98-075
Response
November 3, 1998
REQUEST
LETTER
E-MAIL ADDRESS
We made a purchase on the INTERNET and would like to
pay proper tax could you help us?
Thank You,
NAME
November
16, 1998
NAME
E-MAIL ADDRESS
RE: Advisory
Opinion - Use Tax on Transactions Conducted over the Internet
Dear NAME,
We have
received your request for an advisory opinion concerning the tax liability you
incurred upon making a purchase over the Internet. You offer no specifics concerning the transaction, so this
opinion will be based on these assumptions: (1) the purchase was for an item of
tangible personal property shipped or delivered into Utah for your own
consumption; and (2) the Internet vendor is not a retailer registered with Utah
to collect and remit sales and use tax and you were not charged either tax upon
your purchase.
Utah
Code Ann. §59-12-103 provides that a sales or use tax is levied upon the sale
of tangible personal property made within the state. In the transaction described above, no sales or use tax was
collected upon the sale of the personal property to you. Therefore, the use tax, a complement to the sales tax, is due. As provided by Utah Admin. Code
R865-21U-1(B), the use tax “applies to the purchase of tangible personal
property for consumption if the sale or rental of the property or the services
performed on the property would have been subject to the sales tax if purchased
within the state. The primary purpose
of the use tax is to protect the merchants of Utah from discrimination arising
from the inability of the state of Utah to impose a sales tax on sales made to
residents of this state in interstate commerce or by merchants in other
states.”
The
use tax liability for purchasers is set forth in Utah Admin. Code R865-21U-6
(copy enclosed). For a transaction such
as the one described above, Subsection A.2. of that rule provides that you must
pay the use tax directly to the Tax Commission. There are three separate procedures to do this, depending upon
your circumstances.
Procedure
1 - Subsection A.2.(a). If you made the
purchase as a business that holds or should hold a sales tax license or use tax
certificate of registration, the use tax is paid on your sales and use tax
return.
Procedure
2 - Subsection A.2.(b). If you have no
sales tax collection responsibility, but your annual use tax liability may
reasonably be expected to exceed $400, you must apply for registration as a
consumer and pay the tax using a quarterly use tax return.
Procedure
3 - Subsection A.2.(c). If you are an
individual who has no sales tax collection responsibility and your annual use
tax is less than $400, you may remit the use tax on your individual income tax
return as set forth in the rule.
Please
contact us if you have any other questions.
For
the Commission,
/S/
Joe B. Pacheco
Joe
B. Pacheco, CPA
^^ Commissioner