Should you collect sales tax in Utah?
Sales tax is levied on the retail sale of tangible personal property to your customers, including leasing or renting tangible property. However, you will collect the sales tax if you determine the nexus in Utah. Nexus is the presence that may come physically or economically.
A physical nexus is typically created when your business has a store, warehouse, or office location in Utah. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds can be on revenue or some other transactional basis.
Let’s explore if your business has a Physical nexus in Utah.
A physical nexus is integrated when your business is engaged in the following in Utah:
- Servicing tangible personal property in Utah.
- Maintaining, occupying, or using a place of business or an office in Utah.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- Having a stock of goods in Utah.
Is it constituting an Economic nexus in Utah?
You are required to comply and register under sales tax rules if you are a remote seller (i.e., don’t have a physical presence in the state) and business sales in Utah exceed $100,000 during the current or previous calendar year or make 200 or more separate retail transactions or delivery into the state.
You may also refer to the Utah Taxation Department advisory to know more about business activities that may create an economic nexus within the state.
How can you Register for Sales tax in Utah?
By visiting the Utah One STOP business registration solution , you must apply online to get the sales tax permit. Otherwise, you can also submit the licensing application using the TC-69 form and by sending it to their mailing address.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- EIN and Social Security numbers of all officers, partners, or owners.
- Address details (physical and mailing).
- Business incorporation dates in Utah.
- Contact information.
- Estimated total monthly sales.
- Nature of business.
Is your product or services liable for sales tax in Utah?
Tangible Property: Sales tax in Utah is imposed primarily on the retail sale of tangible personal property, e.g., Furniture, giftware, toys, etc.
Services: Many Services are generally chargeable to sales tax in Utah except otherwise stated. Few of the taxable services include telecommunication, cleaning, washing, repairing, etc. For more information, click here.
Digital Product: Utah charges sales tax on digital products. So, you must collect sales tax if you sell digital products such as software, streaming services, e-books, etc. Read here to know about what Utah says about digital transactions.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. This is taxable in Utah as it is considered a digital product. Review the Utah Revenue Department advisory.
The state provides certain exemptions from the sales tax levy, such as food for home consumption, prescription drugs, manufacturing equipment, etc. Please click here to see what exemptions are covered.
How should you collect and calculate state taxes in Utah?
Collecting and computing accurate sales tax to be remitted to the state may not involve those boisterous efforts as the sales tax is origin-based in Utah, which means you must collect taxes at the rate where your business is located. However, if you are not based in Utah and create a business relationship through the state’s economic nexus, you’ll have to collect and remit the sales tax.
Complexities involved where you have a business nexus even if not in the state. Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden and you can focus on other important business aspects..
Utah has a base sales tax rate of 4.85%, followed by the local tax rates, which vary based on the cities and municipalities.
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectible = Sale value * (4.85% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
Shipping charges can be delineated separately in the sale invoice raised to the customer or dissipated within the selling price of items sold. There will be no tax applicability if shipping charges are separately stated on the invoice. However, if they are not stated separately, you need to collect the tax on the total sales price, including shipping charges. This link will take you to the official guidance issued by the state on delivery charges.
How should you file sales tax in Utah?
There are multiple options available to you for reporting your sales tax.
E-file: You can e-file your return using the Utah Tax Center.
File by Mail or In-person: Complete TC-62s and mail it to their address or submit it in person.
Let us manage all your tax compliances. We will handle all the calculations, payments, remittances, and filings.
Filing frequencies and due dates
Based on your reported sales tax or estimated taxable sales, the Utah Department of Revenue assigns you a filing frequency, which can be Monthly, Quarterly, or Yearly. According to your filing frequency, the due date for filing sales tax would be the last day of the month following the relevant reporting period.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date. This link will take you to the official Utah government advisory, where you can see what the state says about sales tax filing due dates.
Are there any fines or penalties for default when filing or paying sales tax?
The state levies a penalty of up to 5% of sales tax due if returns are filed within 1-15 days of delay from the due date; a 10% penalty is imposed when you file a return after 15 days from the due date. Also, interest is charged at 5% for the delay in paying the sales tax.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates. Please review the Utah State Tax Commission guidelines for penalties and interest.