96-096
Response
June 27, 1996
Request
Tax
Commission
Attn:
XXXXX
210
North 1950 West
Salt
Lake City, Ut 84134
XXXXX
Per
our telephone conversation on May 28, 1996, please send me in writing a ruling
on the following sales and use tax issue.
A
XXXXX-based company that is in the business of selling mining supplies sells to
a company based in Utah. The XXXXX Company has no salespeople in Utah (all
sales contacts and orders occur over the telephone). All supplies sold are
delivered by a common carrier (ie, US Postal Service).
Does
the XXXXX-based company have any requirements in regards to Utah Sales and use
taxes under the sale with the Utah Company?
Your
attention to this matter would be greatly appreciated.
Best
Regards,
XXXXX
XXXXX
RE:
Advisory Opinion - Sales and Use Tax for Out-of-State Vendors
Dear
XXXXX
We received your request for
information about the Utah sales and use tax for an out-of- state vendor. The following answer should satisfy your
request.
Use tax is a tax on the storage, use
or consumption of tangible personal property in Utah. When tangible personal property is sold in interstate commerce
for use or consumption in this state, the sale is subject to Utah use tax. Although use tax is the liability of the
purchaser, the retail vendor is responsible for collecting and remitting the
tax to the State of Utah if the vendor has an office, warehouse, salesperson,
or other physical presence in Utah.
Utah Code Section 59-12-107 states, in pertinent part:
(1)(a)
Each vendor shall pay or collect and remit the sales and use taxes imposed by
this chapter if within this state the vendor;
(i)
has or utilizes an office, distribution house, sales house, warehouse, service
enterprise, or other place of business;
(ii)
maintains a stock of goods;
.
. .
(iv)
regularly engages in the delivery of property in this state other than by
common carrier of United States mail; or
(v)
regularly engages in any activity in connection with the leasing or servicing
of property located within this state.
If an out-of-state vendor uses an in
state sales force (including independent contractors) to deliver the catalogs,
solicit orders, or repair and maintain the product after they deliver it to
Utah, the vendor must obtain a sales tax license and collect and remit sales
and use tax on its Utah sales.
Utah law does not require mail-order
or direct mail retailers to collect Utah use tax if they have no physical
presence in Utah. Such retailers have
no physical presence in Utah if they are out of state and merely accepts orders
via telephone, fax or mail and deliver the property to the Utah customer by way
of the US mail or common carrier.
Your request letter discusses “[a]
XXXXX-based company that is in the business of selling mining supplies [which]
sells to a company in Utah. The XXXXX
Company has no salespeople in Utah (all sales contracts and orders occur over
the telephone). All supplies sold are
delivered by a common carrier (ie., US Postal Service).” Based on these facts it appears that Utah
would not require the XXXXX Company in question to collect and remit the Utah
use tax. The receiving company in Utah, however, must accrue and report use tax
on the transaction unless it is purchasing items for resale. If the XXXXX Company sells supplies to a
Utah Company, and the Utah Company purchases the supplies as wholesale
products, then the XXXXX Company would not need to collect the use tax. Utah only applies the use tax on the retail
level to the ultimate consumer. If,
however, this XXXXX Company fulfills any of the requirements of Section
59-12-107(1)(a)(i), (ii), (iv) and (v) (as stated above), then Utah law would
require that the company collect and remit the Utah use tax.
We hope this letter answers the
questions you asked us. If you do have
further questions, please contact us again and give us as much information as
possible. By doing this we hope to
serve you better and fully answer your questions.
For the Commission,
Alice Shearer,
Commissioner