tax.utah.gov
Publication 62
Revised 7/06
This publication is provided for general guidance only. It does not contain all sales or use tax laws or rules.
Sales Tax Information for Telecommunications Service Providers
Utah State Tax Commission 210 North 1950 West Salt Lake City, Utah 84134 (801) 297-2200 1-800-662-4335 www.tax.utah.gov If you need an accommodation under the Americans with Disabilities Act, contact the Tax Commission at (801) 297-3811, or TDD (801) 297-2020. Please allow three working days for a response.
Contents
Sales and Use Tax General Information .......................................... 2 Introduction ................................................................................ 2 Utah Tax Code ........................................................................... 2 What is Sales and Use Tax? ...................................................... 2 Filing and Reporting Requirements ................................................. 2 Sales Tax License ...................................................................... 2 How To Close a Sales Tax Account ........................................... 2 How To Close an Outlet ............................................................. 2 Notification of Liability ................................................................ 2 Filing Requirements ................................................................... 2 Nexus Filers ......................................................................... 2 Returns ................................................................................ 2 PaymentExpress .................................................................. 3 Electronic Funds Transfer (EFT) .......................................... 3 Seller Discount ..................................................................... 3 Penalties .............................................................................. 3 Interest ................................................................................. 3 Refund ................................................................................. 3 Record Keeping Requirements .................................................. 3 Sales-based Tax Types .................................................................... 4 Combined Sales Tax Rate ......................................................... 4 State Sales and Use Tax ...................................................... 4 Local Option Sales and Use Tax .......................................... 4 County Option Sales and Use Tax ...................................... 4 Resort Communities Tax ...................................................... 4 Rural Health Care Facilities Tax ........................................... 4 Public Transit Tax.................................................................. 4 Highways Tax ....................................................................... 4 Recreational Facilities and Botanical, Cultural, and Zoological Organizations Tax .......................... 4 Town Option Sales and Use Tax .......................................... 5 Related Taxes and Fees ............................................................ 5 Tourism Tax .......................................................................... 5 Motor Vehicle Rental Tax ...................................................... 5 Transient Room Tax.............................................................. 5 Municipality Transient Room Taxes ...................................... 5 Convention Facilities Tax ...................................................... 5 Waste Tire Recycling Fee .................................................... 5 Other Information ....................................................................... 6 Calculating Sales Tax ...................................................................... 6 Definitions .................................................................................. 6 Taxes or Fees Imposed on the Seller ........................................ 7 Determining Tax Base ................................................................ 7 Determining Tax Rate (Sourcing) ............................................... 7 Tax Rate Changes ..................................................................... 8 Sales and Use Tax Exemptions ....................................................... 8 Entity-based Exemptions ........................................................... 8 Use-based Exemptions .............................................................. 9 Product-based Exemptions ........................................................ 9 Additional Information ................................................................... 10 Goods Consumed by the Seller ............................................... 10 Coupons and Rebates ............................................................ 10 Premiums and Gifts ................................................................. 10 Returned Merchandise ............................................................ 11 Returned Checks and Bad Debts ........................................... 11 Special Events ......................................................................... 11 Vending Machine Sales ........................................................... 11 Returnable Containers ............................................................. 11 Food Stamps and WIC ............................................................. 11 Videos and DVDs..................................................................... 11 Newspapers and Postage ........................................................ 11 Money Orders, Faxes and Photocopies ................................... 11 Cigarettes and Tobacco Products ............................................ 11 Trade-in on Manufactured Homes ........................................... 11 Starting a New Business .............................................................. 12 Forms ............................................................................................ 13 Sales Tax Publications ................................................................... 13 Internet Information ....................................................................... 13 Specific Information for Telecommunications Service Providers .......................................................................... 14 Delivery Locations .................................................................. 14 Telephone Services Definitions................................................ 14 Post Paid Calling Service ................................................... 14 Prepaid Calling Service Not Including the Telephone Line ............................................................. 14 Prepaid Calling Service...................................................... 14 Mobile Telecommunications Sourcing Act ............................... 14 Emergency Services Telephone Charge.................................. 15 E-911 Funding ................................................................... 15 Poison Control Center Funding .......................................... 15 Municipal Telecommunications License Tax (MTLT) ................ 16 Filing Frequency ...................................................................... 16 Changes to Accounts............................................................... 16 Penalties for Inaccurate Filing or Non-Filing ........................... 16
Sales and Use Tax General Information
Introduction
This publication is a general guide. It provides basic sales and use tax information, but is not all-inclusive. It includes Utah tax law and administrative rules written by the Utah State Tax Commission. Future changes to the laws or rules will supercede information in this document.
Filing and Reporting Requirements
Sales Tax License
All retailers must have a Utah Sales Tax License and related account number. Application for a license and account number is made to the Tax Commission on a Utah State Business and Tax Registration form, TC-69 or online using OneStop Business Registration, found at business.utah.gov/registration. Examples of businesses that typically must register for a sales tax license include: retailers selling tangible goods or services, wholesalers purchasing resale inventory, manufacturers, leasing companies, and consumers such as professional firms and construction contractors. Sales tax licenses are not transferable.
Utah Tax Code
Utah Tax Code is officially published by Matthew Bender & Co., Inc. under the trademark LexisNexis. The online site requires a subscription fee to access its services. Individuals or businesses may contact the publisher directly to order a hardcopy at: Matthew Bender & Co., Inc. Attn: Customer Support 1275 Broadway Albany, NY 12204-2694 1-800-562-1197 Utah Code, Title 59, Revenue and Taxation, is available free of charge at the Utah Legislature's homepage (see www.le.state.ut.us/~code/title59/title59.htm). The state makes every effort to maintain current information; however, published code found at LexisNexis may be more current than the information found at the state site.
How To Close a Sales Tax Account
Every sales tax license holder that discontinues business in Utah is required to notify the Tax Commission immediately in writing. Businesses may contact the Taxpayer Services Division of the Tax Commission for assistance in closing sales tax accounts. If the Tax Commission is not informed that the business has closed, the license holder may be assessed an estimated tax, including late penalties and interest.
How To Close an Outlet
If the account remains open, but an outlet location in Utah is closed, the sales tax license holder is required to notify the Tax Commission immediately in writing, identifying the effective date of the closure. Businesses may contact the Taxpayer Services Division of the Tax Commission for help in closing sales tax outlets. The closed outlet will no longer appear on the sales tax return generated and mailed to the account holder.
What is Sales and Use Tax?
Sales Tax
Sales tax is a tax on the retail sale or lease of all tangible personal property and on certain services. Sales tax is collected by a Utah licensed retailer or seller, and is paid to the Tax Commission on monthly, quarterly or annual tax returns. For more specific information, refer to Utah Code §59-12103 and Administrative Rules R865-12L, R865-19S, and R865-21U.
Notification of Liability
If you are purchasing a business, Utah Code §59-12-112 requires you to withhold enough of the purchase money to cover any taxes due and unpaid until the former owner of the business produces a receipt from the Tax Commission showing that all taxes have been paid, or a certificate showing no taxes are due. If you fail to withhold the required purchase money and the taxes remain due and unpaid 30 days after the business is sold, you will be personally liable for payment of the unpaid sales taxes of the former owner.
Use Tax
Use tax is a tax on amounts paid or charged for purchases of tangible personal property and for certain services where sales tax was due but not charged. The purchaser remits use tax directly to the Tax Commission. Examples of activities that trigger use tax liabilities include withdrawal of items from resale inventories and other consumption of goods or services purchased tax-free. Use tax must be accrued and paid on certain purchases from unregistered out-of-Utah sellers. Some of the more common items for use tax reporting include advertising supplies, office or shop equipment, computer hardware and software, and office supplies. Sales and use taxes are transaction taxes. This means the tax is not on the articles sold or furnished, but on the transaction, and the purchaser is the actual taxpayer. The seller is charged with collecting the tax from the purchaser and paying the tax to Utah. In cases where the seller does not charge the tax, it becomes use tax and the purchaser is responsible to report and remit the tax.
Filing Requirements
Nexus Filers
Nexus means a business entity has established a direct or representational presence within a particular state. This presence gives the state the right to require a seller to pay or collect and remit certain taxes. Businesses with Utah nexus must file sales tax returns even if they have no tax liability for a particular period.
Returns
Only one sales and use tax return is required for each filing period. Each return may include schedules that allow for multiple outlet sales and goods consumed to be reported on the return. If a seller is liable for sales-related taxes, such as transient room, tourism, waste tire, etc., a separate return must be filed for each period for each separate type of tax or fee. Returns are due on or before the last day of the month page 2
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following each filing period, unless the due date falls on a weekend or holiday. In that case, the return will be due the first working day following the end of the month. The Tax Commission determines the filing frequency for sales and use tax returns. If your sales tax liability is less than $1,000 per year, you may file annually. If your sales tax liability is $1,000 or more but less than $50,000 per year, you may file quarterly. If your sales tax liability is $50,000 or more, you must file monthly. The Tax Commission will notify you if your filing frequency has changed.
Seller Discount
Persons filing monthly sales tax returns are entitled to a seller discount equal to 1.31 percent of the combined sales tax. Persons filing monthly tourism tax returns are entitled to a seller discount equal to 1 percent of the tourism short-term leasing tax adopted by the county. Quarterly and annual filers are not eligible for the seller discount.
Penalties
The penalty for failure to file a tax due return by the due date is the greater of $20 or 10 percent of the unpaid tax. In addition, if a tax balance remains unpaid 90 days after the due date, a second penalty, the greater of $20 or 10 percent of the tax balance, will be added for failure to pay timely. The penalty for failure to pay tax due as reported on a timely filed return, or within 30 days of a notice of deficiency, is the greater of $20 or 10 percent of the tax due. In addition, monthly returns filed late or underpaid returns will result in the loss of seller discount. For more information, see Publication 58, Utah Interest and Penalties at tax.utah.gov/forms/. Purchasers or lessees who claim sales and use tax exemptions for purchases or leases of manufacturing machinery and equipment, normal operating replacements or semiconductor fabricating, processing, research or development materials are required to report the amount of such purchases or leases on the appropriate informational line of their periodic sales and use tax returns. Failure to comply with these reporting requirements may subject the responsible party to a penalty of the lesser of $1,000 or 10 percent of the sales tax that would have been imposed if the exemption had not applied.
Paper Returns
Once a license has been issued or a new tax imposed, the Tax Commission will mail a personalized return to each seller (unless the seller has requested no paper returns be mailed to them by the Tax Commission). However, if a seller does not receive a return, it is the seller's responsibility to obtain blank forms, file all appropriate returns, and pay the taxes by the due date. Returns must be filed even if the account holder has no tax liability for a particular filing period.
Online Sales Tax Return
Sellers have the option of filing their sales and use tax returns and schedules online using the TC-61 web application found at utah.gov/salestax. The Tax Commission will assign a PIN and print it on the TC-61 return that will allow access to the online application.
PaymentExpress
Whether periodic sales tax returns are filed electronically or on paper, sales tax can be electronically remitted to the Tax Commission using PaymentExpress available at paymentexpress.utah.gov. PaymentExpress will accept payment for most tax types, including sales tax. Payment can be made by credit card (American Express, Discover, or MasterCard) or by electronic check (direct debit to a checking or savings account). A convenience fee is applied to PaymentExpress transactions to cover costs associated with the electronic payment service. The convenience fee is $1 for an electronic check payment. For credit card payments, the convenience fee varies depending on the amount paid. A complete convenience fee table is available on the PaymentExpress website in the Frequently Asked Questions section. PaymentExpress is only for the payment of taxes and other amounts due. Be sure to file any tax return separately.
Interest
Interest will be assessed at the rate prescribed by law from the original due date until paid in full. For information, taxpayers may refer to Publication 58, Utah Interest and Penalties at tax.utah.gov/forms/, or call the Utah State Tax Commission.
Refund
A taxpayer can file a claim for a credit or a refund of an overpayment within three years of paying the tax, even though the taxpayer did not object to a notice of deficiency or a notice of assessment by the Tax Commission. If the Tax Commission denies this claim for credit or refund, the taxpayer may file a petition for agency action. A taxpayer may not, however, file a claim for a credit or a refund on a tax deficiency that has been previously adjudicated. Each transaction for which a sales tax refund is requested must include: (1) requestor's name; (2) requestor's account number or federal ID number; (3) seller name; (4) seller account number; (5) seller location; (6) date of sale/purchase; (7) description of item(s) sold/purchased; (8) taxable amount; (9) tax paid; (10) basis for exemption from sales and use tax; (11) sales tax rate(s) and dates of remittance to Utah State Tax Commission; (12) copy of invoice(s) that show tax collected; and (13) copy of check(s) that verify payment of the invoice.
Electronic Funds Transfer (EFT)
If your annual sales tax liability is $96,000 or more, payment must be made by Electronic Funds Transfer (EFT). EFT payments can be completed up to 30 days before the tax filing due date and withdrawn on the payment date you select. If you wait until the tax filing due date to make a payment, the payment must be completed by 7:00 p.m. Mountain Time, with a settlement date no later than the next business day. This account must be set up prior to making your payment. Contact the Tax Commission for information. Caution: Filers who are required to pay by Electronic Funds Transfer (EFT) should not use the Tax Commission's web-based payment system (PaymentExpress) for current returns. Payments made online by credit card or electronic check do not meet EFT filing requirements. Sellers required to pay by EFT that use the online payment system for current returns will lose their seller discount. However, EFT filers may pay past-due liabilities online using PaymentExpress.
Record Keeping Requirements
From Tax Commission Rule R865-19S-22
Every retailer, lessor, or person doing business in Utah is required to keep complete records used to determine the amount of sales and use tax for which they are liable. Records must be retained for three years from the filing date of the tax returns. All records shall be open to the Tax Commission or its authorized agents for examination at any time. page 3
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These records shall: · Show gross receipts from sales or rental payments from leases of tangible personal property, or services performed in connection with tangible personal property made in Utah regardless of whether the retailer considers the receipts to be taxable or non-taxable. · Show deductions and exemptions allowed by law and claimed in filing sales tax returns. · Show bills, invoices, or similar evidence of all tangible personal property purchased for sale, consumption, or lease in Utah. · Include the normal account books maintained by an ordinarily prudent business person, together with supporting documents of original entry such as: bills, receipts, invoices, and cash register tapes. All schedules or working papers used in the preparation of tax returns must also be maintained. Note: Any automated data processing (ADP) tax accounting system must be capable of reproducing visible and legible records for tax liability verification. General ledgers with source references should coincide with financial reports for each tax period. All supporting documentation should be easily accessible. Additional record keeping requirements can be found in Tax Commission Rule R861-1A-35.
Combined Sales Tax Rate
The following taxes are included in the combined sales tax rate and are filed on the TC-61 Sales and Use Tax Return:
State Sales and Use Tax
The state sales and use tax rate is 4.75 percent and applies to taxable transactions in all locations within Utah. Effective January 1, 2007 the state sales tax rate for food and food ingredients will be 2.75 percent. Food and food ingredients means substances sold for ingestion or chewing by humans that are consumed for the substance's taste or nutritional value. Food and food ingredients do not include alcoholic beverages, tobacco or food prepared for immediate consumption.
Local Option Sales and Use Tax
A local rate of 1 percent is imposed on taxable transactions within a community as established by local ordinance. This tax applies to the same transactions as the state sales and use tax.
County Option Sales and Use Tax
A county may impose a tax of .25 percent. This tax applies to the same transactions as the state sales and use tax.
Resort Communities Tax
A qualifying resort community may impose a tax of up to 1.5 percent on the sale, use or rental of taxable goods and services within the resort community, and on the purchase of items subject to the use tax, i.e., items for use, storage, or other consumption within the jurisdiction. A community qualifies for the resort communities tax if transient room capacity in the community is greater than or equal to 66 percent of the permanent population of the community. The resort communities tax, if imposed, applies to sales subject to sales and use tax and is included in the combined tax rate. Sales of motor vehicles, aircraft, watercraft, modular homes, manufactured homes, or mobile homes are exempt from resort communities tax, but are subject to the remaining portion of sales and use tax. This exemption, however, does not apply to trailers, off-highway vehicles, snowmobiles, truck-mounted campers, etc.
Reminders
This information is only a summary and does not contain all sales or use tax laws and rules. 1. Sales tax must be collected on all taxable sales of tangible personal property to the final consumer. 2. You must file a sales and use tax return for every period, whether or not tax is due for a particular filing period. 3. If you change business locations, or add or close any outlets, you must notify the Tax Commission in writing. 4. If you discontinue business, you must notify the Tax Commission in writing within thirty days of the final date you were required to collect sales tax. 5. You must retain your records for three years. 6. Records are subject to audit by a Tax Commission representative. 7. Sales tax licenses are not transferable. 8. Merchandise purchased tax free but used or consumed by you or your company must be reported on the line provided on the sales and use tax return. You must pay use tax on goods you or your company consume. 9. A completed exemption certificate from your exempt customers must be retained in your files to verify nontaxable sales. 10. Interstate sales must be documented with a bill of lading or other proof of shipment. The terms of the sale must require shipment or delivery of the property across Utah's boundaries by the seller. 11. Tax must be rounded to a whole cent by rounding up to the next cent whenever the third decimal place is greater than four.
Rural Health Care Facilities Tax
Qualifying rural counties or cities may adopt a rural hospital tax of up to 1 percent. The tax is imposed on the sale of taxable goods and services sold within the adopting jurisdiction, and on the purchase of items subject to the use tax, i.e., items for use, storage, or other consumption within the jurisdiction. This tax is part of the overall sales and use tax in certain localities, and is used to fund rural county and city hospitals, and qualified nursing homes.
Public Transit Tax
Counties, cities or districts that have a public transit system may adopt a public transit tax of up to .5 percent. Public transit tax applies in the same manner as the local sales and use tax.
Highways Tax
Counties, cities or communities that have not already adopted the public transit tax may adopt a highways tax of .25 percent. The highways tax applies in the same manner as the local sales and use tax.
Sales-based Tax Types
Tax rates vary from one community to another depending on the taxes imposed by the individual community. Tax rates are available on the Tax Commission website at tax.utah.gov/sales/rates.html.
Recreational Facilities and Botanical, Cultural, and Zoological Organizations Tax
Utah counties, cities or towns may impose a tax of .1 percent on all taxable sales and services in the county to fund these types of organizations. page 4
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Town Option Sales and Use Tax
Qualifying towns, as described in Utah Code §59-12-1302(2), may impose the town option sales and use tax of up to 1 percent. This tax applies in the same manner as the local sales and use tax. Currently, only the town of Snowville has imposed this tax.
percent on all short-term motor vehicle rentals or leases. The statewide motor vehicle rental tax of 2.5 percent is not eligible for a seller discount. The statewide motor vehicle rental tax, and the tourism tax if adopted, apply to all rentals of passenger cars or recreational vehicles for a period of 30 days or less, except: · leases and rentals of motor vehicles for the purpose of temporarily replacing a motor vehicle being repaired pursuant to a repair or insurance agreement; · leases and rentals of motor vehicles that are registered for a gross laden weight of 12,001 or more pounds; or · leases and rentals of motor vehicles as personal household goods moving vans. Leases and rentals of motor vehicles that would be exempt from sales tax are also exempt from this tax. Exemptions must be documented by an exemption certificate, such as form TC-721, and retained by the lessor. Motor vehicle rental tax is reported on form TC-61FV for monthly filers or form TC-61F for quarterly or annual filers.
Related Taxes and Fees
The following sales-related taxes and fees are filed on separate returns:
Tourism Tax
Where adopted, this tax is imposed on the following types of transactions: · A restaurant tax of up to 1 percent may be imposed on all prepared foods and beverages sold by restaurants. The term "restaurant" is defined as any retail establishment, other than a theater, whose business is the sale of foods and beverages for immediate consumption. Restaurant includes dinner theaters. See Utah Code §59-12602(4) for more information. Exception: In counties that have adopted the tourism tax, it does not apply to sales of food from deli areas, pizza take-out counters or salad bars within a grocery store or convenience store whose primary business is the sale of fuel or food not prepared for immediate consumption. These sales are exempt from the tourism tax even if the store has seats or stools for customers. However, if a grocery store or convenience store has a full-service restaurant, the tourism tax is due on sales in that restaurant. · A tourism tax of up to 7 percent may be imposed on all short-term motor vehicle rentals or leases. This applies to all rentals of passenger cars or recreational vehicles for a period of 30 days or less, except: · leases and rentals of motor vehicles for the purpose of temporarily replacing a motor vehicle that is being repaired pursuant to a repair or insurance agreement; · leases and rentals of motor vehicles that are registered for a gross laden weight of 12,001 or more pounds; or · leases and rentals of motor vehicles as personal household goods moving vans. Leases and rentals of motor vehicles that would be exempt from sales tax are also exempt from this tax. Exemptions must be documented by an exemption certificate, such as form TC-721, and retained by the lessor. · In addition to the transient room tax discussed below, a county of the first class (counties with a population of 700,000 or more) may impose an additional tax of .5 percent on every rental of rooms in hotels, motels, inns, trailer courts, campgrounds, tourist homes, and similar accommodations for stays of less than 30 consecutive days. This is reported and remitted on form TC-61T. · Persons filing monthly returns are entitled to a seller discount equal to 1 percent of the tourism short-term leasing tax adopted by the county. Tourism tax is reported on form TC-61FV for monthly filers or form TC-61F for quarterly or annual filers.
Transient Room Tax
Utah counties may impose a transient room tax of up to 3 percent (effective October 1, 2006 up to 4.25 percent) on the rental of rooms in hotels, motels, inns, trailer courts, campgrounds, tourist homes, and similar accommodations for stays of less than 30 consecutive days. The transient room tax, if imposed, is charged in addition to sales tax and in addition to other applicable taxes adopted in the community. The transient room tax does not apply to charges for meeting rooms. Some counties have also enacted a tourism tax on lodging, as noted above. Each county may elect to collect the tax itself or contract with the Tax Commission to collect it. The published rate chart (see tax.utah.gov/sales/rates.html) identifies those counties that elect to collect the tax themselves. Transient room tax is reported on form TC-61T, unless it is collected directly by the county.
Municipality Transient Room Taxes
In addition to the county-imposed transient room tax and the tourism tax on room rents, municipalities may impose taxes of up to 1.5 percent on rents charged for the same accommodations that are subject to the Transient Room Tax. Each municipality may elect to collect the tax itself or contract with the Tax Commission to collect it. The published rate chart (see tax.utah.gov/sales/rates.html) identifies those municipalities that elect to collect the tax themselves. Municipality transient room tax is reported on form TC-61T, unless it is collected directly by the municipality.
Convention Facilities Tax
The legislative body of a county within Utah that is of the first class (counties with a population of 700,000 or more) may impose a 1.25 percent sales tax on accommodations and services through Sept. 30, 2006, when the accommodations and services are regularly rented for less than 30 consecutive days. Revenue from the tax must be used for purposes relating to convention facilities.
Motor Vehicle Rental Tax
A statewide motor vehicle rental tax of 2.5 percent is charged on all short-term motor vehicle rentals or leases. This is in addition to the tourism tax, if adopted, of up to 7
Waste Tire Recycling Fee
A waste tire recycling fee of $1 per tire with rim sizes up to and including 24½ inches is imposed on each purchase of new tires. The waste tire recycling fee is paid by the consumpage 5
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er to the tire retailer at the time of purchase. Both new and used vehicle dealers (including trailer and off-road vehicle dealers, in addition to automobile, truck and recreational vehicle dealers) are considered tire retailers for this purpose. The fee applies to all tires sold with a new vehicle. Dealers, at their option, may pay the fee to a tire dealer, provided they also pay sales tax on the purchase. Sales tax exemptions do not apply to the recycling fee. Sales of tires or tires mounted on vehicles sold to governmental agencies or other normally exempt institutions are not exempt from this fee. The fee itself is not subject to sales tax. The fee does not apply to used tires, bicycle tires, or any tires attached to devices propelled by human power, nor does it apply to tires sold and delivered out of Utah. Tire retailers are allowed to retain 2.5 percent of the fees collected and reported to cover the cost of collection. Waste tire recycling fee is reported on form TC-61W.
a. the amount of a trade-in; b. the following from credit extended on the sale of tangible personal property or services: separately stated interest charges; financing charges; or carrying charges; or c. a tax or fee legally imposed directly on the consumer.
Tangible Personal Property
Tangible personal property is property that may be seen, weighed, measured, felt, touched, or is in any manner perceptible to the senses. Tangible personal property includes electricity, water, gas, steam, prewritten software, and digital and electronic goods.
Real Property
Real property is classified as any right, title, estate, or interest in land, including all buildings or structures on the land. Real property includes construction materials that typically lose their separate identity as personal property once incorporated into the real property. These include lumber, bricks, nails and cement used to construct buildings or structures on the land, as well as fixtures such as furnaces, built-in air conditioning systems, built-in appliances, or other items added to or incorporated into real property.
Other Information
The following miscellaneous taxes and fees may also apply to certain sellers. For more information, contact the Tax Commission. · Motor fuel, aviation fuel, and special fuel taxes · Lubricating oil fee · Beer, cigarette, and tobacco products taxes · Municipal energy sales and use tax · Emergency services telephone charge (911 and poison control) · Royalty payment on unprocessed brine shrimp eggs · Multi-channel audio and video tax · Sexually explicit business and escort service tax · Municipal telecommunications license tax
Tangible Personal Property Permanently Attached to Real Property
Tangible personal property is classified as permanently attached to real property if (1) the attachment is essential to use the tangible personal property, and (2) the tangible personal property will remain attached over its useful life. This includes attaching an accessory to the tangible personal property if it is essential to the operation of the tangible personal property and is attached solely for that purpose. This classification is further supported if (1) detachment would cause substantial damage to the tangible personal property, or (2) detachment would require substantial alteration or repair of the real property. The permanently attached tangible personal property retains its classification even if it is temporarily detached for repair or renovation onsite. The permanently attached classification does not include (1) attaching portable or movable tangible personal property for convenience, stability, or for an obvious temporary purpose, or (2) detachment for repair or renovation other than onsite. Also excluded from this classification is a refrigerator, washer, dryer, stove, television, computer or telephone if the attachment to real property is only through a line that supplies water, electricity, gas, telephone or cable.
Calculating Sales Tax
Definitions
Purchase Price and Sales Price (UCA §59-12-102(66))
Purchase price and sales price mean the total amount of consideration valued in money and for which tangible personal property or services are sold, leased, or rented. Purchase price and sales price include: · the seller's cost of the tangible personal property or services sold; · expenses of the seller, including the cost of materials used; a labor cost; a service cost; interest; a loss; the cost of transportation to the seller; or a tax (including federal excise tax) imposed on the seller; · a charge by the seller for any service necessary to complete the sale. Purchase price and sales price do not include: · a delivery charge; · an installation charge; · a discount in a form including: cash or term taken by a purchaser, or coupon that is allowed by a seller and that is not reimbursed by a third party; · the following if separately stated on an invoice, bill of sale, or similar document provided to the purchaser:
Delivery Charges
Delivery charges means charges by the seller of personal property or services for preparation and delivery to a location designated by the purchaser of personal property or services including, but not limited to, transportation, shipping, postage, handling, crating, and packing. Purchase price and sales price of tangible personal property do not include delivery charges if separately stated.
Installation Charges
Installation charges means charges for permanently installing tangible personal property to real property. Installation charges do not include charges for repairs or renovations of tangible personal property. Purchase price and sales price of tangible personal property do not include an installation charge if separately stated. page 6
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Sales of real property are nontaxable. For tangible personal property that becomes part of the underlying realty upon installation, the transaction to purchase and install the tangible personal property is considered the sale of real property and, accordingly, is nontaxable. The contractor is considered to be the user of the materials and is responsible for paying sales and use tax.
Repair Charges
Repair charges means repair or renovation of tangible personal property that is not permanently attached to real property or attaching tangible personal property to other tangible personal property. Charges for labor to repair, renovate, wash, or clean tangible personal property are subject to sales tax. Parts used to repair or renovate tangible personal property, whether or not the parts are actually used, are also subject to sales tax. Charges for labor and parts used to service, repair, or renovate real property are not subject to tax. For real property repairs, the contractor is considered to be the user of the materials and is responsible for paying sales and use tax.
· Admission or user fees for theaters, movies, operas, museums, planetariums, shows of any type or nature, exhibitions, concerts, carnivals, amusement parks, amusement rides, circuses, menageries, fairs, races, contests, sporting events, dances, boxing matches, wrestling matches, closed circuit television broadcasts, billiard parlors, pool parlors, bowling lanes, golf, miniature golf, golf driving ranges, batting cages, skating rinks, ski lifts, ski runs, ski trails, snowmobile trails, tennis courts, swimming pools, water slides, river runs, jeep tours, boat tours, scenic cruises, horseback rides, sports activities, or any other amusement, entertainment, recreation, exhibition, cultural, or athletic activity. User fees include charges for access to a video, video game, television program, or cable or satellite broadcast, if that access occurs at any location other than the individual's residence. · Use of assisted amusement devices when the device or ride is started and stopped by an individual who is not the purchaser or renter of the device and is performing at the direction of the seller. · Assisted cleaning or washing of tangible personal property if the cleaning or washing labor is primarily performed by an individual who is not the purchaser of the service and is performing at the direction of the seller. · Tourist home, hotel, motel, or trailer court accommodations and services regularly rented for less than 30 consecutive days. · Telegraph services and intrastate telephone service. · Meals at restaurants or other eating places. · Sales for commercial use of gas, electricity, heat, coal, fuel oil, or other fuels. · Sales for residential use of gas, electricity, heat, coal, fuel oil, or other fuels are taxed at the state rate of 2 percent plus any local and/or public transit tax applicable. · Sales of prepaid telephone calling cards, including vending machine sales of prepaid telephone calling cards. · Memberships that entitle the purchaser to discounted or free merchandise or services of a type subject to the sales tax. Examples include memberships allowing the card holder to enter a facility and make purchases of merchandise at the stated price without any additional markup, and video memberships that allow members to rent videos at half price. All purchases made with these membership cards are subject to sales tax at the time of purchase unless a specific exemption applies. Note: For more information on taxable sales and purchases, refer to the Additional Information section.
Taxes or Fees Imposed on the Seller
Current Utah law allows municipalities to impose and collect a license fee or tax on any business within the municipality. Examples of city-imposed taxes include a gross receipts tax on all businesses within the city and taxes directed at a particular category of business, such as innkeepers. City-imposed taxes (other than sales and use taxes imposed under the Utah Sales and Use Tax Act) must be included in the taxable sales reported on the state sales and use tax return. For example, a seller makes sales in a city that has imposed a two percent gross receipts tax on revenues. City and state taxes are calculated as follows. Taxable sales City imposed gross receipts tax @ 2% Amount subject to state and local taxes Applicable sales tax rate @ 6.125% State and local sales taxes remitted to the state Transaction total (item cost plus taxes) $100.00 2.00 $102.00 x.06125 $6.25 $108.25
Determining Tax Base
Taxable Sales Sales of tangible personal property and certain services to final consumers are taxable. The following transactions are taxable unless a specific exemption applies: · Retail sales or purchases of tangible personal property made within Utah. · Tangible personal property stored, used, or consumed in Utah. · Rentals and leases of tangible personal property if the situs (location) of the tangible personal property is in this state, the lessee took possession of the tangible personal property in this state, or the tangible personal property is stored, used, or otherwise consumed in this state. · Labor to repair, renovate, wash, clean, and attach tangible personal property in connection with other tangible personal property. This includes maintenance agreements. · Laundry and dry cleaning services, other than coin-operated laundry and dry cleaning services.
Determining Tax Rate (Sourcing)
Sourcing is defined as attributing a sale to a specific taxing jurisdiction in order to determine the tax rate to charge. For sellers with one or more fixed places of business, sales are sourced to the place of business where the sales occur, regardless of whether the goods are delivered. For sellers with a non-fixed place of business (e.g. vending machine operators, mobile tool companies, etc.), sales will be sourced to where the sales take place. If a business sells merchandise that is shipped from outside Utah direct to a consumer in Utah, and if the seller engages in business in Utah (has nexus), then the sale is sourced to the location of the purchaser.
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Tax Rate Changes
The Tax Commission will provide sellers with advance notice of rate changes by publishing the information on its website at tax.utah.gov/sales/rates.html. This site contains a list of rate changes and the current tax rate chart. Tax rates and jurisdiction boundaries may change only at the beginning of a calendar quarter and will be posted 60 days prior to the effective date. Failure to receive notice does not relieve a seller of the obligation to collect sales and use tax at the correct rate. Rate changes for services covering a period starting before and ending after the statutory effective date will be as follows: · For a rate increase, the new rate applies to the seller's first billing period starting on or after the effective date. · For a rate decrease, the new rate applies to the seller's bills issued on or after the effective date. Example 1 A local dealer arranged an automobile lease contract for 36 months, and it accommodated the customer's wish that the payment be made mid-month. Halfway through the contract period, the sales tax rate increased, effective Oct 1, 2006, which increased the monthly lease payment. The payment made on Sep 15, 2006, for the period Aug 16 to Sep 15, was subject to the old tax rate. Since the next payment period, due Oct 15, was for the period that started Sep 16, before the rate went into effect, it was taxed at the old rate, even though the payment was made after the new rate went into effect. However, the following payment, due Nov 15, was for a period (Oct 16 to Nov 15) that started after the new rate went into effect, so was subject to the new rate, and therefore the customer paid the higher rate. Example 2 Using the same scenario above, instead of a tax rate increase there was a tax rate decrease effective Oct 1. The payment due on Sep 15 was at the old higher rate. However, the payment due Oct 15 was at the new lower rate since the bill was issued after the rate went into effect, even though the period started before the effective date. The October and all subsequent bills were taxed at the new lower rate.
The following are exempt: · Sales to United States and Utah government agencies. Currently, sales of construction materials to most Utah government agencies are exempt only if installed by the agencies' employees. Construction materials purchased by or on behalf of public elementary and secondary schools are exempt from the sales tax. The construction materials must be clearly identified and segregated, and they must be installed or converted into real property owned by the school. See Tax Commission Rule R865-19S-23 for information relating to documentation of sales to government agencies. To qualify as a sale made to a U.S. or Utah government agency, the purchase must be made with the government entity's funds. A purchase does not qualify for this exemption if a government agency employee pays for the purchase with personal funds, even if the employee is reimbursed for the purchase by the government agency. Government employees traveling on official business are NOT exempt from these taxes unless they present: · a properly completed exemption certificate; · a check, purchase order, or voucher supplied by the U.S. or Utah government agency; or · a U.S. government credit card (also called SmartPay cards). For detailed information on Federal government credit cards, please refer to FTA bulletin B-07/02, which can be found at www.taxadmin.org/fta/rate/b0702.pdf The sales tax exemption for purchases by Utah state and local government entities does NOT apply to purchases by a state other than Utah or to purchases by any local government entity located outside of Utah. Utah government purchases of items, other than travel, are tax exempt if purchased with a Utah state purchasing card or paid with a Utah state check. Purchasing cards are issued by US Bank. The cards display the Utah state seal, include the words "State of Utah Tax Exempt" and are imprinted with the individual purchaser's name and Utah state agency. While sellers are required to maintain evidence that a purchase qualifies for the sales tax exemption as a sale to the federal or Utah State government, this requirement is satisfied if the seller maintains a record of the qualifying credit card number, a copy of the government entity check, purchase order, or voucher, or a properly completed and signed form TC-721, Exemption Certificate. · Sales made to or by: · an area agency on aging; or · a senior citizen center owned by a county, city or town; and · sales made by a senior citizen center that contracts with an area agency on aging. · Certain enrolled members of Native American tribes (including the tribe itself) may purchase tax free if: · the member has a tribal card showing a Federal Bureau Number; · the sale is to an enrolled tribal member and delivery is taken on the member's own reservation (in the case of the Ute Indian Tribe, the sale must be made on or delivery must be made to tribal trust lands within the Uintah and Ouray reservations); and · in the case of sales to the tribe itself, a purchase order, exemption certificate, or similar evidence of tribal identity must be presented. page 8
Sales and Use Tax Exemptions
Utah law provides some exemptions from sales and use tax. Some of the more common exemptions are outlined below. For complete details on exemptions, refer to Utah Code §59-12-104. If a sale qualifies for an exemption that is either entity-based or use-based, the seller must obtain standard exemption information from the purchaser. Exemption information may be collected by the seller either electronically or on Utah State Tax Commission form TC-721, Exemption Certificate. If captured electronically, the same information for the specific exemption that is on form TC-721 must be retained. A purchaser is not required to provide a signature to claim an exemption from tax unless a paper exemption certificate is used. Purchasers and sellers are allowed to use substitute forms if they contain the same information as Utah State Tax Commission form TC-721. If the exemption is product based, no exemption certificate is necessary.
Entity-based Exemptions
An entity-based exemption is determined by who purchases or sells the product. An exemption certificate is required.
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Sales of tangible personal property made off the reservation to enrolled members of the tribe are taxable. They are exempt from tax only if delivery is made to the reservation by the seller or a licensed common carrier. · Foreign diplomats Certain foreign diplomatic employees are exempt from sales tax to varying degrees. These diplomatic personnel are issued tax exemption cards by the U.S. Department of State. The cards are color-striped, indicating the type and/or amount of sales tax exemption. Bearers of cards with a green stripe are not exempt from taxes on hotel rooms. Sellers are instructed to retain a photocopy of the card for evidence of exemption. The cards are not valid to make exempt purchases of telephone service or other utility services; the U.S. Department of State issues special exemption certificates for such purposes. · Feed, seed, baling ties, etc. sold to commercial agricultural producers. · Sales of tangible personal property used or consumed primarily and directly in farming operations. Charges for labor and/or parts (including lubricating oil, antifreeze or other supplies) used to repair or maintain off-road machinery and equipment used primarily and directly in agricultural production are also exempt. · Sales of electricity and fuel for industrial use as defined in Utah Code §59-12-102. · Sale or lease of semiconductor fabricating, processing, research or development materials. · Sales relating to schools and fundraising. · Sales to religious or charitable institutions. In the case of sales of $1,000 or more, or sales made pursuant to a contract between the seller and the religious or charitable institution, the exemption shall be at the point of sale. In all other cases, the exemption shall be in the form of a refund of sales or use taxes paid at the point of sale made by the religious or charitable institution directly to the Tax Commission. To be eligible for the exemption, the organization must be recognized as exempt under Section 501(c)(3) of the Internal Revenue Code, and must have obtained a sales tax exemption number from the Tax Commission. Religious and charitable organizations may apply to the Tax Commission for a refund of sales taxes paid by completing form TC-160. · Sales of construction materials to a religious or charitable institution or to a contractor purchasing on behalf of a religious or charitable institution.
· the leased property will be capitalized and the lease payments will be accounted for as payments made under a financing arrangement. · Purchases of tangible personal property upon which a sales and use tax was paid to another state are exempt, except if the tax paid was lower than Utah's rate. If lower than Utah's rate, the purchaser must pay the difference. No adjustment or credit is allowed if the tax paid was greater than Utah's rate. · Purchases of machinery and equipment used for normal operating replacements by a cogeneration facility as defined in Utah Code §54-2-1, or a qualified manufacturer or scrap recycler described in the Standard Industrial Classification Manual (SIC) classification 2000-3999. Purchasers of the qualifying machinery and equipment that fail to report this on the informational line of the Sales and Use Tax Return shall be penalized the lesser of $1,000 or 10 percent of the sales and use tax that would have been imposed if the exemption had not applied. · Normal operating repair or replacement parts with an economic life of three or more years that are used in Utah by a cogeneration facility as defined in Utah Code §54-2-1 or a qualified manufacturer or scrap recycler described in the Standard Industrial Classification Manual (SIC) classification 2000-3999. · Charges for labor to repair or renovate tangible personal property are exempt from sales and use tax if the parts used in the repair or renovation are exempt from sales and use tax. · Parts used in the repair or renovation of the following exempt tangible personal property: · tooling or equipment used or consumed exclusively in the performance of an aerospace or electronics industry contract with the United States government; · tangible personal property used or consumed primarily and directly in farming operations; · snow making equipment, ski slope grooming equipment, and passenger ropeways; · hearing aids and hearing aid accessories. · Sales of nonreturnable containers, labels, bags, shipping cases, and casing to a manufacturer, processor, wholesaler, or retailer for use in packaging tangible personal property to be sold by the manufacturer, processor, wholesalers, or retailer. · Purchases of lists or databases containing names and addresses that are used to send direct mail. · Purchases or leases by a telephone service provider of equipment, machinery, or software are exempt if they have a useful economic life of one or more years and are used for the following telecommunication purposes: · enabling or facilitating; · 911 service; · maintenance or repair; · switching or routing; or · transmission.
Use-based Exemptions
A use-based exemption is determined by the purchaser's use of the product. An exemption certificate is required. The following are exempt: · Sales of certain vehicles for exclusive use outside of Utah. · Property purchased for resale in this state, in the regular course of business, either in its original form or as an ingredient or component part of a manufactured or compounded product. · Sales for resale or lease. In addition, the lease of tangible personal property is exempt if it meets all of the following conditions: · the property is part of a sale-leaseback transaction; · sales or use tax was paid on the initial purchase of the property; and
Product-based Exemptions
A product-based exemption is based on the description of a product and is not based on who purchases the product or how the purchaser intends to use the product. Productbased exemptions do not require an exemption certificate. page 9
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The following are exempt: · Isolated or occasional sales, if the sale is made by a person not regularly engaged in the business of selling that type of tangible personal property. The exemption does not apply to sales of tangible personal property for resale or the sale of a vehicle or vessel required to be titled or registered in Utah. · The amount paid for a drug. A drug is defined as a compound, substance or preparation that is intended for the diagnosis, cure, mitigation, treatment or prevention of disease or is intended to affect the structure or function of the human body. Food, dietary supplements, alcoholic beverages, and prosthetic devices are not considered drugs. · Sales or rentals of durable medical equipment, including parts used to repair the equipment and replacements. · Sales or rentals of mobility enhancing equipment that is primarily used to provide or increase the ability to move from one place to another for a person with limited mobility. · A prosthetic device, including repair or replacement parts. Corrective eyeglasses, contact lenses, hearing aids or dental prostheses are not considered prosthetic devices. · Sales of hearing aids and hearing aid accessories, except batteries, and charges for labor and/or parts used in the repair or renovation of hearing aids and hearing aid accessories. Sales of hearing aid batteries are taxable. · Forty-five percent of the sales price of a new manufactured home and 100 percent of the sales price of a used manufactured home. · Fees charged for unassisted amusement devices. · Sales through unassisted car washes and dry cleaning and laundry machines. · Interstate sales delivered by common carrier or the seller to a point outside of Utah. A copy of the bill of lading, freight bill, form TC-757 or other evidence of out-of-Utah delivery must be kept by the licensed seller or retailer. If the property is delivered in the state of Utah to a consumer, the tax applies, regardless of its removal from Utah. See Tax Commission Rule R865-19S-44. · Motor fuels and special fuels subject to Utah state fuel excise tax. · Sales of hay. · Exclusive sale of seedling plants, or garden, farm, or other agricultural produce, if sold during the harvest season by the producer, an employee of the producer, or by a member of the producer's immediate family. · Sales of telephone service charged to a prepaid telephone calling card. · Sales of newspapers or newspaper subscriptions. · Sales of water in a pipe, conduit, ditch, or reservoir. · Room and trailer space rentals for 30 consecutive days or more. · Sales of currency or coinage that constitute legal tender of the United States or of a foreign nation. · Sales of an ingot, bar, medallion, or decorative coin having a gold, silver, or platinum content of 80% or more and that does not constitute legal tender of any nation. · Admissions to higher education athletic events. · Sales of food and food ingredients, prepared food or alcoholic beverages by a church or a charitable institution if the items are not available to the general public.
· Sales of food and food ingredients, prepared food or alcoholic beverages by an institution of higher education if the items are not available to the general public and are prepaid as part of a student meal plan offered by the institution of higher education. · Sales of food and food ingredients, prepared food or alcoholic beverages provided at a medical facility or a nursing facility for inpatient meals. See Tax Commission Rule R865-19S-61.
Additional Information
Goods Consumed by the Seller
Items consumed by the seller are subject to use tax on the amount of the seller's cost of the items, not the selling price. Items consumed by the seller include: · items taken from a seller's inventory and used by the seller; · samples given away for advertising; and, · products consumed by employees without payment. When making purchases for store use from local businesses, tax should be paid at the time of purchase. For example, office supplies and equipment, such as labels for internal accounting, cash register tapes, returnable containers, and furniture are taxable at the point of sale. The seller may purchase grocery bags and sacks and other non-returnable packaging material tax free that go out the door with the customer. No tax is due on items discarded because of spoilage, broken packaging, and similar incidents, because they are not considered as consumed by the seller. The purchase of printed advertising inserts is taxable unless the inserts contain the name and publication date of the newspaper distributing the inserts and are included in and distributed with the newspaper. See Tax Commission Rule R865-19S-65.
Coupons and Rebates
Coupons and rebates are handled in the following manner: · Coupons for which a seller is reimbursed by a third party, such as a manufacturer or distributor, do not reduce the amount subject to sales tax. The amount subject to sales tax is the sales price of the item before the value of the coupon has been deducted. · An in-store coupon or a coupon issued by a seller for which no reimbursement by a third party is received is considered a reduction in the sales price. The taxable amount is the net amount paid for the item after deducting the value of the in-store coupon. · Amounts of manufacturer's rebates, whether paid to the purchaser or retained by the dealer as a down payment, are not subject to tax.
Premiums and Gifts
A premium or gift given away with the sale of a product subject to tax is considered part of that sale, and the purchase of the premium or gift by the retailer is not taxable. Items given away without requiring a specific purchase and items given away as advertising are considered consumed by the retailer and the retailer must pay tax on the retailer's cost of those items. page 10
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Returned Merchandise
A customer who receives credit for returned merchandise is entitled to a refund of the sales tax. If a customer is given a partial refund or allowance, the customer is entitled to a refund of sales tax on the portion of the original sales price refunded.
Newspapers and Postage
Sales of newspapers and postage stamps are exempt. To qualify as a newspaper, publications must: · be published daily or weekly; · be intended for circulation among the general public; · contain matters of general interest and must report on current events; and · must not constitute a book when multiple issues are put together. Purchases of regularly circulated newspapers, such as The Salt Lake Tribune, Deseret Morning News, USA Today, and local town papers such as the Davis County Clipper, are exempt from sales tax. Purchases of tabloids, such as Enquirer, Star, Globe, etc., are not considered newspapers and are taxable. Sales of magazines, such as US News and World Report, Ladies Home Journal and Time, are taxable.
Returned Checks and Bad Debts
Bad debts may be claimed only by a seller. A seller is entitled to a sales tax adjustment for returned checks and bad debts. Nontaxable amounts, such as cash back to the customer and exempt charges, must be deducted from the total amount of the returned check or bad debt amount to arrive at the net write-off amount. The amount of the adjustment to be claimed on the sales tax return is determined by dividing the net write-off amount by one (1) plus the tax rate adopted in the community at the time of sale. For example, if the net write-off amount is $100 and the tax rate is 6.5 percent, the amount of the adjustment to be claimed on the return is determined by dividing $100 by 1.065, resulting in a claim of $93.90. If an item is repossessed, a credit may not be taken, with the exception of motor vehicle repossessions.
Money Orders, Faxes and Photocopies
Money order fees and charges for sending or receiving faxes are not subject to sales tax. Photocopying charges are taxable.
Special Events
When tax is included in the sales price of items sold at special events, the tax must be calculated separately. To determine the sales price without tax, the proceeds of an accounting period are divided by one (1) plus the tax rate adopted in the community where the special event was held. For example: · Where the combined rate is 6.0%, divide by 1.060 · Where the combined rate is 6.125%, divide by 1.06125
Cigarettes and Tobacco Products
Any entity selling cigarettes and/or tobacco products must obtain a license (included on the general application form TC-69) for each selling location. Most sellers may apply online using OneStop Business Registration at business.utah.gov/registration. Civil penalties apply to any licensee selling to underage youth (under 19 years). Questions related to sales to underage buyers should be directed to your local health department. The sale of cigarettes and/or tobacco products is subject to state and local sales tax. The amount subject to sales tax includes the cigarette or tobacco products tax. Tobacco products tax is due from the first purchaser within Utah. If a retail store purchases directly from an out-of-Utah source not collecting the tax, the retail store must be registered and bonded, and remit the tobacco products tax along with form TC-553 on the last day of the month following each calendar quarter. Cigarette tax is paid by purchasing stamps from the Tax Commission, which must be affixed to each package within 72 hours of being received. Stamps are only available to registered and bonded businesses. No cigarettes may be sold without a Utah stamp on each pack. Any cigarette package without the proper stamp is subject to a $25 penalty and confiscation. Application and registration for tobacco products and/or stamping is also made on the general application, form TC-69.
Vending Machine Sales
Vending machine sales, such as machines that dispense soft drinks, gumballs, cigarettes or novelty toys, are taxed in the same manner as special event sales. Tax is included in the vended price. However, a seller of food and food ingredients or prepared food of $1 or less has the option of paying tax on 150 percent of the seller's cost, including incoming freight costs. If this option is taken, the sale itself is exempt, but the taxable amount (150 percent of cost) must be reported as goods consumed on the return. If the vending machine is owned and serviced by a vending machine company, the tax is the responsibility of the vending machine company.
Returnable Containers
Deposits on returnable containers, bottles, pallets and drums are subject to tax. When containers are returned for refund of the deposit, sales tax should be refunded. Bottle deposits are exempt from tax when purchased with food stamps or Women, Infants and Children (WIC) coupons.
Trade-in on Manufactured Homes
Utah Code §59-12-104 provides for an exemption of 45 percent of the sales price of any new manufactured home and 100 percent of the sales price of any used manufactured home. When there is a trade-in, the sales price subject to the exemption is calculated as follows: 1. Subtract any trade-in amount allowed from the original sales price. This difference is the net sales price.
Food Stamps and WIC
Sales of food paid with federal food stamps or Women, Infants and Children (WIC) coupons are exempt from sales and use tax.
Videos and DVDs
Videotape and DVD rentals are taxed in the same manner as sales of tangible personal property.
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2. Multiply the net sales price by the exemption allowed by law (45 or 100 percent) to determine the amount of the net sales price exempt from sales tax. 3. Subtract the amount computed in step 2 from the amount in step 1. This is the portion of the net sales price subject to sales tax. For example, if a dealer accepts a trade-in at a value of $8,000 against the purchase of a new manufactured home valued at $60,000, the calculation would be as follows. Original sales price Less trade-in amount Net sales price Portion of net sales price exempt from sales tax ($52,000 x .45) Portion of net sales price subject to sales tax ($52,000 - $23,400) $60,000 - 8,000 $52,000 $23,400 $28,600
Starting a New Business
If starting a new business, see Publication 38, Doing Business in Utah tax.utah.gov/forms/.
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Forms
The following forms are available at tax.utah.gov/forms/ or by calling the Tax Commission automated forms order hot-line at (801) 297-6700 or 1-800-662-4335 ext. 6700. TC-51 TC-55A TC-61 Nexus Questionnaire Claim for Refund of Motor Vehicle Fees or Sales Tax Utah Sales and Use Tax Return
Sales Tax Publications
The following publications are available at tax.utah.gov/forms/ or by calling the Tax Commission forms order hot-line at (801) 297-6700 or 1-800-662-4335 ext. 6700. Pub 5 Pub 25 Pub 35 Pub 37 Pub 38 Pub 40 Pub 42 Sales Tax Information for Motor Vehicle/Marine Dealer/Body & Repair Shops Sales and Use Tax General Information Sales Tax Guidelines for Public and Private Elementary and Secondary Schools Business Activity and Nexus in Utah Doing Business in Utah Personal Liability for Unpaid Sales, Fuel and Withholding Taxes Sales Tax Information for Sales, Installation and Repair of Tangible Personal Property Attached to Real Property Sales Tax Information for Nurseries, Florists, Landscapers and Related Industries Sales Tax Information for Health Care Sales Tax Information for Public Utilities Sales Tax Information for Restaurants Sales Tax Information for Lodging Providers Utah Interest and Penalties
TC-61 Schedule PS Point of Sale TC-61 Schedule PSD Point of Sale Detail TC-61DF TC-61E TC-61F TC-61FV TC-61N TC-61P TC-61Q TC-61T TC-61W TC-69 TC-69B TC-73 TC-85 TC-160 TC-719 TC-721 TC-721A Sales Tax Refund Coupon Booklet for Donated Food Municipal Energy Sales and Use Tax Tourism, Recreation, Cultural, Convention Facilities and Car Rental Tax Return Tourism, Recreation, Cultural, Convention Facilities and Car Rental Tax Return, monthly Sales Tax Refund Request for Religious or Charitable Organizations Instructions for Filing Refund Claims for Sales Tax Paid on Pollution Control Facilities Utah Sales Tax Sourcing Schedule Transient Room Tax Return Waste Tire Recycling Fee Return Utah State Business and Tax Registration Application Additional Business Locations for a Sales Tax Account Sales Tax Exemption Contract Agreement for Remitting through Electronic Funds Transfer (EFT) Application for Sales Tax Exemption for Religious and Charitable Institutions Sales Tax Exemption Affidavit for Authorized Interstate Carriers Exemption Certificate Sales and Use Tax Exemption Affidavit for Exclusive Use Outside Utah
Pub 45 Pub 53 Pub 54 Pub 55 Pub 56 Pub 58
Internet Information
Utah State Tax Commission Website
www.tax.utah.gov This site has links to: · Forms and publications · Online sales tax return filing · OneStop Business Registration · PaymentExpress · Current and past sales tax rates · Internal Revenue Service · Utah Counties (business license, property tax) · Multistate Tax Compact · Other States' Revenue Departments
TC-721NR Sales Tax Exemption Certificate for Non-Utah Retailers Accepting Delivery of Merchandise in Utah TC-738 TC-757 TC-762 Petition for Redetermination Affidavit of Out-of-State Delivery Lease/Rental Sales Tax Affidavit
State of Utah Website
www.utah.gov This site has links to: · Workforce Services (unemployment) · Labor (worker's compensation) · Commerce (corporations, DBA registration) This publication is provided for general guidance only. It does not contain all sales or use tax laws or rules. If you need additional information, call (801) 297-2200 or 1-800-662-4335 (outside Salt Lake area), or send email to [email protected].
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Specific Information for Telecommunications Service Providers
Delivery Locations
The location where a transaction is completed for tax and fee purposes is the location where a purchaser receives telecommunications services sold by a provider. This is the place of primary use, or in other words, the customer's residential or business address. The taxing jurisdiction is determined by the customer's ZIP+4 billing address, which is considered the place of primary use. The Tax Commission provides a downloadable online database of rates and boundaries that relates ZIP+4 addresses to taxing jurisdictions. It can be downloaded and incorporated into local systems of service providers to calculate taxes and fees attributable to specific locations. This database is available at tax.utah.gov/taxes/telecom. The Tax Commission establishes delivery location outlets on sales tax accounts according to the information provided by the service provider. This information is provided by using form TC-61Q, Utah Sales Tax Sourcing Schedule, available at tax.utah.gov/forms. The delivery location outlets, along with applicable sales tax rates, are pre-printed on sales tax returns. These delivery location outlets are in addition to already-established brick and mortar outlets. These same outlets must also be included on the E-911 and Municipal Telecommunications License returns transmitted electronically. Telecommunications service providers report sales and use tax on form TC-61 and accompanying Schedules PS and PSD. Each jurisdiction into which service is delivered is identified as a delivery location on Schedule PS in Section A and appears as a distinct outlet. The telecommunications service provider no longer needs to file an annual allocation table. Each filer also fills out the Schedule PSD, reporting sales into every jurisdiction where service is provided.
cial telephone services, including E-911 service, special communications services for the deaf, and special telephone services for low income subscribers; 6. subscriber charges for cable or satellite television transmissions, unless those charges are considered user fees; 7. contributions in aid of construction, land development fees, payments in lieu of land development fees, and special plant construction and relocation charges; and 8. charges for one-way pager services.
Post Paid Calling Service
Post-paid calling service means telecommunications service obtained by making a payment on a call-by-call basis, either through the use of a credit card or payment mechanism such as a bank card, travel card, credit card, or debit card, or by charges made to a telephone number. It is not associated with the origination or termination of the telecommunications service. An example of this would be the use of a telephone calling card to which calls are charged, but paid according to an established billing cycle, after the calls were made. This includes calls charged to a home phone and paid according to an established billing cycle for the home phone. A sale of post-paid calling service is sourced to the place of primary use. In jurisdictions that impose the municipal telecommunication license tax, this transaction qualifies as a telecommunications service taxable to the provider of the service and sourced to the address of the consumer. This transaction is also subject to sales and use tax sourced to the address of the end user.
Prepaid Calling Service Not Including the Telephone Line
Prepaid usage-based calling service means the right to exclusively access telecommunications services, paid for in advance, that enables the origination of calls using an access number or authorization code, whether manually or electronically dialed, and sold in predetermined units or dollars that decline with use in a known amount. An example is a phone card in an established amount, either minutes or dollars, available for sale at retail outlets. The amounts paid or charged for prepaid telephone calling cards are subject to sales and use tax and are sourced for sales and use tax purposes according to where the customer purchased the prepaid calling service. When the service is actually used, there is no additional sales and use tax charged.
Telephone Services Definitions
Taxable telephone service charges include:
1. subscriber access fees; 2. charges for optional telephone features, such as call waiting, caller ID, and call forwarding; and 3. nonrecurring charges that are ordinarily charged to subscribers only once or only under exceptional circumstances, including charges to: · establish, change, or disconnect telephone service or optional features; and · repair telephone equipment that retains its character as tangible personal property.
Prepaid Calling Service
In some cases, a disposable phone, a temporary phone line, and prepaid service in specified time or dollar amounts are sold together. A sale of this nature is sourced for sales and use tax purposes according to where the customer purchases the prepaid calling service.
Nontaxable charges include:
1. refundable subscriber deposits, interest, and late payment penalties; 2. charges for interstate long distance or toll calls; 3. telephone answering services received or relayed by a human operator; 4. charges to repair subscriber equipment that is regarded as real property; 5. charges levied on subscribers to fund or subsidize spe-
Mobile Telecommunications Sourcing Act
Telecommunications service may be subject to a tax or fee imposed by taxing jurisdictions whose territorial limits encompass the customer's place of primary use, regardless of where the mobile telecommunication services originate, terminate, or pass through. The Mobile Telecommunications Sourcing Act (Chapter 4 of Title 4 of the U.S. Code) determines the location of a wireless page 14
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telephone call, for taxing purposes, as the customer's place of primary use. Place of primary use means the street address where the customer's use of the mobile telecommunications service primarily occurs. This is the residential or primary business street address. The Tax Commission establishes delivery location outlets on sales tax accounts based on information supplied by the account holder. These delivery outlets and all other fixed locations will be pre-printed on the sales and use tax returns, TC-61 Schedule PS, Section A. The Tax Commission provides a sales and use tax cross-reference table for determining taxing jurisdictions based on customers' ZIP+4 billing addresses, found at tax.utah.gov/sales.
The return detail required in conjunction with the payment coupon is to be submitted electronically and has the same due date as the payment. The file records will be in variable length, text format with each field separated by a comma. It can be submitted using FTP Client to ftp.tax.utah.gov or sent to ftp://ftp.tax.utah.gov/prv/(Tax Commission issued subdirectory). Each account is assigned a specific subdirectory in /prv/(Tax Commission issued subdirectory). For further information concerning the detail of the return, specifications for the format of the data, and for assignment of a subdirectory, contact the Miscellaneous Tax Section at (801) 297-3540. Online info: For E-911 filing format, see www.tax.utah.gov/telecom The line provider may retain an amount not to exceed 1.5% of the E-911 fees collected for the cost of billing, collecting, and remitting the levy.
Emergency Services Telephone Charge
E-911 Funding
A county, city or town may levy a monthly emergency services telephone charge on each local exchange service switched access line (land line) and on each revenue producing radio communications access line (cellular line) with a billing address within the boundaries of the county, city, or town. The amount of the local charge is up to 65 cents per month for each line. There is also a statewide fee of 13 cents per month on telephone services for unified statewide E-911 emergency services, bringing the total E-911 fee up to 78 cents per line. A provider responsible to collect, report, and remit E-911 fees is also responsible to collect, report and remit the Poison Control fee, explained later. The E-911 fee is tied to the provision of phone lines. The value of providing those same phone lines is also subject to sales tax, paid by the phone line subscriber to the phone line provider. Most Utah localities impose the E-911 fees at the maximum local rate of 65 cents plus 13 cents statewide fee per line. The filer is expected to collect, report, and remit E-911 fees for all phone lines in every applicable jurisdiction for each reporting period. Filers must identify each specific jurisdiction where phone service (based on a customer's ZIP+4 service address) is supplied because revenue is distributed to the E-911 response center that supports the jurisdiction. It is not correct to report all lines and fees at the county level or at just one locality within the county if service is in fact supplied to other localities within the county. Lines and fees must be reported in the jurisdictions where they are actually supplied. The taxing jurisdiction is determined by the customer's ZIP+4 billing address, which is considered the place of primary use. The Tax Commission provides a downloadable online database of rates and boundaries that relates ZIP+4 addresses to taxing jurisdictions. It can be downloaded and incorporated into local systems to calculate taxes and fees attributable to specific locations. The database is available at tax.utah.gov/taxes/telecom. The Tax Commission administers the charge according to the same procedures used to administer state sales and use tax. It then distributes the collected funds to the E-911 response center that supports the county, city, or town that imposed the charge declared on the return. Returns are filed electronically and paid using form TC-29, Emergency Service Telephone Fee coupon. Once an account has been established, the Tax Commission will send a booklet of payment coupons (TC-29) to be used in remitting the fees.
Poison Control Center Funding
An emergency services statewide telephone charge of 7 cents per month is imposed on each local exchange service switched access line (land line), and each revenue producing radio communications access line (cellular line) subject to the E-911 emergency services telephone charge. The revenue supports the statewide Poison Control Center at the University of Utah. Therefore, taken together with the E-911 fees, the total levy per phone line is up to 85 cents per month. A provider responsible to collect, report, and remit Poison Control fees is also responsible to collect, report and remit the E-911 fees, explained previously. The Poison Control fee is tied to the provision of phone lines. The value of providing those same phone lines is also subject to sales tax paid by the phone line subscriber to the phone line provider. Each filer is expected to collect, report, and remit the fee for all phone lines for each reporting period. The revenue is distributed to the University of Utah Poison Control Center so the fee is not reported at the jurisdictional level, but rather as a statewide total. The emergency services telephone charge is remitted to the Tax Commission on or before the last day of the month following the month in which the charge is imposed, and is accompanied by Tax Commission form TC-29, Emergency Service Telephone Fee coupon. Once an account has been established, the Tax Commission will send a booklet of payment coupons (TC-29) to be used in remitting the fees. There is no provision for a filer to retain any portion of the fee for any cost incurred administering this fee. The return detail required in conjunction with the payment coupon is submitted electronically and has the same due date as the payment. The file records will be in variable length, text format with each field separated by a comma. It can be submitted using FTP Client to ftp.tax.utah.gov or sent to ftp://ftp.tax.utah.gov/prv/(Tax Commission issued subdirectory). Each account is assigned a specific subdirectory in /prv/(Tax Commission issued subdirectory). For further information concerning the detail of the return, specifications for the format of the data, and for assignment of a subdirectory, contact the Miscellaneous Tax Section at (801) 297-3540. Online info: For E-911 filing format, see www.tax.utah.gov/telecom
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Municipal Telecommunications License Tax (MTLT)
Municipalities may impose a tax of up to 4 percent on gross receipts from telecommunication service provided to those municipalities. Gross receipts are attributed to a municipality if they are from transactions located within the municipality according to the same address rules as E-911 fees. If the telecommunication provider passes this tax on to their customers (subscribers), then this amount becomes part of the cost of goods sold and is part of the taxable base for sales tax purposes to the subscribers. The Tax Commission administers the tax according to the same procedures used to administer state sales and use tax. It then distributes the collected funds to the city or town that imposed the charge that was declared on the return. Returns are filed using electronic means and the tax payment is made to the Tax Commission on a separate form TC-34, Municipal Telecommunication License Tax coupon on or before the last day of the month following the month in which the tax is imposed. Once an account has been established, the Tax Commission will send a booklet of payment coupons (TC-34) to be used in remitting the fees. The Municipal Telecommunications License Tax (MTLT) is tied to the provision of telecommunications service and is paid by the provider. About half of the jurisdictions in Utah impose the tax. To identify the jurisdictions along with the rates, access the Other Sales Tax Rates and Fees chart at tax.utah.gov/sales/rates.html. When an MTLT account is set up with the Tax Commission, the filer is expected to report and remit MTLT for service provided in every one of the implementing jurisdictions for each reporting period. The filer must identify the specific jurisdictions where telecommunications service is provided (based on ZIP+4 service addresses) because revenue is distributed to those jurisdictions. It is not correct to report all service at just one locality within the county if service is supplied to other localities within the county that impose the tax. Service must be reported in the jurisdictions where it is supplied. The taxing jurisdiction is determined by the customer's ZIP+4 billing address, which is considered the place of primary use. The Tax Commission provides a downloadable online database of rates and boundaries that relates ZIP+4 addresses to taxing jurisdictions. It can be downloaded and incorporated into local systems to calculate taxes and fees attributable to specific locations. The database is available at tax.utah.gov/taxes/telecom.
The return detail required in conjunction with the payment coupon is submitted electronically and has the same due date as the payment. The file records will be in variable length, text format with each field separated by a comma. It can be submitted using FTP Client to ftp.tax.utah.gov or sent to ftp://ftp.tax.utah.gov/prv/(Tax Commission issued subdirectory). Each account is assigned a specific subdirectory in /prv/(Tax Commission issued subdirectory). For further information concerning the detail of the return, specifications for the format of the data, and for assignment of a subdirectory, contact the Miscellaneous Tax Section at (801) 297-3540. Online info: For telecom filing format, see www.tax.utah.gov/telecom
Filing Frequency
Returns for E-911, Poison Control, and Municipal Telecommunications License Tax are filed at the same frequency as sales and use tax returns. If you are a monthly filer of sales and use tax, then you are also a monthly filer for the telecom taxes, and the same goes for quarterly filers.
Changes to Accounts
Any changes to delivery locations into which telecommunications services are provided, such as adding or deleting a location, should be reported to the Tax Commission using form TC-61Q, Utah Sales Tax Sourcing Schedule. This will update accounts for sales and use tax. Company name changes, ownership changes, and address changes should also be reported using either the return or separate correspondence.
Penalties for Inaccurate Filing or Non-Filing
It is absolutely essential the Tax Commission receives correct and timely information upon which to base timely distribution to localities. It can do nothing with a payment that is not accompanied by a correct return showing detailed, jurisdiction-by-jurisdiction information. In the event the Commission does not receive accurate or timely return information, it may impose a penalty of the greater of $20 or 10% of the unpaid tax due on the return. A sales tax, municipal telecom license tax, or E-911 fee return that does not have distribution information necessary for the commission to make a correct distribution to counties, cities, and towns is not considered a filed return. Similarly, a tax is not paid (even if remitted) if not accompanied by one of the above-mentioned returns.
Detailed filing instructions and filing formats are available on the Tax Commission's website. E-911: tax.utah.gov/telecom Municipal Telecom: tax.utah.gov/telecom
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Free 2006 Utah Sales Tax Information for Telecommunications Service Providers, Pub-62 - Utah
| File Size: | 264.1 kB |
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| State: | Utah |
| Category: | Tax Forms |
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| Page Size: | Letter (8 1/2" x 11") |
| URL |
http://tax.utah.gov/forms/2006/pub-62.pdf |
| Download 2006 Utah Sales Tax Information for Telecommunications Service Providers, Pub-62 ( 264.1 kB) |
Preview 2006 Utah Sales Tax Information for Telecommunications Service Providers, Pub-62
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