Can a money-losing, tax-subsidized public swimming pool program get a sales tax exemption on its admission and equipment rental fees just because charging tax feels like double taxation?

Plain-English summary

The coordinator of a county school district's swimming pools wrote to the Commission asking that the district's public swimming pool program be exempted from state sales tax on admission fees ("open plunge" swimming) and on rental income from equipment like balls and floating devices. The district had been regularly paying sales tax on both. The coordinator offered three sympathetic reasons: the open plunge program lost money every year even after admission fees; the program was already subsidized by mill levy (property) taxes, so charging sales tax on top felt like double taxation; and rental income was used to buy supplies and replace equipment rather than generate profit.

The Commission acknowledged the situation and the reasoning behind the request, but explained it has no authority to create a sales tax exemption on its own, no matter how persuasive the argument. The Commission can only administer exemptions the State Legislature has already enacted -- and at the time, no exemption existed that covered a county/school district's swimming pool admission or equipment rental charges. If the district wanted this kind of relief, its only path was to pursue a change through the legislative process, not through an advisory opinion or ruling from the Commission.

What this means for you

Government entities, school districts, and nonprofits seeking a tax break

However compelling your financial hardship or "double taxation" argument may be, the Tax Commission cannot grant you a sales tax exemption that doesn't already exist in statute. If you believe your situation warrants one, the effective path is lobbying the Legislature to enact a new exemption, not requesting an advisory opinion.

Accountants and tax professionals advising public entities

This ruling is a clean, citable example of the separation between the Commission's administrative role (applying exemptions the Legislature created) and the Legislature's lawmaking role (creating new exemptions). Don't expect an advisory opinion to substitute for a legislative fix.

Common questions

Q: Can the Utah Tax Commission create a new sales tax exemption if a taxpayer's situation seems unfair?
A: No. The Commission can only administer exemptions the Legislature has already enacted -- it cannot create new ones on its own authority.

Q: Is there currently an exemption for school district or government-run recreational facility fees?
A: Not as of this 1998 ruling. Check current Utah Code for any exemption enacted since then, since this ruling doesn't reflect any later legislative changes.

Q: Does this ruling apply to my organization's fees?
A: No. It binds the Commission only for the requesting district and the facts described. Another taxpayer can't rely on it as binding, though it may carry some persuasive weight in a dispute with closely similar facts.

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original page: https://files.tax.utah.gov/tax/commission/ruling/98-057.htm

Original ruling text

98-057

Response August 11, 1998

REQUEST
LETTER

August 11, 1998

Re: Account Number #####

Dear Sirs:

I am the Coordinator of the COUNTY District Swimming
Pools. My department HS been regularly
paying state sales taxes on open lunge admissions and on rental use income of
such items as balls and floating devices.

I am asking that my program be exempt from state
sales taxes for the following reasons: 1.)
The open plunge (public swimming) program loses money every year-our
open plunge program lost over $$$$$ last year even with admission fees from the
public. 2.) The open plunge program is subsidized by mill levy taxes-this is
in a way double taxation. The public is
charged another tax (sales tax) after being charge a mill levy tax in the first
place. 3.) The money the pools take in from renting equipment is used to buy
supplies for the pools and to replace the rental equipment.

In all, public swimming pools do not make a
profit. It costs our district $$$$$ an
hour to keep a pool running. This is
subsidized by mill levy tax money. I
feel that the COUNTY District Swimming Pools should not have to pay a sales tax
on admission fees to our open plunge program or for public rental use
fees. I would appreciate your due
consideration of this request. Thank
you.

Sincerely,

NAME

COUNTY

September
30, 1998

NAME

COUNTY

RE: Sales
Tax on Granite School District�s Swimming Pool Admission Charges

Dear NAME,

We
have received your request for an advisory opinion concerning the application
of sales tax on COUNTY School District�s charges for admission and rental of
equipment at its swimming pools. You
have specifically asked the Tax Commission to exempt these charges from sales
tax and have offered several reasons why you believe an exemption is in the
public�s interest.

We
appreciate your situation and the reasons you give asking for an
exemption. However, no matter how
persuasive an argument for sales tax exemption, the Tax Commission is not
empowered to create an exemption. We
may only administer those sales tax exemptions that have been enacted by the
State Legislature. Currently, no
exemption exists that would apply to COUNTY swimming pool charges. Should you wish to pursue an exemption for
these charges, you would need to do so through the legislative process.

Please
contact us if you have any other questions.

For
the Commission,

Joe
B. Pacheco, CPA

Commissioner

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