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Utah Poised to “Take Control of Sales Tax Policy”


 Utah: Is a Storm Brewing Over Click-Through-Nexus Legislation?

UPDATE, 4.17.13: SB 226 was defeated in the House.

Utah lawmakers have narrowly approved a bill that would require online sellers to collect and remit Utah sales tax, as brick-and-mortar retailers do. According to Senator Wayne Harper (R-Taylorsville), who sponsored the bill, “We need to do something to maintain control of our own tax policy.” (Deseret News).

SB 226 “modifies the circumstances under which a person may be required to collect and remit sales and use taxes to the State Tax Commission.” In brief, it would require remote sellers who do not have nexus, or a physical presence in the state, to collect and remit sales taxes at both the state and local level. If passed, it would take effect on July 1, 2013.

Against

Support for the bill was not overwhelming. While 15 members of the Senate approved the measure, 12 senators voted against it. Senator Todd Weiler (R-Woods Cross) worried that “Utah will get sued if we pass this bill” because the Supreme Court has ruled in the past that states cannot force businesses to collect and remit sales tax unless they have nexus.

Sen. Weiler was also concerned that “[t]he public will see this as a tax increase. We will be branded as having raised taxes.” Senator Stephen Urquhart (R-St. George) argued that the measure would send a negative message to businesses: “At this point, this bill is an economy killer.”

For

That may be, but passage of SB 226 would help fill Utah’s coffers. According to the Deseret News:

The Legislature’s fiscal analysts say the bill would bring an additional $550,000 to the state in 2014. Businesses that would be subject to the law that are not currently required to pay or collect and remit sales and use taxes would pay about $785,000 more annually… .”

Many Utah businesses are in favor of the legislation. Speaking in support of SB 226, Utah businessman Scott Hymas pointed out that “[i]f the current tax loophole remains in place, online-only sales companies will continue to have an unfair advantage in the sales collection process, reducing the amount of tax money that goes to educate our children, pay for our needed services, and potentially reduce other taxes.”

SB 226 is now being considered by the House Rules Committee.

Federal Legislation

Meanwhile, back in the District of Columbia, federal lawmakers have yet to act on the Marketplace Fairness Act of 2013, which was introduced on February 14.

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photo credit: Paul Mayne via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.