Effective May 5, 2008, Utah legislation has enacted the Professional Employer Organization Licensing Act under the Utah Insurance Code. As part of the Act, a covered employee whose service is subject to a sales or use tax is considered the employee of the client for purposes of imposing and collecting the tax on the service performed by the employee. However, the Act may not be interpreted to relieve a client of sales or use tax liability.
Tax shall be assessed on a per capita or per employee basis on a client for a covered employee, and on the professional employer organization for an employee of the organization who is not a covered employee coemployed with a client. If the tax amount is determined on the basis of the gross receipts of the professional employer organization, only an administrative fee collected by the organization is considered gross receipts. If the tax is imposed on the basis of total payroll, the professional employer organization is eligible to apply for a small business allowance of exemption available to the client for a covered employee for the purpose of computing the tax. (H.B. 169, Laws 2008, Effective May 5, 2008)