Utah Enacts Affiliate Nexus Bill

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)

Posted on April 5, 2012