Utah – Taxable and Nontaxable Items in Same Transaction

SALT Report 1467 – Utah recently enacted legislation that addresses the taxability of separately stated items in sales, lease and rental transactions.  SB 27 provides that if a transaction consists of a sale, lease or rental of tangible personal property, products or services that are taxable, along with the sale, lease or rental of tangible personal property, products, or services that are not taxable, then the entire transaction is considered taxable. However, if at the time of the transaction the seller:
  • Separately states the portion of the transaction that is not taxable on an invoice or bill of sale provided to the purchaser; or
  • Is able to identify from the books and records that the seller keeps the portion of the transaction that is non-taxable then the non-taxable amount can be purchased tax free.

If the sales price of a transaction consists of two or more items of tangible personal property, products, or services that are taxed at different rates, then the entire purchase is taxable at the higher tax rate unless the seller, at the time of the transaction:

  • Separately states the taxable items at each of the different rates on an invoice or bill of sale provided to the purchaser; or
  • Is able to identify the tangible personal property, products, or services that are taxable at the lower tax rate in the books and records the seller keeps in the seller’s regular course of business.

A purchaser and a seller may correct the taxability of a transaction if:

  • After the transaction occurs, the purchaser and the seller discover that the portion of the transaction that is not taxable was not separately stated on an invoice or bill of sale provided to the purchaser because of an error or ignorance of the law; and
  • The seller is able to identify in the books and records that the seller keeps the specific portion of the transaction that is not taxable.

For Further Information:

Utah State Legislature – S.B. 27