What conditions had to be met for Utah to approve an AIDS-awareness special group license plate, and could the related fees benefit an organization?

Plain-English summary

Utah Private Letter Ruling 01-023 said the Tax Commission could consider an AIDS-awareness special group license plate only after the statutory conditions for an “other” special group plate were met.

The Commission required a qualifying organization, at least 500 completed applications, and the prescribed fees.

It said a qualifying organization was one recognized as exempt under Internal Revenue Code section 501(c)(3).

Even if the plate was approved, the requesting organization could not receive revenue from plate issuance or renewal fees unless the Utah Legislature specifically authorized that benefit.

The request

The requester sought a special group license plate supporting AIDS awareness and Utah organizations working to prevent HIV and provide services to affected people.

The requester submitted a petition with approximately 390 supporters.

No then-specified statutory plate category addressed AIDS awareness, so the Commission analyzed the process for creating an “other” special group plate under Utah Code Ann. § 41-1a-408(10).

Three approval conditions

The Commission listed three requirements:

1. A qualifying organization that made a significant contribution to Utah had to request the plate.
2. The organization had to collect at least 500 applications.
3. The organization had to submit all required fees with the applications.

For its administrative standard, the Commission treated recognition under Internal Revenue Code section 501(c)(3) as satisfying the significant-contribution requirement if the other conditions were met.

Required fees

The ruling stated that each application required $55:

• A $5 license plate fee under Utah Code Ann. § 41-1a-1211(1).
• A $50 special group license plate application fee under § 41-1a-1211(3).

The Commission could not approve the request until all conditions were satisfied.

If it rejected the request because the conditions were not met, the organization had to refund the fees to applicants.

Plate design after approval

If the request was approved, the Commission said it would design a plate meeting the criteria in Utah Code Ann. § 41-1a-408(2) and (3).

Organizational benefit required legislation

The general special-group-plate process did not allow the requesting organization to receive fees from issuing or renewing the plates.

Only organizations specifically authorized by the Legislature could benefit from those fees.

The Commission therefore said legislation was necessary if the goal was to direct plate revenue to the Utah AIDS Foundation or another section 501(c)(3) organization.

Holding

Under the law described in the ruling:

• A recognized section 501(c)(3) organization could satisfy the organizational eligibility standard.
• At least 500 applications were required.
• Each application had to include the stated $55 in fees.
• Unsuccessful requests required applicant refunds.
• Plate approval did not itself authorize payments to the sponsoring organization.
• A legislative enactment was required to direct plate or renewal fees to that organization.

What this means for you

Nonprofit and advocacy organizations

A petition showing public support was not a substitute for the statutory application count, fees, and organizational eligibility requirements.

Organizations seeking revenue from a plate

Authorization to create a special group plate and authorization to receive its fees were separate issues. The latter required specific legislation.

Accountants and administrators

Keep application fees segregated and account for the refund obligation if a request is rejected under the described process.

Common questions

Q: Was the petition with about 390 names enough?

A: No. The ruling required at least 500 applications, not merely expressions of support.

Q: What organization could request the plate?

A: The Commission said it would recognize a section 501(c)(3) entity as making the required significant contribution to the state if the other conditions were met.

Q: How much accompanied each application?

A: The ruling stated $55: a $5 plate fee and a $50 special-group application fee.

Q: What happened if the request was rejected?

A: The organization had to refund all application fees.

Q: Could the sponsoring nonprofit receive plate revenue?

A: Not without legislation specifically authorizing that benefit.

Key source language

• Threshold: “The organization collects a minimum of 500 applications.”
• Approval timing: “the Tax Commission cannot approve a request for a special group license plate until these conditions are met.”
• Revenue limitation: “we are not authorized to transfer fees to any organization except as specifically mandated by statute.”

Citations and references

• Utah Code Ann. § 41-1a-408(2), (3), and (10)
• Utah Code Ann. § 41-1a-1211(1) and (3)
• Internal Revenue Code § 501(c)(3)

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 01-023
• Date note: the source header identifies the response as July 2, 2001; the response dateline itself is redacted as “DATE.”
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

REQUEST LETTER

01-023

Response 7/2/01

NAME

ADDRESS

Several months ago, I contacted your organization regarding the creation of a new special group license plate that would directly benefit organizations in the State of Utah dedicated to preventing the spread of HIV and ensuring compassionate services to those impacted to HIV/AIDS issue. To date, I have not received a reply from your organization regarding this issue.

During last year�s Utah AIDS Foundation�s Walk for Life, my colleagues and I gathered several hundred signatures for our petition to your organization. These signatures are from Utah residents who would support the creation of an AIDS awareness special group license plate. I have enclosed another complete copy of these petitions for your review.

I recently moved to Arizona, however, I am still very dedicated to this cause and will do whatever your organization requires to expedite the creation, administration and/or implementation of this special group plate. Obviously I would like to speak further with you regarding this request. Please contact me at ###### or via email at ADDRESS.

I appreciate your time, consideration and attention to this very sincere request.

NAME

RESPONSE LETTER

DATE

NAME

ADDRESS

RE: Advisory Opinion Creation of an AIDS awareness special group license plate

Dear Mr. NAME,

We have received your request for the Tax Commission to issue special group license plates that would directly benefit organizations in the State of Utah dedicated to preventing the spread of HIV and ensuring compassionate services to those impacted to HIV/AIDS issue. You have included a petition containing the names of approximately 390 persons who support your request.

The Tax Commission is required to administer the issuance of special group license plates in accordance with laws enacted by the Utah Legislature. The Legislature has provided in statute for the issuance of a number of specifically described special group license plates. None of these specified license plates, however, concern AIDS awareness or benefit organizations involved with this issue. Nevertheless, under Utah Code Ann. �41-1a-408(10), the Legislature permits the Tax Commission to consider requests to create and issue �other� special group license plates, if the following conditions are met:

1. An organization that �makes a significant contribution to the state� requests the Tax Commission to authorize special group license plates for the organization. The Tax Commission considers that an organization �makes a significant contribution to the state� if it is recognized as a 501(c)(3) entity, i.e., exempt from federal income taxation under Section 501(c)(3), Internal Revenue Code. Accordingly, the Tax Commission will authorize special group license plates for an organization that is a 501(c)(3) entity if it meets the other conditions listed below;

2. The organization collects a minimum of 500 applications. A sample application that each applicant must complete may be obtained by contacting NAME, Deputy Director of Motor Vehicle Division, at 297-7680; and

3. All fees required under Utah Code Ann. �41-1a-1211 are submitted with the applications, which in this case is $55 per application (a $5 license plate fee required under subsection 1211(1) plus a $50 special group license plate application fee required under subsection 1211(3)).

Under current law, the Tax Commission cannot approve a request for a special group license plate until these conditions are met. Should these conditions not be met and the Tax Commission rejects the organization�s request, the organization is required under subsection 408(10) to refund all fees to the applicants. However, should the Tax Commission approve the request, we will design a license plate that satisfies the criteria required under subsections 408(2) and (3).

Please note that current law does not provide for an organization making a special group license plate request under subsection 408(10) to benefit from the fees associated with issuing and renewing such plates. The only organizations that can currently benefit from such fees are those that the Legislature has specifically authorized through legislation. If your goal is to benefit the Utah AIDS Foundation or some other 501(c)(3) organization by such fees, legislation providing for this benefit will be required. The Tax Commission is authorized to consider requests for and issue special group license plates subject to the conditions stated above, but we are not authorized to transfer fees to any organization except as specifically mandated by statute.

Please contact us if you have any other questions.

For the Commission,

Marc B. Johnson

Commissioner

MBJ/KC

01-023