Sales Tax Articles
Sales Tax State Activity Update - January 2007
Utah - Closed Pipelines Open-Up for Exemptions
The Utah Tax Commission recently issued a Private Letter Ruling indicating construction materials purchased by a contractor are exempt when used to construct a closed pipeline water delivery system.
The closed pipeline system is a real property contract and materials installed as such are deemed real property. In making the determination, the commission relied primarily on the fact that the pipeline was for use exclusively by agricultural customers for agricultural purposes.
The commission noted the exemption was limited to the following three areas:
- Construction materials for the pipelines,
- Other tangible personal property, and
- Otherwise taxable labor for the installation of personal property used solely for agricultural purposes. Construction materials and installation labor for personal property not solely used for agricultural purposes remain subject to tax.
The full text may be accessed on the Utah.gov website.
(Utah Tax Commission, Private Letter Ruling, Opinion No. 06-008, 12/20/06)
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