Sales and Use Taxes in Utah

April 13, 2006

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In Utah a tax is levied on the purchaser for the amount paid or charged for:

retail sales of tangible personal property
amounts paid to common carriers or telephone or telegraph corporations
gas, electricity, heat, coal, fuel oil, or other fuels sold or furnished for commercial or residential use
meals
admissions or user fees for entertainment, recreation, cultural, or athletic activities
services for repairs, renovations, or installation of tangible personal property
cleaning or washing of tangible personal property
hotel or trailer court accommodations and services for less than 30 consecutive days
laundry and dry cleaning services
leases and rentals of tangible personal property
tangible personal property stored, used or consumed in Utah
prepaid telephone calling cards

Sales and use tax rate. The Utah sales and use tax rate is generally 4.75 percent. The tax rate on the residential use of utility services is 2 percent. (In addition, make sure you contact your local governments in Utah because they are allowed to assess a local sales and use tax.)

Starting January 1, 2007, the state portion of sales and use tax on food and food ingredients is reduced from 4.75 percent to 2.75 percent. This category includes substances in liquid, concentrated, solid, dried, or dehydrated form that are sold for ingestion or chewing by humans and consumed for the substance's taste or nutritional value. Tobacco products, alcholic beverages, and prepared foods are excluded from the reduced rate.

Tax-exempt items. Utah has many specific items that are exempt from sales tax — for example, certain prescription medications are exempt from Utah sales tax. You'll want to check and see if you are exempt from the sales tax.

Responsibility for paying sales tax. In Utah the purchaser is liable for paying the sales tax, but vendors are responsible for collecting the tax and remitting it to the state.

Use tax. The use tax is an excise tax on the storage, use, or other consumption of tangible personal property in Utah on which no sales tax was paid. The use tax is a complementary tax that applies when the Utah sales tax does not.

Responsibility for collecting use tax. The person storing, using, or consuming tangible personal property within the state is liable for the use tax.

Obtaining tax permits in Utah. In Utah you need a separate license for each place of business, but even if you operate more than one place of business you need only complete one application. You must file the application with the Utah Tax Commission.

Leases. In Utah if the sale of the tangible personal property is subject to sales tax, the rental or lease of the same property is also a taxable sale. The lessor must compute sales or use tax on amounts received or charged according to the rental or lease agreement.

The following discussions address additional sales and use tax issues that many small business owners face: