Is the concrete foundation for a ski lift's towers and terminals covered by Utah's passenger-tramway sales tax exemption?

Plain-English summary

A company that designs, builds, and installs ski lifts for Utah resorts had always assumed its entire lift installation qualified for Utah's passenger-tramway sales tax exemption. A 1996 audit raised a question: does the concrete foundation for the towers and terminals count as part of the exempt "tramway," or is it separately taxable real property construction?

The Commission's answer had two parts:

Yes, the concrete foundations count as part of the exempt tramway. Utah Code § 63-11-38 defines "passenger tramway" to include two-car/multicar aerial tramways, chair lifts, J-bars, T-bars, platter pulls, and rope tows. Because a passenger tramway physically operates through towers secured in concrete foundations, the Commission concluded those foundations are "an integral part of and appurtenant to the tramway" — not a separate, unrelated piece of construction.

But the exemption only protects the purchase if the ski resort itself buys the concrete/cement directly from the supplier. Under Rule R865-19S-58, a contractor who purchases materials and converts them to real property (like pouring and setting a concrete foundation) is treated as the final consumer of those materials — so the contractor, not its customer, owes the sales tax, and the customer (the ski resort) has no separate tax liability because it's ultimately buying real property. Utah has enacted a specific exception letting contractors buy materials tax-free when working for a public school (a different rule covered elsewhere in this corpus, see PLR 96-035/96-024), but no equivalent exception exists for ski-resort contractors. So if the lift installer buys the cement and pours the foundation itself, the installer is liable for the tax on that cement — even though the finished tramway (including its foundation) would have been exempt if purchased and installed by the resort itself.

The workaround: to keep the whole tramway project tax-exempt, the ski resort should buy the cement/concrete materials directly from the supplier (not from the lift-installation company), so long as (1) the resort itself pays the vendor directly, and (2) it can establish the materials were used to build a qualifying passenger tramway.

What this means for you

Ski lift installers/contractors

Don't assume your entire installed project — including foundation concrete — is automatically tax-exempt just because the finished tramway would be. If you're the one buying and pouring the concrete, you're the taxable "final consumer" of that concrete, and there's no ski-resort equivalent of the public-school contractor exemption to change that.

Ski resorts

If you want the foundation materials for a new lift to come in tax-free, have your resort purchase the cement/concrete directly from the cement supplier — paying the vendor directly yourselves — rather than letting your lift-installation contractor buy and bill it as part of the overall project. Keep documentation showing the materials went into a qualifying passenger tramway.

Accountants and tax professionals

This confirms two distinct threshold questions apply to any ski-resort construction project: (1) is the item within the § 63-11-38 statutory definition of "passenger tramway" (here, extended to integral appurtenant foundations), and (2) who is the "final consumer" under Rule R865-19S-58 based on who purchases and converts the materials to real property. Getting the exemption requires satisfying both — being part of the tramway isn't enough if the wrong party made the purchase.

Common questions

Q: Is a ski lift's concrete tower foundation covered by Utah's passenger-tramway exemption?
A: Yes — the Commission treats it as an integral, appurtenant part of the tramway, not separate real property construction.

Q: Does that mean the ski-lift company never owes tax on the concrete it uses?
A: No — if the ski-lift company itself buys the concrete and pours the foundation, it's the taxable final consumer of those materials, just like any other real property contractor. Only the resort's own direct purchase from the supplier is exempt.

Q: Is there a public-school-style exception letting ski-lift contractors buy materials tax-free?
A: No — the Commission was explicit that the legislature has not enacted an equivalent exception for ski-resort contractors.

Q: Can I rely on this 1997 ruling today?
A: Not directly — it binds the Commission only for the taxpayer and facts it addressed, and Utah's statutes and rules have been renumbered and amended repeatedly since. Verify current law before relying on it.

Citations and references

Statutes:

• Utah Code § 63-11-38 (definition of "passenger tramway")

Rules:

• Utah Admin. Rule R865-19S-58 (a contractor who converts personal property to real property is the final consumer, liable for the tax)

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/97-024.htm

Original ruling text

97-024

Response
April 24, 1997

REQUEST
LETTER

Dear
Ms. Rees,

XXXXX
designs, manufactures, and installs ski lifts in Utah and is responsible to
collect and pay the appropriate sales tax. In the past we have assumed that the
entire lift would be considered the passenger tramway" for the purpose of
establishing its tax exempt status under current State Tax Regulations. It has
been brought to our attention during a 1996 tax audit that the foundation concrete
for the towers and terminals might be considered real property and not subject
to the ski lift sales tax exemption.

We
have signed chair lift contracts for installation in 1997 and need to clarify
this point to our customers. Currently the tax has not been included in the
contracts nor do the customers know they will be liable for the tax on a
portion of the project cost. I would like to request that you have the chair
lift foundation issue reviewed and give me an advisory opinion we can use for 1997
projects.

If
you need more information please give me a call.

Thank
you for your help on this matter.

Sincerely,

XXXXX

RESPONSE LETTER

NAME

ADDRESS

CITY
STATE ZIP

Advisory
Opinion - Ski Resort sales tax exemption on passenger tramways

Dear
XXXXX,

We have received your request for
tax guidance concerning the sales tax exemption for passenger tramways install
at ski resorts. We offer the following:

The sale to a ski resort of a
passenger tramway, as defined by section 63-11-38 of the Utah Code, is exempt
from sales tax. �Passenger tramway�
means two-car or multicar aerial passenger tramway; chair lift, J-bar, T-bar,
or platter pull and rope tow.

Passenger tramways operate in
conjunction with towers secured in or to concrete foundations. The question of whether the concrete
foundations become real property upon installation is important because the
contractor who sells and converts an item of personal property to real property
is regarded as the final consumer of the personal property. Utah Admin. Rule R865-19S-58. As the final consumer of the item, the
contractor is liable for the sales tax on his purchase of that item. The contractor�s customer has no tax
liability because the customer is buying real property, which is not subject to
sales tax.

The legislature has authorized
contractors to purchase construction materials tax free only in a limited
circumstance. If the contractor
purchases the materials on behalf of a public school and converts those
materials to real property owned by the school, the contractor need not pay
sales tax on the purchase of those materials.
The legislature has not enacted an equivalent exception for contractors
installing ski resort improvements.
Therefore, if your company purchases construction materials on behalf of
the ski resort and converts them to real property, your company is liable for
the tax. Likewise, if your company
purchases the items tax free for resale, then sells and installs any of
the items so as to convert them to real property, your company will be liable
for the tax on those items. To avoid
this outcome, the ski resort should purchase the cement directly from the
cement company or supplier, and not from your company. The cement purchases will be exempt if:

1. the
   ski resort makes payment for the materials directly to the vendor; and

2. establishes that materials purchased
   were used to construct a qualifying passenger tramway.

When the auditors raised this issue
with you, they may have questioned whether the cement foundations are part of
the tramway within the meaning of this exemption. We conclude that the
foundations which secure the tramway are an integral part of and appurtenant to
the tramway. Therefore, if the cement
used to build the tramway foundations is purchased directly by the ski resort,
the exemption applies.

Please let us know if you have other
questions.

For
the Commission,

Joe
B. Pacheco,

Commissioner