Utah Sales Tax

Whether you’re starting a new small business in Utah or you’re expanding your market area to serve the state, you need to learn about Utah’s sales tax before you begin making taxable sales there. Although Utah is a member of the Streamlined Sales and Use Tax Agreement (SSUTA), you’ll still need to know whether or not you’re considered to have a sales tax nexus there, what specific types of transactions are taxable in the state, and what rates to charge your Utah customers depending on where they’re located.

Utah Sales Tax Rates

The state sales tax rate in Utah is 4.85%, but local, county, and other special tax rates are added in nearly every zip code and municipality. At a minimum, the effective rate you will charge your customers will be 6.10% after adding a 1% general local sales tax and a 0.25% county option sales tax.

There are quite a few other categories that local jurisdictions can use to add to the total sales tax, including mass transit, county option transportation, highways, rural hospitals, transportation infrastructure, supplemental, and others. Different areas use different combinations of these categories depending on their specific circumstances, so the effective rate can vary considerably from one part of the state to another. Moab has the highest combined rate in the state at 8.85%.

Utah is an origin-based state for sellers with a physical presence in the state. When those sellers ship to customers in Utah, they use the tax rate of their physical location, no matter where the customer receives the package. For example, if you have a store in Salt Lake City, all orders will have Salt Lake City’s tax rate applied, regardless of whether you ship the order across town or to a different Utah location.

For out-of-state sellers, however, destination-based sourcing applies. This means remote sellers should charge customers using the rate at the point where the customer takes possession of their purchase. If you ship the order to Salt Lake City, then you should calculate tax using Salt Lake City’s tax rate. However, if you ship to another customer in West Jordan, then you should calculate sales tax using West Jordan’s tax rate.

Sales Tax Nexus in Utah

You are not obligated to collect and remit sales tax on purchases by customers in Utah unless you have a nexus, or significant business presence, in the state. Utah defines a nexus condition for sales tax purposes as:

• Having or using an office, distribution house, sales house, warehouse, service enterprise, or other place of business in the state
• Maintaining a stock of goods in the state
• Regularly soliciting orders in the state, unless this solicitation is only through advertising or solicitation by direct mail, email, the internet, telephone, or similar means
• Regularly delivering property into Utah through means other than a common carrier
• Regularly engaging in any activity related to the leasing or servicing of property located in Utah

You may also have a nexus if you sell the same or a very similar line of products as a related seller under the same or a very similar business name, or you use the place of business of a related seller to advertise, promote, or assist in making sales, and you:

• Have more than a 10% interest in the related seller, or
• The related seller has more than a 10% interest in your company, or
• Your company is wholly owned by the related seller.

If you use Amazon’s FBA program and your goods are stored at a fulfillment center in Utah, you may be required to collect sales tax on those purchases. Additionally, if you are a remote seller making $100,000 or more in sales of tangible personal property, or if you complete 200 or more transactions in Utah in a calendar year, you are required to collect and remit sales tax. 

Even if you’re not required to collect Utah sales tax on sales made to customers in the state, you may do so voluntarily. As an added incentive for this type of voluntary collection, the state allows out-of-state vendors without nexus in Utah but who have registered to collect and remit Utah state sales tax, to keep 18% of the sales tax revenue they collect on their sales into the state as long as they file returns electronically, either through the Tax Commission website or through the SSUTA’s simplified electronic return (SER).

What’s Taxable?

Most sales of tangible personal property are subject to sales tax in Utah, with some specific exceptions. Many services are taxable as well, with medical and janitorial services being notable exceptions in that category. Tangible goods exempt from sales tax include:

• Prescription drugs
• Durable and disposable medical equipment
• Mobility enhancing equipment and prosthetic devices
• Newspapers
• Fuel cells
• Purchases made with food stamps or WIC coupons

Groceries are taxed at a lower statewide rate of 3%, while prepared food is taxed at the full applicable sales tax rate. Utah also specifies that prewritten software, whether delivered on physical media or downloaded, is taxable, as are digital or electronic goods. Custom software is not taxable, regardless of the method of delivery. Shipping and handling charges are not considered part of the purchase price of an item and so are not taxable as long as they’re listed separately on the receipt or invoice. See the state’s documentation for more information about acquiring an exemption certificate for sales tax on key items.

Registration and Filing

If you have a sales tax nexus in Utah, and if what you’re selling is taxable, you’ll have to register with the state to receive a sales tax number to use in filing your sales tax returns. You can do this through the OneStop Business Registration service on the state website or by downloading and submitting a paper form. If you use the online service, you’ll receive a temporary sales tax number that you can begin using immediately.

Because Utah is a member of the SSUTA, you can also register to collect sales tax through the SSUTA website. If you choose to go this route, however, you will have to register with all member states at once, and so this may or may not be a good option for you depending on how many states you’re currently operating in.

The state mails personalized tax return forms to every business with a sales tax number unless you request that they do not. You can use this form to file your returns, or you can file online, and regardless of your filing method, you can also pay online.

Your filing frequency will be assigned by the state when you register for your sales tax number, which will be based on your previous or projected sales. The options are:

• Annual – you will be assigned this frequency if you have an annual sales tax liability of $1,000 or less.
• Quarterly – you will be assigned this frequency if you have an annual sales tax liability between $1,001 and $49,999.
• Monthly – you will be assigned this frequency if you have an annual sales tax liability between $50,000 and $95,999.

Businesses with an annual sales tax liability of $96,000 or more also have to file monthly, but with the added requirement that payments be made through electronic funds transfer (EFT).

Due Dates and Penalties

All Utah sales tax returns are due on the last day of the month following the close of the period in question. For annual filers, that means a due date of January 31^st of the next year.

Monthly Due Dates

Period	Due Date
January	February 28
February	March 31
March	April 30
April	May 31
May	June 30
June	July 31
July	August 31
August	September 30
September	October 31
October	November 30
November	December 31
December	January 31

Quarterly Due Dates

Period	Due Date
January – March (Q1)	April 30
April – June (Q2)	July 31
July – September (Q3)	October 31
October – December (Q4)	January 31

If the due date falls on a weekend or holiday, returns and payments will be due on the next business day. Utah does require the filing of a return whether or not any tax is due.

Failure to file your returns or pay in a timely manner will result in a penalty of $20 or 10% of the total tax due, whichever is larger. If your bill remains unpaid after 90 days from the original due date, another $20 or 10% penalty will be added on. Interest also accrues starting on the day your return is due, and it must be paid in full as well in order for your account to return to a satisfactory condition.

Resources

• Utah Sales Tax Rates Chart – https://tax.utah.gov/salestax/rate/17q4combined.pdf
• Utah Sales and Use Tax General Information – https://tax.utah.gov/forms/pubs/pub-25.pdf
• Utah Sales Tax Nexus Definitions – https://tax.utah.gov/forms/pubs/pub-37.pdf

Utah Sales Tax Software

Whether you do business primarily in Utah or you operate in several states, keeping track of when you have to charge sales tax on purchases and at what rate can be a significant burden. Each state has different requirements concerning what exactly is taxable, and the myriad different local rates add to an already daunting task. You must stay on top of all these details, however, and that’s where TaxTools software and tax calculator can provide your company with tremendous benefits.

TaxTools manages all of your sales tax-related records and returns, allowing you to file and pay quickly and easily. It keeps track of all your sales and can produce up-to-date reports whenever you need them, including location data and any other information required by the state. It also stays abreast of local and state tax rate changes so that you can be sure you’re always in tax compliance, and it integrates smoothly with all eCommerce platforms. So, if you’re ready to see how TaxTools can help streamline your business processes and remove some stress from your daily operations, click here to sign up.

Last updated September 2023