96-118
Response
August 12, 1996
Request
XXXXX
Utah
State Tax Commission
210
N. 1950 W.
Salt
Lake City, Utah
Dear
Ms. XXXXX
I
just spoke to a very helpful agent, XXXXX?
I may have that wrong, concerning a possible sales tax liability on our part
for work that we are doing in Arizona and shipping to XXXXX in XXXXX, Utah.
Recently
we have received a purchase order from them showing a taxable status. In talking to them about this they have told
me that if I do not put the tax on the invoice they go ahead and accrue it and
pay it. But, really we are supposed to
be collecting it.
Your
helpful agent told me that is not correct if we are wholly out of Utah and have
no affiliation there. She said you
would send me documentation of the law and how it would be applied in this
situation.
Thank
you so much for your help.
Sincerely,
XXXXX
XXXXX
RE: Advisory Opinion - Utah Sales Tax and Nexus
Dear XXXXX
We have
received your request for an opinion regarding your company’s obligation to
collect and remit sales tax on the products that it delivers to companies in
Utah, specifically, to XXXXX. We offer
the following guidance:
Although
sales tax is the liability of the purchaser, an out-of-state vendor is required
to collect Utah sales tax if the vendor has an office, warehouse, inventory,
salesperson, or other presence in Utah sufficient to create nexus.
Section
59-12-107(1)(a) of the Utah Code 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 or United States mail; or
(v) regularly engages in any activity in
connection with the leasing or servicing of property located within this state.
Additionally,
if an out-of-state vendor uses an in-state sales force (including independent
contractors) to deliver catalogs, solicit orders, or repair and maintain the
product it sells after the product is delivered to a Utah consumer, the vendor
must obtain a sales tax license and collect and remit sales and use tax on its
Utah sales.
Where
the above conditions do not apply and the out-of-state company does not have
sufficient nexus with Utah, Section 59-12-107(1)(b) of the Utah Code imposes
the responsibility of accruing and remitting the sales tax upon the Utah
consumer. In such a situation, the
out-of- state vendor is not responsible for collecting and remitting the Utah
sales tax.
From
the facts in your letter, it is unclear whether or not your company has
sufficient nexus with Utah to assume the responsibility of collecting and
remitting Utah sales tax for its sales to Utah consumers. However, if your company does have
sufficient nexus with Utah, then your company is responsible for collecting and
remitting Utah sales tax from sales to XXXXX and any other Utah consumer. In that case, please use the enclosed form
to apply for a sales tax license.
Please
contact us again if you have further questions.
For
the Commission,
Alice
Shearer,
Commissioner