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Utah Won’t Link Sales Tax Rate to Internet Sales Tax

  • Feb 17, 2014 | Gail Cole

 Utah lawmakers reject linking sales tax rate to Marketplace Fairness Act of 2013.

The Marketplace Fairness Act of 2013 would allow states to require certain out-of-state retailers to collect sales tax, provided the states make complying with sales tax laws more simple. Some form of this federal legislation has been kicking around Washington D.C. for several years. If the latest version’s passage in the Senate raised hopes that it would become law last year, it’s lengthy, uneventful tenure in the House has subdued those hopes.

Some states are taking matters into their own hands, passing affiliate nexus laws (New York) and use tax notification laws (Colorado) to encourage remote sellers to collect sales tax. Other states are waiting to see if the Supreme Court or the federal government will settle the issue of remote sales tax. The Supreme Court avoided the issue last fall, when it refused to take on appeals of the New York affiliate nexus law. The Marketplace Fairness Act is still alive--for now.

Some of these states are accounting for a possible federal or legal solution to remote sales tax in their own legislation. Consider a bill recently defeated in Utah.

Utah House Bill 224 would reduce the Utah state sales and use tax rate from the current 4.70% to 4.50% if the Supreme Court of the United States authorizes or Congress permits the state to require certain sellers to collect a sales or use tax. The bill also allows for a reduction in local sales and use tax rates.

While acknowledging that an internet sales tax would not be a tax increase, bill sponsor Rep. Jim Nielsen (R) said he is opposed to taking more “money out of the private sector.” He would rather leave that money where it can “generat[e] economic activity.”

Representative Joel Briscoe (D) voted against the measure. He sympathizes with businesses that watch customers price items and then leave to purchase them (tax-free) online but believes the best course of action is to “wait until Congress makes a decision.”

The measure was rejected by the Utah House of Representatives in a 47-26 vote, according to Utah Public Media.

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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.