Audit says Weber State bookstore abusing state sales tax policy

Wednesday, July 10, 2013

A legislative audit shows the Weber State University Bookstore’s failure to charge sales tax on electronic products cost the state approximately $167,353 in lost sales tax revenue for one year, and similar abuses at other state schools could be costing the state as much as $1.16 million a year.

The audit findings were outlined Monday as part of a legislative audit subcommittee review. The audit focused on potential sales tax abuses by University of Utah, Utah State University and Weber State in competing with the private sector and how their tax-exempt status translated into products generating sales tax. A Board of Regents guideline, R555, places limitations on the extent to which a public institution can compete with the private sector.

All state schools currently sell textbooks tax free, but their computer practices are inconsistent. WSU reportedly stopped charging sales tax on computers, iPads, calculators and flash drives in January 2010, saying the equipment is considered to be instructional material, according to the audit.

WSU’s approach to not charge sales tax is in line with tax advice from the Utah Tax Commission. WSU, the University of Utah and USU all have 501C3 status, granted to religious and charitable organizations. The audit says tax commission officials said the university’s mission-based activities could be interpreted broadly — meaning many items sold by the universities would enjoy tax-exempt status.

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