Good news for marketplace sellers! The state of Utah now requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Etsy and eBay.
This means that if you sell on a platform like eBay, then eBay will collect sales tax from your Utah buyers on your behalf, and remit it to the state.
But as usual, there are always a few wrinkles here when it comes to eCommerce sales tax.
This post will explain what online sellers need to know about the Utah marketplace facilitator law, and answer your frequently asked questions.
Overview of the Utah Marketplace Facilitator Law
Utah’s marketplace facilitator law states that a marketplace facilitator must collect and remit sales or use tax on all sales into Utah if, in the previous or current calendar year, it has more than $100,000 in gross revenue in Utah, or makes at least 200 separate transactions in the state. When calculating the threshold, a marketplace should include all sales made through the platform, its own and third-party sales.
Quick Facts about the Utah Marketplace Facilitator Law
- Effective date: October 1, 2019
- Threshold: Utah’s marketplace facilitator law states that a marketplace facilitator must collect and remit sales or use tax on all sales into Utah if, in the previous or current calendar year, it has more than $100,000 in gross revenue in Utah, or makes at least 200 separate transactions in the state.
- State law information: Read the full text of the Utah Marketplace Facilitator Law
- Marketplaces that have adopted this law:
Frequently asked Questions about Marketplace Facilitator Laws
What exactly is a marketplace facilitator in Utah?
Utah law defines marketplace facilitators as a person or an affiliate who is paid by sellers to facilitate sales of the seller’s products (tangible personal property, products transferred electronically or services) through a marketplace the person or affiliate owns. A marketplace facilitator does not include a person who only provides payment processing services or, as of July 1, 2020, facilitates sales for restaurants.
Marketplace facilitators are considered the seller of goods and services they facilitate and must charge and pay sales tax, file returns and respond to audits.
Online sales platforms like Etsy and eBay are considered marketplace facilitators under Utah law.
Does this mean I can stop collecting Utah sales tax?
In Utah, marketplace facilitators are considered the seller of goods and services they facilitate and must charge and pay sales tax, file returns and respond to audits.
Marketplace facilitator laws only cover marketplaces. The state still requires that merchants collect sales tax from buyers via sales channels where the marketplace facilitator laws do not apply.
Does this mean I can cancel my Utah sales tax permit?
No, marketplace-only sellers should not cancel their sales tax permits.
Do I still need to file an Utah sales tax return?
If you are registered to collect sales tax in Utah (i.e. you have an active Utah sales tax permit) then the state still requires that you file sales tax returns.
A marketplace seller with a Utah sales tax license must file sales tax returns but does not report sales made through a marketplace. Marketplace sellers are not liable for taxes a facilitator is required to collect.
What do I do with any Utah sales tax I have already collected?
If you have already collected Utah sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket.
Does TaxJar handle this for me?
TaxJar AutoFile Handles Utah Sales Tax Automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of Utah wants it filed. For example, many states, Utah included, want sellers to break down their sales tax collected interstate (sales originating in Utah sent to another state) and intrastate (sales made from Utah to Utah.)
If a marketplace has collected sales tax on your behalf, TaxJar reports that directly to the state so that the state is aware you have met your sales tax obligations.
If you currently AutoFile your Utah sales tax returns, you don’t need to do a thing. It’s handled!
TaxJar Reports Give You all the Info You need to File Manually
If you prefer to file manually, your TaxJar Reports also reflect what the Utah State Tax Commission wants to see on your tax return.
Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.
Get started now with your free TaxJar trial. No credit card required.
Further reading on Utah sales tax and marketplace facilitator laws:
- TaxJar’s Marketplace Facilitator FAQ
- State by State: Marketplace Facilitator Laws Explained
- Utah Sales Tax Guide for Businesses
Do you have questions or something to say about the Utah marketplace facilitator law? Start the conversation in the comments!