Quick Answer: You need to get a sales tax permit in Utah if you have a physical presence or meet economic or affiliate nexus requirements. Read on for more detailed information.
What is Sales Tax Nexus Anyway?
Your business owes sales tax in any state where it has “sales tax nexus”. In short, if you have sales tax nexus you need to collect and remit sales tax. If you don’t have sales tax nexus, you generally don’t need to get a permit.
Sales tax nexus is a legal term that means you have crossed a threshold and now have a sales tax collection responsibility in the state. Nexus can be created by having a physical presence, economic presence, or by other factors. Nexus rules vary by state and retailers have specific nexus rules based on where they have people, property or inventory.
What Should You Do Once You Determine You Have Sales Tax Nexus?
Once you determine that you have sales tax nexus in Utah, your next step is to register for a sales tax permit in the state. Check out our blog post on getting a sales tax permit in Utah or more information about that process.
Common Ways to Have Sales Tax Nexus in Utah
1. Economic nexus in Utah
If you made $100,000 of sales or had 200 or more separate transactions in Utah in either the previous or the current calendar year, then you are required to register for, collect, and pay sales tax to the state. If you meet this threshold, it does not matter if you have a physical presence in Utah. Nexus has been created based on your volume of sales.
For more information see Utah S.B. 2001.
If you need help determining which states you have crossed economic nexus thresholds, check out our Sales Tax Starter Kit service.
2. Physical presence nexus in Utah
The following creates physical presence nexus in Utah. If you have any of the following in Utah you need to get a sales tax permit:
- Have or use an office, distribution house, sales house, warehouse, service enterprise or other place of business;
- Maintain a stock of goods in Utah;
- Regularly solicit orders (whether or not those orders are accepted in Utah) unless the activity in Utah is only advertising or solicitation by direct mail, email, the Internet, telephone or similar means;
- Regularly deliver property in Utah other than by common carrier or U.S. mail; or
- Regularly engage in any activity related to the leasing or servicing of property located in Utah.
- If the seller regularly services property in the state.
For more information, please see Utah Publication 37.
If you need help determining which states you have a physical presence in, check out our Sales Tax Starter Kit service.
Uncommon Ways to Have Sales Tax Nexus in Utah
1. Affiliate Nexus in Utah
What exactly is affiliate nexus? Affiliate nexus can exist when a business has sufficient contact with a state through a separate business. If your out-of-state business has a relationship with an in-state business, then you may have affiliate nexus.
Please keep in mind that an “affiliated business” does not necessarily mean that it is a marketing “affiliate” in the typical sense of the word. Instead, “affiliate nexus” refers to the relationship between two businesses.
A seller has affiliate nexus in Utah if:
- The seller has more than 10 percent interest in a related seller, or a related seller has more than 10 percent interest in the seller, or a related seller wholly owns the seller, and
- The seller sells the same or a very similar line of products as the related seller under the same or a very similar business name, or the place of business of the related seller or one of its in-state employees is used to advertise, promote or assist sales by the seller to a buyer.
For more information about affiliate nexus please see Utah Publication 37.
Do You Need a Sales Tax Permit in Utah If You Only Sell on Marketplaces?
If you are an out-of-state online retailer who ONLY sells on approved marketplaces (such as Amazon, eBay, etc), Utah sales tax will be remitted by the marketplace. However, Utah still requires you to get a sales tax permit and remit returns if you have nexus in the state, even if no sales tax is due.
For more information about this please see Utah Publication 25.
If you are an e-commerce seller who is unsure of where you need to get a sales tax permit, feel free to check out our Sales Tax Starter Kit service.
Disclaimer: Nothing on this page should be considered tax or legal advice. Information provided on this page is general in nature and is provided without warranty.