) 334-263

0:

Bruce Collier
Sun Valley City Attorney
PCEaEELBPaD, KORB &i COLLIER
P,O. Box 249
Ketchum, ID 83340

Per Request for Attorney GeneralDsOpinion
QUESTIONS PRESENTED:
1.

Does the vendor of a ski lift ticket which is
sold from a location within the City Limits of
the City of Sun Valley have a responsibility
to collect, and liability for, local option
sales tax from the purchaser of the ticket?

2.

Does the City of Sun V ley have the power
under both the tax c o d 3 and state law to
require the collection of local option tax for
building materials not purchased within the
city limits of Sun Valley, but delivered in Sun
Valley for use in construction of real property
improvements located within Sun Valley?

'we understand your reference to "tax codewto mean the city of Sun Valley's ordinance
imposing a l d sales tax under Idaho Code $$50-1043 through 50-1049.

CONCLUSIONS:
1,
A vendor who sells a ski lift ticket from a location
within the city limits of the City of Sun Valley has a
responsibility to collect city sales tax from the purchaser of
the ticket. The tax thus collected must be remitted to the City
of Sun Valley in the manner provided in the cityss municipal
sales tax ordinance.

2.
The City of Sun Valley may impose its sales tax on
sales made in the city, POP the sale of goods, a sale is in the
city when title passes in the city, Under the Uniform Commercial
Code, title passes either when provided by contract between the
parties or, if there is no express contractual provision, when
the seller completes his responsibilities regarding delivery of
the product sold.
In no case does title pass before
identification of specific goods to the sale. $ahen delivery of
building materials occurs in the City of Sun Valley, and there is
no specific provision in the sales contract to the contrary,
title passes at the time of delivery. That is the time of sale.
If the seller is a retailer required to have a city sales tax
permit, the city may require the seller to collect city sales tax
on the sale and remit the tax to the city.

Statement of

Our understanding of the facts relating to your questions is
set out below. We have not undertaken an independent review of
these facts, Instead, we have relied on the statements contained
in the request letter and representations of facts made in
telephone conversations with the city attorneys of the cities of
Sun Valley and Ketchlam. We understand the relevant facts to be
as follows:
ets.
The Sun Valley Company sells tickets
that allow the purchaser to use ski lifts operated by
the company. These lift tickets are sold at various
locations: some in the City of Sun Valley, some in the
The
City of Ketchum and some not in either city.
tickets may be valid for a day, a weekend, a season or
another period.
During the period for which the
tickets are valid, the purchaser may use them to ride
on any of the companyss ski lifts.
Lifts on
Dollar Mountain and Elkhorn Plountain are located in the

City of Sun Valley.
Lifts on Bald Mountain are in
Blaine County and, except the base of the Warm Springs
Lift which is in Ketchum, are not in either city.

-.

Building
Property owners or their
contractors purchase building materials from retailers
(such as lumberyards) located outside the City of Sun
Valleyo There are no retailers of building materials
known to have retail stores within the city limits of
the City of Sun Valley. Some retailers are located in
the City of Ketchum.
Others are located elsewhere,
The purchasers use the building materials to construct
buildings and other real property improvements
located in the City of Sun Valley.
. .-

*-.

_-

'

The City Property Tax Alternatives Act, Idaho Code
1043 through 50-1049, authorizes resort cities to impose certain
"local option nonproperty taxesH including "a sales tax upon part
or all of sales subject to taxation under Chapter 36, Title 63,
Idaho Code.* See Idaho Code
50-1046. Chapter 36, title 63,
Idaho Code is the "Idaho Sales Tax Act." See, Idaho Code S 633601. The City of Sun Valley exercised the authority granted by
The City Property Tax Alternatives Act.
It adopted a city
ordinance imposing a sales tax.
The Idaho Supreme Court has
reviewed and affimed the constitutionality of Sun Valley9s tax
in Sun Valley Co. v. City of Sun Valley, 109 Idaho 424, 708 P.2d
147 (1985),
To focus upon the issues about which you seek our opinion,
we assume that the City of Sun Valley is a qualified resort city
under Idaho Code
50-1044 and that the enac ment of its
ordinance imposing the tax is procedurally correct.

f

THE SALE OF 6x1 LIFT TICKETS

Idaho Code S 50-1046 states:
%sca%==optionnonproperty t
itted
by
cent aajerity vote,
A
cent
(60%) majority of the voters of any resort city voting
on the question may approve and, upon such approval,
50-

% h e fact that we express these necessary assumptions is not intended to imply that we
believe there is any reason to question the accuracy of either.

any city may adopt, implement, and collect, subject to
the provisions of this act, the following city localoption nonproperty taxes: (a) an occupancy tax upon
hotel, motel, and other sleeping accommodations rented
or leased for a period of thirty (30) days or less; (b)
a tax upon liquor by-the-drink, wine and Beer sold at
retail for consumption on the licensed premises; and
(c) a sales tax upon part or all of sales subject to
taxation under chapter 36, title 63, Idaho Code.
Sun Valley's tax is the third type of tax, i.e., a tax on
Npart or all of sales subject to taxation under [the Idaho Sales
Tax
The city may only tax sales that are also subject to
the state sales tax. It may choose to exempt from its tax sales
that the-state taxes, but it may not tax sales that the state
exempts. The first issue is whether the sale of lift tickets is
subject to the state sales &ax.

.

The Idaho sales tax is imposed on retail sales.
63-3619 imposes the tax, It states:

Idaho Code

excise tax is hereby imposed upon each sale at retail
at the rate of five per cent (5%) of the sales price of
all property subject to taxation under this act and
such amount shall be computed monthly on all sales at
retail within the preceding month,
The word "salew means:
3-36x2.
6ah.
The tern uBsaletP
means and includes
any transfer of title, exchange or barter, conditional
or otherwise, in any manner or by any means whatsoever,
of tangible personal property for a consideration and
shall include any transfer of possession through
incorporation or any other artifice found by the state
tax commission to be in lieu of, or equivalent to, a
transfer of title, an exchange or barter. Elsale" shall
also include:

(e) Admission charges.

(f) Receipts from the use of or the privilege of using
tangible personal property or other facilities for
recreational purposes.

This definition does not limit 'salew to sales of tangible
personal property.
By its express terms, the statute defines
98sale99to "also includeN transactions that, but for this
statutory language, would not be subject to a tax imposed only on
the sale of tangible personal property, TWO of these additional
sales are the amounts charged for wadmissionsw and certain
recreational charges.
- There is little reason to question that the Sun Valley
Company's ski facilities, including its ski lifts, are used for
"recreational purposeseg8

A 1987 decision of the ~yoming Supreme Court holds that
s'tate9s sales tax does not apply to the purchase of ski lift
tickets. See, State Board of Equalization v, Jackson Hole Ski
cor~oration,737 P.2d 350 (Wy, 1987), modified 745 P.2d 58 (Wy,
1987). However, that decision is based upon statutory language
that differs significantly from that found in the Idaho Sales Tax
Act. The Wyoming statute at issue in that case imposed Wyoming's
sales tax on "the sales price paid for each admission to any
place of amusement, entertainment, recreation, games or athletic
event,
See,
39-6-404 (a)(viii) W.S. 2377, as quoted in Id 737
P. 2d at 354, The facts in that case were that individuals who
did not purchase ski lift tickets were not excluded from the U.S.
Forest Service land on which the Jackson Hole Ski corporation
conducted its skiing operations. No entry fee to this area was
charged. For this reason, a charge for using a ski lift was not
within the ordinary meaning of an Nadmission to any place of
.Ot
Accordingly, a regulation purporting to tax
amusement.
all charges by ski resorts and all charges for transporting
persons by ski lifts was beyond the authority of the statute.
The regulation was held invalid.

In contrast to the Wyoming statute, the Idaho Sales Tax Act
does not limit the scope of sales subject to tax to admissions,
Instead, it also includes, gtreceiptsfrom the use of or the
privilege of using tangible personal property or other facilities
Idaho Code
63-3612(f) quoted
for recreational purpose^.^^
above. Since the Wyoming decision did not address a statute such

C

as .Idaho Code S 63-3612 ( f ) , it i s i n a p p l i c a b l e t o t h e q u e s t i o n
you have asked,
The s a l e of l i f t t i c k e t s is c l e a r l y s u b j e c t t o t h e Idaho
S a l e s Tax. It i s proper f o r a r e s o r t c i t y t o include &he s a l e of
l i f t t i c k e t s i n t h e scope of its t a x .
Sun V a l l e y ' s ordinance
imposing i t s s a l e s t a x e x p r e s s l y does so.
Section 3-1-2 of t h e
c i t y ' s municipal t a x ordinance d e f i n e s s a l e t o include:
" S a l e w s h a l l a l s o include:

E.

Admission charges and charges f o r s k i l i f t t i c k e t s ;

F.
~ e c e i p t i from
the
use
or
privilege
of
using
tangible
personal
property
o r - other
facilities
for
recreational
purposes
and
this
shall
s p e c i f i c a l l y include,
among o t h e r t h i n g s ,
r e c e i p t s from t h e s a l e of s k i l i f t t i c k e t s ;
The remaining i s s u e f o r t a x i n g t h e s a l e of l i f t t i c k e t s
t u r n s on which s a l e s a r e , and which s a l e s a r e not, s u b j e c t t o Sun
Valley" s a l e s t a x ,
This i s an i s s u e because l i f t t i c k e t s a r e
s o l d from l o c a t i o n s both w i t h i n and o u t s i d e t h e c i t y .
The
p u r c h a s e r of a l i f t t i c k e t may u s e s k i l i f t s l o c a t e d both w i t h i n
and o u t s i d e t h e c i t y .
Sum V a l l e y ' s t a x ordinance makes no attempt t o t a x s a l e s
t h a t occur o u t s i d e t h e c i t y . S e c t i o n 3-1-3 (A) of t h e ordinance
imposes t h e c i t y t a x . I t s t a t e s :
Tax Imposed: The C i t y hereby imposes and s h a l l c o l l e c t
a Munic a l s a l e s t a x w o n each s a l e a t r e t a i l within
t h e C i t F a t t h e r a t e of two p e r c e n t ( 2 % ) of t h e s a l e s
p r i c e of a l l p r o p e r t y which would be s u b j e c t t o
t a x a t i o n by t h e S t a t e of Idaho under t h e p r o v i s i o n s of
t h e Idaho S a l e s Tax A c t , i n c l u d i n g i t s subsequent
amendments t h e r e t o ;
[Emphasis added.]
The Idaho s a l e s t a x i s n o t a t a x on property.
Supreme Court d e s c r i b e s it a s follows:

The Idaho

3The ordinance also defines the terms "in this city" and "in the city" to mean "Within the
exterior limits of the City of Sun Valley, Blaine County, Idaho." See $3-1-2.

A sales tax is not a tax on property but
rather an excise tax
a levy on certain
transactions designated by statute. Eeonardson et ale
v, Moon et ale, 92 Idaho 796, 451 P,2d 542 (1969).

--

Boise Bowlins Center v. State, 93 Idaho 367, 461 P.2d 262 (1969).
We must interpret Sun Valley's ordinance as placing the
city's tax on the same legal incident on which the state tax
falls, i. e. , the sale itself rather than the object of the sale.
When the incident of the tax occurs in the city, the city's tax
applies. The cityDs ordinance, by its language, limits the tax
to "sale[s] at retail within the Sityew It is not necessary to
determine a location for the object of the sale (the use or
privilege -of using ski lifts located both in and outside the
city). A skier who purchases a ticket in the city is subject to
the city's sales tax, even if the skier decides to use lifts
outside the city, A skier who purchases a ticket at a location
ou.tside the city is not subject to the cityss sales tax, even if
the skier decides to use lifts inside the city. It is the point
of sale, not the location of the ski lift the skier may use, that
determines the incident sf the tax.
The alternative argument, that the location of the object of
the sale determines its taxability, is subject to serious legal
and practical difficulties, The object of the sale is not only
the use of the lifts, but also the privilege of using the lifts.
If the privilege of using the lifts were the incidence of the
tax, Sun Valley could claim tax on all the sales, whether made in
the city or outside the city. The city of Ketchum, which is also
a resort city imposing the local option sales tax, could make the
same claim.
These competing claims raise the possibility of
taxing the same transaction more than once at the local level.
This may be double taxation prohibited by art. 7, g 5 , of the
Idaho Constitution. A construction of statutes that avoids a
constitutional conflict is preferred.
Scandrett v. Shoshone
Applying the city
County, 63 Idaho 46, 116 P.2d 225 (1941).
sales tax only to sales occurring in the city avoids the possible
conflict of taxing authority between the two cities.
It is worth noting that state courts in other states have
reached similar conclusions about the application of local sales
taxes.
The location of the taxable incident has most often
controlled the application of the tax, See, citv of Pomona v .
State Board of ~aualizationet a l . , 53 Cal.2d 305, 1 Cal.Rptr.
489, 347 P.2d 904 (1959); ~obil-Teria ~aterinq Co., Inc. v.

S~radlinq,576 SeW.2d 282 (Mo.1978); and Bullock v. Duniaan Tool
& Sumlv Co.. Pne., 588 S.W.2d 633 (Tex.Giv.App.1979).
Based on the foregoing it is our conclusion that the vendor
of a ski lift ticket sold from a location within the city limits
of the City of Sun Valley has a responsibility to collect city
sales tax from the purchaser of the ticket.
The tax thus
collected must be remitted to the City of Sun Valley in the
manner provided in the cityssmunicipal sales tax ordinance.

Because the Resort City Sales Tax is limited to transactions
subject to the state sales tax, it is necessary to review how the
Idaho Sales Tax Act taxes building materials. The basic rule is
in Idaho Code
63-3609(a):
a i l sale

--

ale at r e t a i l . The terms
or ofsale a retailm mean a sale of
tangible personal property for any purpose other than
resale of that property in the regular course of
business or lease or rental of that property in the
regular course of business where such rental or lease
is taxable under section 63-36f2(h), Idaho Code.

(a)
All persons engaged in constructing, altering,
repairing or improving real estate, are consumers of
the material used by them; all sales to or use by such
persons of tangible personal property are taxable
whether or not such persons intend resale of the
improved property,
Sun Valleyss Municipal Sales Tax ordinance uses identical
language to define @'retail sale" and @'sale at retail.tt See,
S 3-1-2.
There is an important difference between the taxes imposed
by the Idaho Sales Tax Act and the tax imposed by Sun Valley.
Sun Valley imposes only a sales tax, The Idaho Sales Tax Act
imposes both a sales tax (Idaho Code S 63-3619) and a use tax
(Idaho Code
63-3621). Use taxes are a usual complement to sales
taxes. They are imposed upon the privilege of using tangible
personal property within the taxing jurisdiction, Their primary
purpose is to avoid economic disadvantage to merchants within the
taxing jurisdiction. Without use taxes, goods can be purchased
outside the taxing jurisdiction and used in the jurisdiction

without payment of the tax that would be required if the same
goods were purchased from a merchant within the jurisdiction.
Justice Felix Frankfurter of the United States Supreme Court has
described the difference between these two taxes:
A sales tax and a use tax in many instances may bring
about the same result.
But they are different in
conception,
are
assessments
upon
different
transactions, and in the interlacings sf the two
legislative authorities within our federation may have
to justify themselves on different constitutional
grounds.
A sales tax is a $ax on the freedom of
.
A use tax is a tax en the enjoyment of
purchase.
that which was purchased.
McLeod v. Y o E o Dilworth CO. et al.,
1023, 1025-1026, 88 L.Ed. 1304 (1944).

322 eT-S. 327, 64 Sect.

.
Thus, in McLeod, the state of Arkansas could not impose its
sales tax on the sale of goods purchased in Tennessee and
subsequently shipped to and used in Arkansas. But, in a case
decided the same day, General Tradina Co. v. State Tax omm mission
of Iowa, 322 U,S. 335, 64 S.Ct. 1028, 88 E.Ed. 3.309 (1944), the
Court held that the state of Iowa could require a Minnesota
seller to collect from its customers Iowa use tax on goods
purchased in Minnesota and subsequently shipped to and used in
Iowa,
Sun Valley imposes only a sales tax. As observed earlier
regarding the sale of lift tickets, the cityDs ordinance imposes
the tax "upon each retail sale within the city." For its tax to
apply to building materials, the sale of the materials must occur
within the city* Although the State of Idaho can and does
require an out-of-state seller to collect Idaho use tax on
property sold to an Idaho customer for delivery into Idaho (see
Idaho Code S 63- 3621), there is no statutory basis for the City
of Sun Valley to require the collection of a city use tax on
property delivered in the City of Sun Valley.
It can only
require collection of its sales tax on sales transactions that
occur in the city.
The facts as stated to us are that there is no known retail
outlet of building materials in Sun Valley. That fact does not
prevent taxable retail sales of building materials from occurring
in the city. The Idaho Sales Tax Act and Sun Valley's sales tax
ordinance use identical language to define the word "salen:

The term
means and includes any transfer of
title, exchange or barter, conditional or otherwise, in
any manner or by any means whatsoever, of tangible
personal property for a consideration.

...

Idaho Code
ordinance,

63-3612 and

s 3-1-2 of the sun Valley sales tax

Under this provision, a sale occurs when title transfers.
The applicable law governing when title transfers for sales tax
purposes is article 2 of the Uniform Commercial Code as adopted
in Idaho. Old West Realty v. Idaho State Tax Commission, 110
Idaho 546, 548-549, '715 P.2d 1318 (1986). Idaho Code
- ... .
reads:
b

ion f o r security

Each provision sf this chapter with regard to the
rights, obligations and remedies of the seller, the
buyer, purchasers or other third parties applies
irrespective of title to the goods except where the
provision refers to such title, Insofar as situations
~
by the other provisions of this chapter
are R O covered
and matters concerning title become material the
following rules apply:
(I) Title to goods cannot pass under a contract for
sale prior to their identification to the contract
(section 28-2-501) , and unless otherwise explicitly
agreed the buyer acquires by their identification a
special property as limited by this act. Any retention
or reservation by the seller of the title (property) in
goods shipped or delivered to the buyer is limited in
effect to a reservation of a security interest. Subject
to these provisions and to the provisions of the
chapter on Secured Transactions (chapter 9), title to
goods passes from the seller to the buyer in any manner
and on any conditions explicitly agreed on by the
parties.
(2) Unless otherwise explicitly agreed title passes to
the buyer at the time and place at which the seller
completes his performance with reference to the
physical delivery of the goods, despite any reservation

of a security interest and even though. a document'of
title is to be delivered at a different time or place;
and in particular and despite any reservation of a
security interest by the bill of lading , ,
(a) if the contract requires or authorizes the seller
to send the goods to the buyer but does not require him
to deliver them at destination, title passes to the
buyer at the time and place of shipment; but
(b) if the contract requires delivery at destination,
title passes on tender there,

.

-

-.d

.

(3) Unless otherwise explicitly agreed where delivery
is to be mad@ without moving the goods,
(a) if the seller is to deliver a document of title,
title passes at the time'when and the place where he
delivers such documents; or
(b) if the goods are at the time of contracting already
identified and no documents are to be delivered, title
passes at the time and place of contracting.

(4) W rejection or other refusal by the buyer to
receive or retain the goods, whether or not justified,
or a justified revocation of acceptance revests title
to the goods in the seller. Such revesting occurs by
operation of law and is not a "saleOvg

Under this provision of the Uniform Commercial Code, title
passes, and thus the sale occurs, at the time the seller delivers
the building materials to a building site in the City of Sun
Valley %mless otherwise explicitly agreedH between the buyer and
seller. m e n title passes at a place of delivery in Sun Valley,
3-1-3 of the city's sales
the sale is "within the Cityf1under
tax ordinance. The seller is required to collect and remit the
city's sales tax on such a sale.
Courts in other states have used the passage of title to
determine the application of local sales taxes. See, Shell Oil
ComDanv v. Director Of Revenue, 732 S.W.2d 178 (No. 1987) (Shell
Oil Company required to collect Sto Louis County sales tax on
aviation fuel Shell sold to airlines that was delivered from
Texas via a third party into the fuel tanks of aircraft at
Lambert Field in St. Louis); Matter of Gunther9s Sons v.
McGoldrick, 255 App. Div. 139, 5 N.YoS.2d 303 (1938), aff'd 279
N.Y. 148, 18 N.E, 2d 12 (1938) (furs sold by New York City
retailer but held in Iffree storagem until shipped to out-of-city
purchasers by common carrier were not subject to New York City's

; Bruce Collier

.
,a

Page 12

sales tax because title did not pass until the furs were
delivered to the out-of-city purchaser).
In summary, we conclude that the City of Sun Valley may
impose its sales tax on sales made in the city. For the sale of
goods, a sale is made in the city when title passes to the buyer
in the city.
Under the Uniform Commercial Code, title passes
either when provided by contract between the parties or, if there
is no express contractual provision, when the seller completes
his responsibilities regarding delivery of the product sold. In
no case does title pass before identification of specific goods
to the sale. When delivery of building materials occurs in the
City of Sun Valley, and there is no specific provision in the
sales contract to the contrary, then title passes at the time of
delivery and that is the time of sale.
In that case, if the
seller is a retailer required to have a city sales tax permit,
the city may require the seller to collect city sales tax on the
sale and remit the tax to the city.
AUTHORITIES CONSIDERED:
1.

Statutes
Idaho Code § 28-2-401.
Idaho Code 5 s 50-1043 through 50-10490
Chapter 36, Title 63, Idaho Code,
Idaho Code S 63-3609.
Idaho Code 5 63-3612.
Idaho Code S 63-3619.
Idaho Code § 63-3621,

2.

Cases
Boise Bowlinq Center v. State, 93 Idaho 367, 461 P.2d 262
(1969).
Bullock v. Duniqan Tool & Sup~lvCo., Inc., 588 S.W.2d 633
(Tex.Civ.App.1979).
City of Pomona v. State Board of Ecrualization et al., 1
Cal.Rptr. 489, 347 P.2d 904 (1959).
General Tradinq Co, v. State Tax Comvn of Iowa, 322 U.S.
335, 64 Sect. 1028, 88 L.Ed. 1309 (U.S.Iowa, 1944).

Matter of Gunther s s Sons v IeiIcGoldrick, 255 Wpp. Dive 139, 5
N.YoS.2d 303 (1938), aff9d 279 N.Y. 148, 18 N.E. 2d 12
(3.938)McLeod v. J. E. Dilworth Co., 322 U.S. 327, 64 Sect. 1023,
88 L.Ed. 1304 (U,S.Ark,, 1944).
Mobil-Teria Caterinq Co.. Inc. v, Spradlinq, 576 S.W.2d 282
(Mo. 1978).
Old West Realty v. Idaho State Tax Commission, 110 Idaho
546, 715 IPo2d.1318 (1986)Scandrett v.
(1941),

Shoshone County, 63 Idaho 46, 116 P.2d 225

Shell Oil eom~anv v. Director Of Revenue, 732 S.W.2d 178
(No. 1987).
State Board of Eaualization v. Jackson Hole Ski Cor~oration,
737 P.2d 350 (Wy, 1987) Modified 745 P,2d 58 (Wy, 1987).
Sun Valley Co. v. City of Sun Vallev, 109 Idaho 424, 708
P.2d 3.47 (1985).
Dated this 29th day of April, 1991.

LARRY ECHOHAWK
Attorney General
State of Idaho

Analysis by::
THEODORE V. SPAWGLER, JR,
Deputy Attorney General