Utah Sales Tax Handbook

RATE OF SALES TAX:

6.10%

LOCAL & COUNTY MAXIMUM RATES:

2.95%

What are the taxable goods and services?

The first step in sales tax compliance is determining if the items or services your firm offers are taxable in Utah.

Traditional Products and Services

Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in Utah.

Prescription drugs and fuel are both tax-free.

Utah levies a 3% reduced rate on grocery purchases.

Some Utah services are subject to sales tax. View this PDF from the Utah State Tax Division website for a complete list of taxable services.

Digital Products and Services

A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.

Businesses in Utah are required to collect sales tax on the sale of digital products or services.

How to Apply for Utah Sales Tax

If you have concluded that you must charge sales tax on any or all of the products and services that your company sells, the next step is to apply for a sellers permit.

This enables your company to collect sales tax on behalf of the municipal and state governments.

You will need the following information to register:

The kind of business entity (Corporation; Limited Liability Company; Sole Proprietorship; etc.)
The recommended name for your company.
When will the new business in Utah begin?
The first paycheck in Utah was made on this day.
Names, addresses, phone numbers, FEINs, SSNs, or TINs of owners, partners, corporate executives, LLC members, and the Registered Agent are all required. Signatures must be submitted electronically.
The location of the company (s).
A brief summary of the company’s operations.
Name and contact information for the individual submitting the registration.
Payment methods (Visa; MasterCard; electronic check).
Foreign Business Entities (entities situated outside of Utah): You must present a Certification of Good Standing/Existence from the State of Incorporation that is no older than ninety (90) days.

A Resale Certificate might help you save money.

When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.

Retail Sales

For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.

Here’s an illustration of how this situation may look:

In West Jordan, Utah, Mary owns and operates a bookshop. Because books are taxed in the state of Utah, Mary charges a flat 6.850% sales tax on all purchases. This includes the 4.700% Utah state sales tax, the 1.350% Salt Lake County sales tax, and the 0.800% Mary local district tax. (Only include county, municipal, and city taxes if appropriate.)

Sales inside the state

The state of Utah has a scheme known as origin-based sales taxation. This implies that long-distance transactions inside Utah are taxed based on the seller’s address. This regulation applies to sales taxes levied by the state, county, and city.

Consider the following scenario:

Steve operates his own eBay electronics company from his home in Provo, Utah. A buyer from Salt Lake City discovers Steve’s eBay website and buys a $350 set of headphones. Steve adds the Utah state tax rate of 4.700% to this transaction, plus 0.800% for Utah County’s tax rate, 1.100% for Provo’s city tax rate, and 0.250% for his local tax district. The total cost is $373.98 ($23.98 sales tax) at a total sales tax rate of 6.850%.

Out-of-State Purchases

Businesses in Utah must only pay sales tax on out-of-state sales if they have a presence in other states.

Nexus indicates that the company has a physical presence in another state.

Common nexus types include:

A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.

Submit Your Sales Tax Return

You’re ready to submit your sales tax return now that you’ve obtained your Utah seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.

How to File a Claim

Businesses in Utah are required to file sales tax forms and make sales tax payments online.

How Frequently Should You File?

The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.

Annual filing: If your company collects less than $1,000 in sales tax each year, you should submit returns on an annual basis.
Quarterly filing: If your company collects between $1,000 and $50,000 in sales tax each year, you should choose to submit quarterly returns.
Monthly filing: If your firm receives more than $50,000 in sales tax per year, you must submit monthly returns.

Deadlines for Filing

Unless it is a weekend or a federal holiday, all Utah sales tax return deadlines come on the last day of the month.

Penalties for Filing Late

Utah has a late filing penalty of 10% every month or partial month, with a maximum penalty of 20% of the tax stated on the tax return.

The state levies the unpaid tax at a compounded annual interest rate of 2%.