So, you need to know about sales tax in The Beehive State. Look no further!
Whether you’ve fully set up shop in Utah, or simply ship there once in a while, it’s important you know whether your business is liable to their sales taxes. This guide will tell you everything you need to know, plus direct you to the right places for handling any sales tax responsibility you may have.
What’s taxable in Utah?
Services include professional services provided by lawyers, architects, landscapers, etc. The definition can be pretty wide, and many exemptions can apply. Your best bet would be to check with Utah Department of Revenue to confirm your service is even taxable.
Tangible products, as you might guess, are physical items. Utah taxes most tangible products, but there can be exemptions! To be absolutely clear about which products are subject to sales tax, and which are exempt, check Utah Department of Revenue.
Digital products are goods that are delivered or accessed electronically, usually through the internet. Media streaming services and eBooks usually fall into this category, too, but rules can vary. Check Utah Department of Revenue website to be sure.
Better known as SaaS, these products are cloud-based software products, accessed online by customers. The definition of SaaS sometimes falls in the gray area of “digital service.” Utah does tax SaaS products, but check the website to confirm that the definition firmly applies to your service.
Do you have nexus in Utah?
The word “nexus” refers to a commercial connection in the state. Nexus determines the following questions for a state tax agency: Do you do business here, what kind, and how much? And when you do have nexus, that means you’re obligated to collect tax on your sales there.
So the first question for you to answer is whether you have nexus in Utah.
You probably have nexus in Utah if any of the following points describe your business:
- A physical presence in Utah: a store, an office, a warehouse or distribution center, storage space, you, an employee, a representative, etc.
- A significant amount of sales in Utah within twelve months. *
* This is called an economic nexus, a sales tax nexus determined by economic activity, i.e. - the amount of sales you make in a particular state. Any kind of economic activity could trigger the nexus, once your total sales reach a certain threshold amount.
The threshold in Utah is $100,000 in annual sales or 200 separate sales transactions, whichever your business reaches first. To learn more about how this works, check out the Ultimate Guide to US Economic Nexus.
How to register for sales tax in Utah
Okay, so you have nexus! Now what?
The next crucial step in complying with Utah sales tax is to register for a sales tax permit. It’s actually illegal to collect tax without a permit. So to get all your ducks in a row, start with tax registration first.
You can find directions about how to register in Utah on their Department of Revenue website.
When registering for sales tax, you should have at least the following information at hand:
- Your personal contact info
- Your business contact info
- Social security number (SSN) or Employer Identification Number (EIN)
- Business entity (sole-proprietor, LLC, S-Corp, etc.)
- Bank account info (account number and routing number) where you’ll deposit the collected sales tax
How to collect sales tax in Utah
Now it’s time to tackle the intricate stuff! Tax rates can vary based on the location of your business and the location of your customer, plus the levels of sales tax that apply in those specific locations.
The state-wide sales tax in Utah is 4.7%.
There are additional levels of sales tax at local jurisdictions, too.
Utah has an origin-based sales tax system, which keeps it simple for you. If you’re a local business, then you must charge the tax rate according to your location in Utah. So that would be the state-wide 4.7%, plus any local taxes if necessary.
If you have more than one location in Utah, then charge the sales tax rate of where the sale occurred.
If you’re not based in Utah but have nexus in the state, you may charge only the 4.7% use tax rate. * Use tax is similar to sales tax, but charged only by “remote sellers” — businesses like you, who aren’t based in a state but have nexus there.
Check out Quaderno's Sales Tax Calculator see your product's tax rate, amount, and final price in Utah.
* Important to note for remote sellers: This is not always true. While some states allow out-of-state retailers to charge a flat use tax rate, other states have peculiar rules for remote sellers. Contact the state’s Department of Revenue to be sure.
Sales tax on shipping charges in Utah
Utah doesn’t apply sales tax to any shipping costs, as long as the shipping costs are clearly listed and separated from the price of the item(s) you’re selling. Be sure to always mark the cost of the product and the cost of the shipping on two different lines of the bill.
When to file taxes in Utah
When you register for sales tax, Utah will assign you a certain filing frequency. You’ll be asked to file and pay sales tax either monthly, quarterly, or annually.
Usually the frequency they choose is based on the amount of sales tax you collect from buyers in Utah. High-revenue businesses file more frequently than lower volume businesses, for example.
Utah sales tax returns are usually due on the last day of the month following the reporting period. If the due date falls on a weekend or holiday, then your sales tax filing is generally due the next business day.
How to file taxes in Utah
When tax time rolls around in Utah, whether it’s monthly or annually, you must do three things:
- Calculate how much sales tax you owe
- File a sales tax return
- Make a payment
Other Utah tax info
If you miss a filing or payment deadline, certain penalties can apply. Such a pain! Check the state’s website for up-to-date penalty fees.
On a brighter note, you could be eligible for sales tax discounts in Utah! Usually these discounts are designed to save you a bit of money, as a reward for complying with the sales tax system. Check the state’s website for up-to-date discount policies.
Sales Tax Holidays
One final tricky aspect about Utah sales tax are the sales tax holidays. During these days of the year, you aren’t required to charge sales tax, and buyers will expect to not be charged. Check the state’s website for current sales tax holidays.
- The Quick Guide to U.S. Sales Tax Nexus
- The Ultimate Guide to US Economic Nexus
- How the Wayfair decision on US sales tax will affect your business — and how it won’t?
- What You Must Know About Sales Tax if You Have Customers in the United States
- US Sales Tax for eCommerce: How to comply
- Sales Tax for Digital Products in the U.S.
- Sales Taxes for SaaS Products in the U.S.
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the Tax Agency.