Utah – Affiliate Nexus Bill Enacted

SALT Report 1468 – Utah Governor Gary Herbert signed into law an affiliate nexus bill that requires out-of-state sellers to collect and remit Utah sales and use tax, effective July 1, 2012. The bill provides definitions regarding who is deemed “a seller in the state” and expands the types of sellers who will be required to pay or collect and remit sales and use taxes.
The new bill, HB 384, defines a seller as someone who sells tangible personal property, services, or products that are transferred electronically for use in Utah. These sellers will be required to pay or collect and remit taxes, if:
  • The seller holds a substantial ownership interest in, or is owned by, a related seller, and
  • The seller sells the same or a substantially similar line of products as the related seller and does so under the same or a substantially similar business name, or
  • The place of business of the related seller or an in-state employee of the related seller is used to advertise, promote or facilitate sales by the seller to the purchaser

However, a seller that is not required to collect tax under this requirement may voluntarily collect and remit the tax to the state.

A “related seller” will be defined as someone that:

  • Meets one or more criteria that would require a seller to collect and remit sales and use tax; and
  • Delivers tangible personal property, services, or products transferred electronically that are sold by a seller that does not meet the same criteria

The determining criteria would include having or utilizing an office, distribution house, sales house, warehouse, service enterprise or any other similar place of business in the state of Utah.

The legislation also states that if the U.S. Supreme Court or Congress issues a decision or passes legislation that would authorize a state to require sellers to collect a sales tax that Utah does not already collect, then sellers would be responsible for collecting and remitting that tax in Utah as well.

For Further Information:

Utah State Legislature – HB 384