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The Utah State Tax Commission has updated guidance on business activity and nexus for sales and use tax purposes. The publication redefines “nexus” to mean that a business entity has established a direct or representational presence within a state or jurisdiction. This presence allows Utah to require the business to collect and remit certain taxes. “Retailer” is also redefined as any person regularly engaged in regular solicitation of a consumer market in Utah. A retailer includes commission merchants, auctioneers, salesmen, representatives, distributors, supervisors and employers. The publication also discusses the recently enacted Utah affiliate nexus rules. It states that a seller has nexus in Utah if the seller has a more than 10% interest in a related seller, a related seller has a more than 10% interest in the seller, or a related seller wholly owns a seller; and the seller sells the same or a very similar line of products as the related seller under the same or a very similar business name, or the place of business of the related seller or one of its in-state employees is used to advertise, promote, or assist sales by the seller to a buyer. (Publication 37, Utah State Tax Commission, May 2012)

(06/22/2012)

On March 24, 2012, Utah Governor Gary Herbert signed into law an affiliate nexus bill that will require certain remote sellers to collect and remit Utah sales tax, effective July 1, 2012. An out-of-state seller will be considered to have nexus in Utah if the seller holds a substantial ownership interest in, or is owned in whole or in substantial part, by a related seller, and the seller sells the same or a substantially similar line of products as the related seller and does so under the same or a substantially similar business name, or the place of business of the related seller or an in-state employee of the related seller is used to advertise, promote, or facilitate sales by the seller to the purchaser. Sellers not required to collect and remit tax under this requirement can do so voluntarily. A “related seller” is a seller that meets one or more criteria requiring the seller to collect and remit sales tax and delivers tangible personal property, a service, or a product transferred electronically that is sold by a seller that does not meet the same criteria. Those criteria are that the seller has an office, distribution house, sales house, warehouse, service enterprise or a similar place of business in Utah. The bill also provides that if federal legislation is passed authorizing a state to require certain sellers to collect a sales tax that Utah does not already require a seller to collect, including the currently enacted affiliated nexus seller requirement, sellers will be required to collect and remit the tax to Utah. (H.B. 384, Laws 2012, effective as noted)

(04/05/2012)

Free flu vaccines that a pharmacy plans to offer to uninsured individuals would be exempt from Utah sales and use tax because the vaccines are for human use and are purchased by a medical facility. An exemption exists for amounts paid for certain drugs and syringes if the item is intended for human use; and a prescription was issued for the item or the item was purchased by a hospital or other medical facility. In this case, prescriptions would not be required to receive the promotional flu vaccine. The Utah Tax Commission determined that the taxpayer, a pharmacy located inside a retail store, would be functioning as a medical facility while it administered the vaccines under the assumption that the vaccines would be administered by qualified, state-licensed health care professionals. (Private Letter Ruling, Opinion No. 09-020, Utah State Tax Commission, January 28, 2010, released August 2010).

(11/14/2010)

A private letter ruling was issued by the Utah State Tax Commission in response to a taxpayer’s questions concerning sales and use tax treatment of various charges associated with public relations, advertising and marketing.

Public relations service retainers, including coordinating media events and media interviews, are exempt from tax because Utah does not impose sales or use tax on consulting services for planning, management, execution and reporting of public relations activities. Advertising and marketing labor retainers are similarly exempt. However, tax is due on purchases of materials and supplies used in providing these services.

Labor charges for logo design and production, advertising materials, packaging, and label design are not taxable because graphic design services are not subject to Utah sales and use tax provided the services are the true object of the transaction. This remains true even if the design is incorporated into a tangible medium.

Charges for website design, including time to conceptualize, design, program or maintain a website, are not subject to Utah sales and use tax provided the object of the transaction is the company’s expertise rather than the purchase of the website with the design services only a secondary consideration. However, should the design of a website entail only the bundling of pre-existing programs into a unique website for a specific client, the Commission would probably consider the transaction to be a taxable purchase of canned computer software. (Private Letter Ruling, Opinion No. 09-002, Utah State Tax Commission, August 17, 2009 (released April 2010))

(05/04/2010)

Effective July 1, 2010, if a seller of advertising and promotional direct mail receives information indicating the locations of the recipients to which the advertising and promotional direct mail is delivered, the seller must collect and remit sales and use tax to the Utah commission in accordance with the information the purchaser provides. (H.B. 349, Laws 2010, effective July 1, 2010)

(04/15/2010)

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