Sales Tax Obligations of Sellers in Utah

April 13, 2006

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Utah imposes various requirements on sellers doing business in the state. We recommend that you go through the items below to help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. In Utah, exemption certificates may follow the sample form furnished by the Utah Tax Commission or you may use the Multistate Tax Commission's uniform sales and use tax certificate. As a seller you must collect and keep exemption certificates documenting the transaction. Receipt of a resale certificate or other representation by the purchaser that items are purchased for resale will relieve you of responsibility for the transaction. You must obtain the following information:

the signature of the purchaser
the purchaser's name and address
the purchaser's sales tax license number
a description of the types of tangible personal property and services being purchased for resale

Procedure for accepting blanket certificates. As a seller you may accept a blanket certificate if your customer repeatedly purchases the same type of property or services for processing or resale. However, blanket certificates may not be used to purchase property or services not covered by a blanket certificate. As a seller you must periodically inquire whether the information on a blanket certificate is accurate and complete. This is important, because if you have not accepted a blanket certificate in good faith, liability for the tax does not shift from you to the purchaser.

Sales and use tax liability for out-of-state mail order and catalogue retailers. Utah has a statute that specifically taxes out-of-state mail order and catalogue sellers. However, you will be responsible for paying this tax only if you have physical presence within Utah. To determine if you have physical presence, ask yourself the following:

Do I have retail facilities, a warehouse, or any office space in Utah? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
Do my employees or I enter Utah for purposes of taking and transmitting orders from Utah? If your employee or independent contractor goes into Utah to take or transmit orders, your business may have physical presence in Utah. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
Do my delivery vehicles frequently enter Utah for purposes of delivering property? Frequent deliveries in Utah by your trucks will give you physical presence in Utah.

Sales tax "bracket system." The bracket system may be followed by sellers in computing the sales tax. Contact the state of Utah for your appropriate bracket.

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. In Utah the purchaser is liable for paying the sales tax, but the seller is responsible for collecting the tax and remitting it to the state.

Claiming refund for excess tax payments. In Utah a credit is allowed on your current sales tax return for tax remitted on the sale of goods that are later returned. Refund claims must be filed within three years from the date of overpayment.