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                                tax.utah.gov

                                                                 Publication 37
                                                                              Revised 9/19

 Business Activity
  and
         Nexus 
             in
                Utah
    
             Utah State Tax Commission
             210 North 1950 West
             Salt Lake City, Utah 84134                                       If you need an accommodation under the Americans 
             801-297-2200                                                     with Disabilities Act, email taxada@utah.gov, or call 
             1-800-662-4335                                                   801-297-3811 or TDD at 801-297-2020. Please allow 
             nexus@utah.gov                                                   three working days for a response.
             tax.utah.gov

                                                                 2.  have or use an offi ce, distribution house, sales house, 
Purpose
  The purpose of this publication is to defi ne nexus and pro-    warehouse, service enterprise or other place of business;
  vide general guidelines for determining whether a business     3.  maintain a stock of goods in Utah;
  entity’s activities create nexus with the state of Utah.       4.  regularly solicit orders (whether or not those orders are 
                                                                 accepted in Utah), unless the activity in Utah is only ad-
                                                                 vertising or solicitation by direct mail, email, the Internet, 
Definitions
                                                                 telephone or similar means;
  Nexus                                                          5.  regularly deliver property in Utah other than by common 
  Nexus means a business entity has established a direct or      carrier or U.S. mail; or
  representational presence within a state or jurisdiction. This 
  presence allows the state to require the business to collect   6.  regularly engage in any activity related to the leasing or 
  and pay certain taxes.                                         servicing of property located in Utah.
  The standards are different for determining whether a          A seller also has nexus in Utah if:
  business has nexus for purposes of sales tax or corporate      1.  a.  the seller has more than 10 percent interest in a 
  franchise/income tax.                                          related seller, or
                                                                 b.  a related seller has more than 10 percent interest in 
  Retailer
  Utah law defi nes a retailer as any person regularly en-        the seller, or
  gaged in regular solicitation of a consumer market in Utah.    c.  a related seller wholly owns the seller, and
  A retailer includes commission merchants, auctioneers,         2.  a.  the seller sells the same or very similar line of prod-
  salespersons, representatives, distributors, supervisors and   ucts as the related seller under the same or a very 
  employers.                                                     similar business name, or
                                                                 b.  the place of business of the related seller or one of its 
Sales Tax                                                        in-state employees is used to advertise, promote or 
  The United States Constitution requires a business to have     assist sales by the seller to a buyer.
  suffi cient nexus with Utah in order for Utah to require that 
  business to collect and pay sales tax.
  A business that engages in the following activities exceeds    Corporate Tax
  the minimum threshold of nexus, subjecting it to Utah’s sales  Public Law 86-272 restricts a state from imposing a net in-
  and use tax requirements.                                      come tax on income earned within its borders from interstate 
                                                                 commerce if the company’s only business activity within the 
  Retailers and marketplace facilitators must collect and pay    state is the solicitation of orders for sales of tangible person-
  sales and use tax on their sales and on sales they facilitate  al property. Only the solicitation to sell tangible personal 
  on their marketplace if they:                                  property has immunity under P.L. 86-272.
  1.  sell tangible personal property, products transferred      Businesses that earn income from Utah sources, other than 
   electronically, or services for storage, use, or  consump-    from merely soliciting sales of tangible personal property, 
   tion in the state; in either the previous calendar year or    are required to fi le a Utah corporation franchise and income 
   the current calendar year, that result in either:             tax return. For example, a corporation has Utah nexus and is 
    a.  gross revenues of more than $100,000; or                 subject to this tax if it:
    b.  200 or more separate transactions.



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   1.  sells or performs services in Utah in which the customer    17. Consigning tangible personal property to any person, 
   receives the greater benefi t of the service in Utah, or         including an independent contractor, for sale.
   2.  earns income from the use of intangible property in Utah.   18. Maintaining an offi ce or place of business (in-home or 
   Corporations that make loans or issue credit cards to Utah      otherwise) of any kind other than an in-home offi ce.
   customers (e.g., banks) are subject to the Utah corporate       •   Any offi ce or other place of business in Utah that does 
   franchise or income tax whether or not they have a business     not strictly qualify as an in-home offi ce does not have 
   location in Utah.                                               protection under this rule.
   For the sale of tangible personal property to be protected      •   It doesn’t matter whether the company pays directly, 
   under P.L. 86-272, it must be limited solely to solicitation,   indirectly or not at all for the cost of maintaining the in-
   except for de minimis activities and activities conducted by    home offi ce.
   independent contractors. “De minimis” means those activities    19. Entering into or selling/disposing of franchising or licens-
   that, when taken together, establish only a trivial connection  ing agreements, or selling/transferring tangible personal 
   with the taxing state.                                          property associated with a franchise or license by the 
   The following activities establish nexus in Utah (See Utah      franchise or licensor to its franchisee or licensee in Utah.
   Administrative Rule R865-6F-6):                                 20. Conducting any activity that serves an independent busi-
   1.  Repairing, maintaining or servicing the property.           ness function apart from the solicitation of orders, even if 
   2.  Collecting current or delinquent accounts, whether direct-  the activity increases sales.
   ly or by third parties, through assignment or otherwise.
                                                                   If you have any questions about business activity or nexus 
   3.  Investigating credit worthiness.                            that are not answered above, please contact the Tax Commis-
   4.  Installing or supervising installation at or after shipment sion at the address in the heading of this publication.
   or delivery.                                                    To request an agreement to resolve prior business tax li-
   5.  Conducting training courses, seminars or lectures           abilities from the Auditing Division’s Voluntary Disclosure 
   for personnel (other than personnel involved only in            Program, the following written information is required.
   solicitation).                                                  1.  A description of the company’s activities, including:
   6.  Providing any kind of technical assistance or service       a.  the number of years doing business in Utah,
   beyond the solicitation of orders.
                                                                   b.  a list of the type of property owned and/or leased in 
   7.  Investigating, handling or otherwise helping to resolve     Utah,
   customer complaints, other than mediating direct cus-
   tomer complaints, when the sole purpose is to ingratiate        c.  a description of equipment leased for use in Utah,
   the sales personnel with the customer.                          d.  the number and length of time representatives acting 
   8.  Approving or accepting orders.                              on your behalf or employees have been in Utah, and
   9. Repossessing property.                                       e.  how Utah business is solicited.
   10. Securing deposits on sales.                                 2.  The type of tax being offered and a statement why the 
                                                                   company is not offering other tax types.
   11. Picking up or replacing damaged or returned property.
                                                                   3.  A declaration of estimated tax liability for the disclosure 
   12. Hiring, training or supervising personnel (except person-   period, by tax type.
   nel involved only in solicitation).
                                                                   4.  A declaration of the estimated tax liability for periods 
   13. Using agency stock checks or any other instrument or        prior to the disclosure period, by tax type.
   process by which employees make sales in Utah.
                                                                   5.  Disclosure as to whether the company has collected or 
   14. Maintaining a sample or display room for longer than two    withheld tax.
   weeks (14 days) at any one location within Utah during 
   the tax year.                                                   6.  A statement indicating whether the Utah State Tax Com-
                                                                   mission or the Multistate Tax Commission has contacted 
   15. Carrying samples for sale or exchange for  anything of      the company, and the nature of the contacts.
   value.
                                                                   7.  The voluntary disclosure agreement terms proposed by 
   16. Owning, leasing, using or maintaining in Utah:              the company.
   a.  a repair shop;                                              See Pub 4 for more information regarding the Voluntary 
   b.  a parts department;                                         Disclosure Program, or visit the Tax Commission website at 
   c.  any kind of offi ce other than an in-home offi ce;            tax.utah.gov.
   d. a warehouse;
   e.  a meeting place for directors, offi cers, or employees;
   f.  stock of goods other than samples for sales person-
   nel or that are used entirely ancillary to solicitation;
   g.  a telephone answering service that is publicly attrib-
   uted to the company or to employees or agents of the 
   company in their representative status;                         This publication is provided for general guidance 
                                                                   only. It does not contain all sales or use tax laws 
   h.  mobile stores, such as vehicles driven by employees 
                                                                   or rules. If you need additional information, call 
   who make sales from the vehicles;
                                                                   801-297-2200 or 1-800-662-4335.
   i.  real property or fi xtures to real property of any kind.
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