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The Utah State Tax Commission has revised and reissued and informational publication that provides guidance on the taxes it administers. Included in the publication are the procedures for requesting a waiver of tax penalties or interest and the types of circumstances that may constitute reasonable cause for a waiver. (Publication 17, Utah State Tax Commission, February 2010)


The Utah State Tax Commission has revised its tax publication related to the sourcing of taxable sales in the state. The publication now clarifies that the retail sale of taxable services in Utah, when the seller sells, leases, or rents any tangible personal property (including products transferred electronically), should be sourced to the seller's fixed place of business or the customer's location depending on the seller's preference. If the seller does not have a fixed place of business, (vending machine operators, mobile tool companies, etc.), the seller should source the sale to the location where the sale took place. For sales at special events (fairs, swap meets, etc.), the event location should be used for sourcing purposes. In addition, retail sales of a taxable service where the seller does not sell, lease or rent any tangible personal property (including products transferred electronically), should be sourced to the customer's location. (Publication 25, Utah State Tax Commission, June 2009)


In a private letter ruling, the Utah State Tax Commission found that an out-of-state “nexus seller” would not create nexus for an out-of-state “related seller”. In the letter, the nexus seller has an office in Utah as well as employees to support and service its Utah customers. The related seller does not have any retail stores or employees, engage in any Utah activities, or own or lease any real property in Utah. Under these facts, the Commission found that the related seller does not meet Utah’s statutory definition of a retailer engaged in business. On the other hand, since the related seller is an affiliate, further analysis had to be done to determine if the related seller had affiliate nexus instead. The nexus seller was a web-based provider of e-commerce services and did provide the related seller with certain business services for its backend infrastructure, including content delivery network and storage services. However, these services were not provided in Utah. It was therefore determined that the related seller does not have affiliate nexus in Utah based on the types of services performed as long as those services are not directly related to establishing or maintaining a market in Utah for new or existing customers. (Private Letter Ruling, Opinion No. 09-008, Utah State Tax Commission, July 28, 2009)


A Utah university sought clarification on the exempt purchase of goods by employees at point of sale. When employees made these purchases, they were charged sales tax. The university would reimburse employees for the sales tax paid. The university requested a refund of these reimbursed amounts as they were a 501(c)3 organization and were exempt from sales tax. The state found that the university was not eligible for a refund as the sales were not "made to" a charitable institution, as the applicable statute states. The sales were made to the employees of the university, who made the payments for the sales, even though they were for university use. (Private Letter Ruling, Opinion No. 08-014, Utah State Tax Commission, April 7, 2009)


The Utah State Tax Commission has revisited a private letter ruling that discusses the application of Utah sales tax to a corporation’s sale of a software-supported automobile dealer management service and associated services. Although the original letter ruling found the associated services to be taxable, the newly described facts indicate that set-up and training fees charged to customers are not taxable. Since the services are separately-stated on the invoice, optional to the client, and because some clients utilize other companies for these services or use the instructions provided by the seller to perform the services themselves, they are not “necessary to complete the sale”, and,, therefore, should not be included in the purchase price.

The Tax Commission determined that separately-stated custom programming and forms programming fees charged to customize the software are not taxable, because such charges are not included in the definition of “prewritten software”. Separately contracted for support fees were also found to not be taxable because they are not among the specifically enumerated taxable services, and because the support fees did not relate to installing, enhancing, or upgrading prewritten computer software.

However, since the Tax Commission still holds that the software-supported automobile dealer management service is “prewritten software”, it denied the corporation’s request to rule that application service fees and monthly licensing fees to access the software-supported service were also not taxable. (Private Letter Ruling, Opinion No. 08-002, Utah State Tax Commission, amended July 10, 2009)



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