Did Utah's waste-tire recycling fee apply to an interstate carrier's vehicles when the seller delivered them outside Utah?

Plain-English summary

Utah Private Letter Ruling 92-017 addressed the waste-tire recycling fee on vehicles purchased by an interstate transportation company.

The company ran six percent of its annual miles in Utah and received its purchased vehicles from sellers at out-of-state destinations.

The Commission said the fee was not due because the vehicles' tires were sold and delivered outside Utah.

Out-of-state delivery

Tax Bulletin 7-90 stated that the tire recycling fee did not apply to tires sold and delivered out of state.

The company represented that sellers delivered all of its purchased vehicles to out-of-state destinations.

The Commission therefore concluded that the recycling fee was not due on those vehicle tires.

In-state delivery

The result changed when a vehicle was sold and delivered in Utah.

In that situation, the tire recycling fee was due even if the vehicle sale was exempt from sales tax.

Interstate mileage

The requester emphasized that only six percent of its annual mileage occurred in Utah.

The Commission's stated analysis did not apportion the fee by mileage.

It based the result on the vehicles' place of sale and delivery.

Holding

Under the stated facts:

• No tire recycling fee was due on vehicle tires sold and delivered outside Utah.
• The fee applied when vehicles were sold and delivered in Utah.
• A sales-tax exemption for the vehicle did not eliminate the tire fee.
• The stated result depended on the presented delivery facts.

What this means for you

Interstate carriers and fleet managers

Keep seller delivery records for vehicle and trailer purchases. The delivery location controlled this ruling's fee result.

Vehicle and trailer dealers

Do not assume that a vehicle's sales-tax exemption also exempts its tires from a separate recycling fee.

Accountants and tax professionals

Verify current fee statutes and administrative guidance because the cited 1992 provisions may have been amended or recodified.

Common questions

Q: Did the carrier owe the fee on vehicles delivered outside Utah?

A: No.

Q: Did low Utah mileage create the exemption?

A: The ruling did not base its answer on mileage. It relied on out-of-state sale and delivery.

Q: Was the fee due on a vehicle delivered in Utah?

A: Yes.

Q: Did a vehicle sales-tax exemption also exempt the tire fee?

A: No.

Key source language

• Exemption: “the tire recycling fee does not apply to ‘tires sold and delivered out of state.’”
• Result: “the recycling fee is not due.”
• Utah delivery: “the fee is due even if the sale of the vehicle is exempt from sales tax.”

Citations and references

• Utah Code Ann. §§ 26-32a-101 through 26-32a-113
• Utah Tax Bulletin 7-90

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 92-017
• Scope note: the company stated that sellers delivered all current vehicle purchases to out-of-state destinations.
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

Response
July 10, 1992

July
10, 1992

XXXXX

Re: Tire Recycling Fee

Dear
XXXXX:

This
letter is in response to your request for a Tax Commission ruling on whether the waste tire recycling fee is due from interstate transportation companies. You indicated that only six percent of your miles are run in Utah. You further express your opinion that since Tax Bulletin 7-90 does not give a specific example for interstate carriers, the fee should not be due.

The
Tax Commission policy is to refer such requests to the division most qualified to analyze the request and make recommendations concerning it. As such, your request: was referred to the Tax Commission's Auditing Division for their analysis and recommendations. The division's recommendation is as follows:

Tax
Bulletin 7-90 states that the tire recycling fee does not apply to "tires sold and delivered out of state." Since all vehicles purchased by XXXXX are presently delivered by the seller at an out of state destination, the tires on the vehicles would be "sold and delivered out of state" and the recycling fee is not due. If vehicles are sold and delivered in state, the fee is due even if the sale of the vehicle is exempt from sales tax.

Based
upon the facts presented in your letter, we are in agreement with the Auditing Division's recommendations. Obviously, if there are deviations from these facts this opinion may be negated.

For
the Commission,

Joe
B. Pacheco

Commissioner

XXXXX:

Please
reference the attached letter.

It
has been a year now since we wrote this attached letter to the Tax Commission. We have yet to receive an answer on this matter. If the matter continues unresolved, it is our intention to exempt ourselves from this fee as allowed by your Tax Bulletin 7-90.

Would
it be possible to hear definitively on this matter before April 11th? Thanks for your assistance.

XXXXX

V.P.
Finance

XXXXX

Auditing
Division

Utah
State Tax Commission

160
East 300 South

Salt
Lake City, UT 84134

Dear
XXXXX:

As
explained to you over the phone last week Friday, we take exception to your interpretation of the Tire Recycling Fee code as passed in Senate Bill 6 (Utah Code 26-32a-101 through 113). As we read Tax Bulletin 7-90 from your office, it doesn't state that the tax should apply to residents who accept delivery out of state because they are involved extensively in interstate transportation as we are. Nor does the Tax Bulletin state that the recycle fee should apply to tires ultimately disposed of in Utah.

We
are an interstate transportation company. Only 6% of our annual miles are run in Utah and 94% of our annual miles are run in other states. We feel it unjustified that we should have to bear 100% of this tire recycling fee because we reside in Utah. Secondly, since the Tax Bulletin makes no reference to "resident" or "disposed in Utah," we take exception to being assessed this fee since we clearly and specifically qualify for the exemption of "tires sold and delivered out of state." All of our trailers purchased from XXXXX of XXXXX and XXXXX of XXXXX are purchased by us and delivered to us in Idaho. XXXXX has informed us that your office has assessed this fee on our trailer tires.

In
light of the above arguments, it is our opinion and interpretation of the law that we qualify for exemption from this fee. We request and would very much appreciate your concurrence on this matter.

Cordially
yours,

XXXXX

Vice
President - Finance