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Welcome to the Utah State Tax Commission's Sales and Use Tax Workshop for Vehicle Body & Repair Shops.
Due to legislative actions, tax laws may change frequently. Changes to current laws, rules, bulletins, publications, policies and procedures of the Tax Commission will supersede any information found in this workshop. The information contained in this online workshop is not all-inclusive and should not be used as a legal reference.
For general information on sales and use tax, please see the Utah Sales and Use Tax Workshop; Publication 25, Sales and Use Tax General Information; and Utah Code § 59-12, Sales and Use Tax Act.
This online workshop has been customized for vehicle body and repair shops. Additional information for this industry can be found in Publication 5, Sales Tax Information for Vehicle & Watercraft Dealers and Body & Repair Shops.
Visit the Utah State Tax Commission website at http://tax.utah.gov.
From the Tax Commission’s sales and use tax web page, users can get information on sales tax rates, rate changes, filing returns online and more.
A variety of online services are available from the Tax Commission. Visit this site to file Utah tax returns, pay Utah tax liabilities, register a business, request a tax license, or access motor vehicle services such as renewing vehicle registrations.
The Tax Commission’s website includes a Research Library. Use the Research Library database to search rules, decisions, rulings and bulletins. There is also access to state legislation affecting taxes, the Utah Code and U.S. Tax Code.
Go the Tax Commission website to learn about free tax workshops.
Sales and use tax forms and publications are available online.
Representatives in the Taxpayer Services Division are available to assist taxpayers from 7:00 a.m. to 6:00 p.m. Mountain Time, Monday through Thursday, excluding state holidays.
Taxpayers can call (801) 297-2200 or 1-800-662-4335 with tax inquiries. For information specific to sales and use tax, taxpayers are encouraged to:
Please note that email is not secure. Do not include account numbers, social security numbers, or request account changes when corresponding through email.
Click here to review the Utah Sales and Use Tax Workshop. The online workshop includes information on sales tax license requirements, collecting and remitting sales and use tax, types of sales and sales-related taxes, record keeping requirements, and two examples on how to file sales tax returns.
Click here for a schedule of Sales and Use Tax Workshops presented by the Tax Commission.
Sales and use taxes are transaction taxes. This means the tax is not on the items sold or furnished, but on the transaction and the purchaser is the actual taxpayer. The seller is charged with collecting sales tax from the purchaser and remitting the tax to Utah.
Sales and use taxes are trust fund taxes; the funds collected may not be used for any other purpose. The seller holds the collected tax in trust for the state until remitted to the Utah State Tax Commission.
Sales tax is a tax on the retail sale or lease of all tangible personal property and on certain services. Sales tax is collected by a Utah licensed retailer or seller, and is paid to the Tax Commission on monthly, quarterly or annual tax returns. For more information, refer to Utah Code §59-12-103 and Administrative Rules R865-12L, R865-19S, and R865-21U.
Use tax is a tax on amounts paid or charged for purchases of tangible personal property and for certain services where sales tax was due but not charged. In cases where the seller does not charge sales tax, it becomes use tax and the purchaser is responsible to report and remit use tax directly to the Tax Commission. Examples of activities that trigger use tax liabilities include withdrawal of items from resale inventories and other consumption of goods or services purchased tax-free.
Use tax must be accrued and paid on certain purchases from unregistered out-of-Utah sellers. Some of the more common items for use tax reporting include advertising supplies, office or shop equipment, computer hardware and software, and office supplies.
Depending on the type of transaction, the final consumer can be the seller (repair shop) or the customer. To identify the final consumer and the party responsible to pay sales or use tax, determine who consumes the tangible personal property.
The customer is the final consumer of items that become a component part of the customer’s vehicle. For example, a customer purchases four new tires from the seller and asks the seller to install the tires. The customer is the final consumer of the tires. The repair shop prepares an invoice that lists the tires and labor (along with any other charges) and collects sales tax from the customer as applicable.
When the repair shop consumes items, it becomes the final consumer. For example, the repair shop will pay sales tax on purchases of office supplies or shop supplies because the shop is the final consumer of these items. Shop supplies can include equipment, tools and dies; sandpaper, tape, masking paper and similar supplies; paint thinners and accelerants; chemicals and solvents used for cleaning parts or tools; parts or supplies used for public relations or advertising purposes; grinding wheels and compounds; oxygen, acetylene, argon, carbon dioxide, helium, etc.
Utah law provides three types of sales tax exemptions for all taxpayers:
The most commonly used exemption form is TC-721, Exemption Certificate.
A purchaser must meet the exemption conditions in order to purchase items tax-free. Funds used to purchase the items must be from the purchaser’s business and the exempt items must be used in the normal course of business.
Exemption certificates are accepted by sellers at face value. Sellers keep the certificates to document the exemption for record keeping purposes. The seller is not liable for unlawfully claimed exemptions unless the seller participates in improperly claiming an exemption.
Sellers may keep exemption certificates on file for a customer’s future purchases. However, certain items purchased tax-free require the purchaser to complete an exemption certificate for each qualifying purchase (e.g., manufacturing equipment). A purchaser is required to notify the seller if a certificate on file is cancelled, modified, or limited for the exemptions claimed.
Businesses that purchase items tax-free under exemption provisions and later use a portion of the items for non-exempt purposes must report and remit sales and use tax on the cost of non-exempt items.
A repair shop can purchase items exempt from sales tax if a customer will be the final consumer. This is applicable when items used to repair the customer's vehicle become a component part of the customer's vehicle.
For example, a radiator installed in a customer’s vehicle can be purchased exempt from sales tax by the repair shop. This would be a use-based exemption because the repair shop is purchasing the radiator for resale. The repair shop would complete form TC-721, Exemption Certificate and give to the seller at the time of purchase.
Some examples of items that the repair shop could purchase exempt for resale include repair parts; lubricants; welding rods; paint, wax and lacquers used in painting or polishing vehicles; body filler; repair parts; sublet repair labor; paint hardener and rust preventatives.
If a repair shop purchases items exempt for resale and later uses the item, it would pay use tax on that item when completing the sales tax return.
For example, assume a repair shop purchases eight tires; the transaction is exempt from sales tax because the repair shop plans to sell the tires to its customers. However, it is later determined that the repair shop’s vehicle needs two new tires and the repair shop puts two tires purchased exempt on its company-owned vehicle. The repair shop is now the final consumer of these two tires. When the repair shop prepares form TC-61, Sales and Use Tax Return, it will include the amount paid for the two tires on Line 4, goods consumed by the repair shop.
Certain repair shop customers may be exempt from sales tax. The customer must meet exemption criteria in order to purchase items exempt from sales tax. Following are some guidelines for repairs shops relating to transactions exempt from sales tax.
The funds to purchase items exempt from sales tax must come from the customer’s business; the items must be used in the customer’s normal course of business.
When a customer requests a purchase exempt from sales tax, the repair shop gives the customer a blank TC-721, Exemption Certificate. The customer completes the form at the time of purchase and the repair shop keeps the completed form on file to support the exemption.
There may be occasions when a customer is not able to complete form TC-721, Exemption Certificate at the time of the purchase. In these instances, the repair shop can charge sales tax on the transaction and reimburse sales tax to the customer upon receipt of a completed exemption certificate.
Some repair shop customers that may be exempt from sales tax are:
Remember – for any exemption, the funds must be from the customer’s business and used in the customer’s business. For example:
The following items are taxable:
The following items are not taxable:
