Sales Tax Guide for Utah

What Is Taxable in Utah?

In Utah, most tangible personal property is subject to sales tax. However, certain items are exempt, such as prescription drugs, some grocery staples, specific medical devices, and select agricultural products.

If your business involves selling taxable goods or services, you are required to collect and remit sales tax accordingly. It’s also essential for businesses to consider the applicability of use taxes for goods purchased from outside Utah.

Who Needs to Collect Sales Tax?

Businesses required to collect sales tax include:

• Retailers with a physical presence in Utah
• Online sellers that surpass the state’s economic nexus threshold
• Service providers based on the nature of services rendered

Utah enforces an economic nexus threshold of $100,000 in sales or 200 transactions per year. Meeting this threshold obligates businesses to register and collect sales tax, even if there’s no physical presence. Non-compliance can lead to penalties and back taxes, making doola’s Bookkeeping service indispensable for staying compliant and avoiding legal troubles. 

How to Register for a Sales Tax Permit in Utah

To obtain a sales tax permit in Utah, follow these steps:

1. Gather documents such as your EIN, business registration, and other relevant business details.
2. Access the Utah State Tax Commission website.
3. Fill out the online application to register.
4. Obtain your Sales Tax License and begin tax collection.

Collecting sales tax without a valid permit is illegal, so ensure you complete your registration before conducting taxable sales. Our expert team at doola is ready to assist you in navigating the registration process.

How to Calculate Sales Tax in Utah

Proper sales tax computation can be achieved through these steps:

Step 1:
Verify the applicable sales tax rate pertinent to both your business and the buyer’s location.

Step 2:
At the sales point, collect the suitable tax amount.

Step 3:
Consistently maintain detailed records of all transactions.

Utah requires businesses to file sales tax returns either monthly, quarterly, or annually, contingent upon sales volume. Ensure punctual adherence to filing dates to avoid penalties. Be aware that local tax rates can vary; some areas may have additional taxes that need to be included in your total sales tax calculation.

Common Sales Tax Exemptions in Utah

Certain businesses and transactions can qualify for sales tax exemptions, including:

• Purchases intended for resale, necessitating a resale certificate
• Sales to various nonprofit organizations
• Specific manufacturing and agricultural purchases

Appropriate exemption certificates must be used to claim these exemptions, and precise records should be maintained. Improper use of these certificates can lead to extensive audits and fines.

Remote Seller and Marketplace Sales Tax Rules in Utah

Utah has particular rules governing sales tax for remote sellers and marketplace platforms such as Amazon, eBay, Shopify, and Etsy. 

The economic nexus threshold is established at $100,000 in sales or 200 transactions, dictating that businesses exceeding these parameters adhere to Utah’s remote seller sales tax regulations.

In addition, Utah offers a Streamlined Sales and Use Tax Agreement, which can simplify the process for remote sellers dealing with multi-state sales activities.

What Triggers a Sales Tax Audit

Utah businesses are subject to sales tax audits for reasons including; incomplete or erroneous sales tax filings, habitual late payments, discrepancies between declared sales and actual revenue, and the misuse of exemption certificates.

Reducing audit risk involves maintaining comprehensive records of sales, exemptions, and tax payments. Routine internal audits can also help ensure the accuracy of tax filings.

FAQs About Sales Tax in Utah

Frequently asked questions about Utah sales tax encompass:

Are digital products taxable in Utah? 

Certain digital goods may be taxable. It’s important to refer to state guidelines for accuracy.

Do businesses outside Utah need to collect Utah sales tax? 

Yes, if sales or transactions exceed the $100,000 or 200-transaction threshold.

What if I overcharge or undercharge sales tax? 

This may result in needing to reimburse customers or remit under-collected amounts to the state. Detailed record-keeping is key to avoiding these issues.

Are any services taxable in Utah? 

While many services may not be taxed, exceptions exist, requiring individual evaluation of services.

Stay Compliant With doola

Managing sales tax compliance doesn’t need to be daunting. By remaining informed and leveraging appropriate tools, you can circumvent penalties and ensure your business’s smooth operation.

doola offers the solutions needed for compliance, supporting business owners with financial management, tax advice, and bookkeeping.