Utah – Updated Sales and Use Tax Information Guide

1/28/2013

SALT Report 2087 – The Utah State Tax Commission updated its sales and use tax publication to address seller amendments and adjustments as well as the proper application of sales and use tax for bundled transactions, returnable containers, and third-party drop shipments.

Seller Amendments and Adjustments

A seller who has credited or refunded previously reported sales taxes should either amend the return on which the taxes were originally reported or claim an adjustment on their next sales tax return.  If amending or adjusting on paper, the following information must be included with the amended return:

  • An explanation of the changes,
  • Documentation, such as an exemption certificate, provided by the purchaser that proves the purchaser was exempt from the tax,
  • Proof that the purchaser was credited or refunded the tax,
  • Adjustments only:  calculation of adjustment amount which is the refunded tax divided by current period’s tax rate, and
  • Adjustments only:  schedule showing which period the taxes were originally reported to the Commission and, the locations being adjusted

If you are amending or adjusting a return electronically, you must explain the basis for the amendment and provide the documentation above, upon request.  If there are multiple business locations or a non-fixed location, the return schedules must also be amended or adjusted for the location where the tax was originally reported.

A sales and use tax return cannot be adjusted to claim a credit for taxes paid to another seller. Instead, a refund must be sought from the seller or applied for through the Commission, using form TC-62PR.

Bundled Transactions

A bundled transaction is the retail sale of two or more separate products that are sold for one combined price. If any part of the bundled transaction is subject to tax, the entire transaction is taxable unless the seller keeps separate records of the tax-exempt portion of the transaction.

Returnable Containers

Deposits on returnable containers, bottles, pallets and drums are subject to tax. When containers are returned for refund of the deposit the sales tax should also be refunded. Bottle deposits are only exempt from tax when they are purchased with food stamps or Women, Infants and Children (WIC) coupons.

Third-party Drop Shipping

In third-party drop shipments, a customer buys tangible personal property or products transferred electronically from a business that does not have the item in stock.  In this case, the business will purchase the items from a wholesaler who will send it directly to the customer.

For sales and use tax purposes there are two separate transactions that occur in third-party drop shipping. The first transaction is between the customer and the business and is subject to tax. The second transaction is between the business and the wholesaler and is exempt from tax as a purchase for resale.

If the business has a Utah sales tax license, it must collect and pay the sales tax.  If the business is not required to have a Utah sales tax license, it does not have to collect the tax. However, the customer will be required to report and pay tax directly to the Commission

For Further Information

Utah State Tax Commission – Publication 25