What is the sales tax rate in Utah?
Utah’s statewide base sales tax rate is 4.85%, but local jurisdictions, such as cities and counties, can impose additional sales taxes.
As a result, the total sales tax rate in Utah can vary significantly depending on your location. Typically, the combined state and local sales tax rate can range from 4.85% to 8.35% or higher.
It’s important for businesses to be aware of the specific sales tax rate in their area to ensure they are charging customers the correct amount. The Utah State Tax Commission provides an online sales tax rate locator tool that can help businesses find the appropriate sales tax rate for their location.
When should your business collect Sales Tax in Utah?
When it comes to Utah sales tax, businesses are required to collect and remit sales taxes as soon as they have created a tax nexus in the state.
Now a tax nexus is far simpler and less sci-fi than it sounds. Essentially, a nexus is a significant presence or connection to the state that triggers the obligation to collect and remit sales tax.
This can be established through a physical presence, such as having an office or store in the state, or through an economic nexus, which is based on sales revenue and transaction thresholds.
Once a nexus is established, businesses must collect sales tax on taxable sales made to customers in Utah.
Utah Physical Sales Tax Nexus
A physical sales tax nexus in Utah is established when a business has a significant presence or connection to the state, such as:
- Having an office, warehouse, or other place of business in Utah
- Employing staff or salespeople in the state
- Holding inventory in the state
- Using a drop shipper or fulfillment service located in Utah
Meeting just one of these criteria can create a nexus and require you to collect and remit sales tax on taxable sales made to customers in Utah.
Utah Economic Nexus Threshold: Revenue, Thresholds and Transactions
Utah has implemented economic nexus rules for sales tax collection, meaning that businesses without a physical presence in the state may still be required to collect sales tax if they exceed certain sales revenue or transaction thresholds.
The economic nexus threshold in Utah is $100,000 in gross sales or 200 separate transactions within the state in the previous or current calendar year.
So if your business exceeds these thresholds, you have an economic nexus in Utah and have to start taking Utah sales tax compliance seriously.
Which services are taxable in Utah?
In Utah, most tangible personal property is subject to sales tax, but the taxation of services can be more complex.
Simply put, some services are taxable while others are not.
Generally, services that are considered essential or non-luxury are exempt from sales tax, while those that are considered non-essential or luxury are taxable. It’s crucial for businesses to understand which services they offer are subject to sales tax in Utah.
Taxable services in Utah include, but are not limited to:
- Telecommunication services
- Repair and maintenance services
- Personal services such as haircuts, manicures, and massages
- Recreation and amusement services
- Professional services such as accounting, legal, and consulting
Utah Sales Tax on Products: How to Calculate What Your Business Should be Charging
Calculating the sales tax on products in Utah involves several steps.
- First, determine if the product is taxable in Utah. Most tangible personal property is taxable, while some specific items may be exempt.
- Then, identify the appropriate sales tax rate for your location, considering both the state and local rates.
- Finally, apply the tax rate to the total price of the taxable product to calculate the sales tax amount.
For example, if you sell a taxable item for $100 in a location with a combined sales tax rate of 7.85%, the sales tax amount would be $7.85 ($100 x 0.0785), and the total price, including tax, would be $107.85.
How much is the Utah clothing tax?
In Utah, clothing is considered tangible personal property and is generally subject to the state sales tax rate of 4.85%, plus any local sales taxes. However, certain types of clothing, such as prescription medical clothing and protective equipment, may be exempt from sales tax.
Utah Online Sales Tax: Are SaaS and Digital Services Taxable?
In Utah, SaaS (Software as a Service) and other digital services are generally considered taxable if the customer has a tax nexus in the state. The sales tax rate for digital services is the same as the rate for tangible personal property, which is 4.85% at the state level, plus any local sales taxes.
SaaS Sales Tax Utah: Why is SaaS taxable in Utah?
The Utah Tax Commission interprets Utah Code defines SaaS as prewritten software accessed by a user in the state field, and as a result Utah does subject SaaS to sales tax. This category also includes hosted software, application service provider software, and cloud computing applications, which are all taxable in Utah.
How can a business get a sales tax permit in Utah?
In Utah, businesses that are required to collect sales tax must obtain a sales tax permit, also known as a seller’s permit or sales and use tax license. The Utah State Tax Commission handles the registration process, and you can apply online through the Taxpayer Access Point (TAP) portal.
Here’s how to get a sales tax permit in Utah:
- Visit the Utah TAP portal and create an account.
- Complete the online application, providing information about your business, such as the legal name, physical and mailing addresses, and business type.
- Pay the one-time registration fee, if applicable.
- After approval, you will receive your sales tax permit, which should be displayed prominently at your place of business.
- Remember to renew your permit as required and keep your business information up-to-date with the Utah State Tax Commission.
Collecting Sales Tax in Utah as a Business
Once your business has a sales tax permit in Utah, you must collect sales tax from your customers on taxable sales. Here are some key considerations for collecting sales tax in Utah:
Identify taxable and non-taxable items: Determine which of your products or services are subject to sales tax in Utah, and which are exempt.
Apply the correct sales tax rate: Use the appropriate combined state and local sales tax rate for your business location or the customer’s location for online sales.
Charge sales tax on shipping and handling: In Utah, sales tax applies to shipping and handling charges if the shipped items are taxable.
Keep detailed records: Maintain records of your sales, sales tax collected, and any sales tax exemptions. These records should be kept for at least three years.
Stay updated on tax law changes: Monitor any changes to Utah’s sales tax laws and regulations to ensure compliance.
Utah Tax Return Due Dates Explained
In Utah, sales tax returns can be filed monthly, quarterly, or annually, depending on your sales tax liability. The due dates for sales tax returns in Utah are:
Monthly: 20th day of the following month
Quarterly: April 20th, July 20th, October 20th, and January 20th
Annually: January 31st of the following year
What is the required frequency for sales tax returns in Utah?
The frequency of sales tax returns in Utah is based on your sales tax liability:
Monthly: If your sales tax liability is greater than $1,000 per month
Quarterly: If your sales tax liability is between $250 and $1,000 per month
Annually: If your sales tax liability is less than $250 per month
It’s essential to file your sales tax returns on time to avoid penalties and interest.
