Does your business operate or sell in Utah? With all the recent talk about sales tax, you may be wondering what you might owe and how to calculate everything. Here is a guide to walk you through the basics.
You’re an online seller, but don’t live in Utah
If your business operates out of the state and you sell an item to someone living in Utah, do you have to pay sales tax? You don’t. If you don’t have sales tax nexus (an office, employee, warehouse, etc.) in Utah, then you do not have to worry about registering for a sale tax permit, looking up Utah sales tax rates, or remitting sales tax in Utah.
You live in and/or operate a business in Utah
If your business operates out of Utah or you live in the state, you do have to deal with Utah sales tax. Again, Utah is origin-based, which means your sales tax rate depends on where you live or operate your business.
There is a base sales tax rate for Utah: 4.70%. However, this doesn’t take into account local tax rates, which vary wildly. They can be as low as 4.70% or as high as 8.35%. These numbers can also change periodically (as frequently as quarterly), so make sure you keep up with the latest rate that affects your business.
One difference between Utah and some other states is that shipping is not taxable if you separately charge for shipping on your invoice. However, if they’re included in the cost of the item you’re selling then it is taxable.
If you are an online seller, live out-of-state, and use a fulfillment service (like FBA)
While Utah does not have an FBA warehouse, Utah does plainly state that retailers who have some kind of presence in the state have sales tax nexus. Utah law defines a retailer as any person regularly engaged in regular solicitation of a consumer market in Utah. This includes commission merchants, auctioneers, salesmen, distributors, supervisors and employers.
Your business must engage in the following activities to exceed the minimum threshold of sales tax nexus in the state of Utah:
- have or use an office, distribution house, sales house, warehouse, service enterprise or other place of business;
- maintain a stock of goods in Utah;
- regularly solicit orders, unless the activity in Utah is only advertising or solicitation by direct mail, email, the Internet, telephone, or similar means
- regularly deliver property in Utah other than by common carrier or US mail
- regularly engage in any activity related to the leasing or servicing of property located in Utah
There are a few, more specific ways to meet the minimum requirement for nexus in Utah
1a) the seller has more than 10% interest in a related seller, or
1b) related seller has more than 10% interest in the seller, o
1c) related seller wholly owns the seller, AND
2a) the seller sells the same or very similar line of products as the related seller under the same or a very similar business name, or
2b) 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.
If you don’t meet any of those criteria, you likely don’t have to worry about nexus if you sell in Utah. Most FBA sellers will not meet these criteria, since there is no Amazon fulfillment center in the state.
Collecting the Correct Sales Tax Rate
Hopefully you understand a little more about sales tax and how it operates in the state of Utah. But down to the question everyone wants to know: how much does my business collect when it comes to sales tax? Here’s the rundown.
Since Utah is an origin-based state, it depends where your business operates. The base rate for Utah is 4.70%, but you more than likely have local sales tax rates to deal with. Make sure to look up your local sales tax rate to find the rate that pertains to you and your business.
If you operate out of state and have nexus in Utah, collect the base rate.
When you pay also varies wildly depending on how much your tax liability is:
- If your liability the previous year was $1,000 or less, file sales tax every year on January 31st.
- If your liability was from $1,001 to $49,999, file quarterly on April 30th, July 31st, October 31st, January 31st.
- If your liability was from $50,000 to $95,999, file on the last day of every month.
- Lastly, if your liability is $96,000 or more, file the last day of every month with mandatory EFT payments.
Once you file for your sales tax permit, state officials will give you instructions for determining when you pay and getting you on a payment schedule.
File sales tax in Utah
If you need to file a sales tax return in Utah, TaxJar has your back. You can now enroll in AutoFile for the state of Utah and we’ll automatically file your sales tax return for you! Find out more at TaxJar.com.
Summing It Up: Origin-based with specific nexus rules
In Utah it’s all about where your business operates or where you live. If you live out of state, you don’t likely don’t have to worry about sales tax in Utah at all unless you have established sales tax nexus with an office, employee, warehouse, etc.
The list of criteria to fit the minimum requirements for nexus in Utah is fairly long, so make sure you read above to see if you have to worry about it. If you do, collect the 4.70% base rate.
If you operate in state, read over your local tax rates to see what to collect from customers.
As for sales tax on shipping in Utah, if you collect it separately on the invoice, you don’t owe sales tax on it. However, if it is included in the same price as the item listed, then you do owe sales tax on it.
Do you have experience selling in Utah? Questions about sales tax in Utah? Comment below to get the discussion going!