Bill Summary – FastDemocracy

LEGISLATIVE GENERAL COUNSEL                                                  H.B. 17
Approved for Filing: A.V. Arthur 6
          6 12-19-23 4:46 PM 6
                               SALES AND USE TAX REVISIONS
                                       2024 GENERAL SESSION
                                            STATE OF UTAH
                                   Chief Sponsor: Steve Eliason
                                 Senate Sponsor: Wayne A. Harper
 6
 LONG TITLE
 Committee Note:
        The Revenue and Taxation Interim Committee recommended this bill.
            Legislative Vote: 12 voting for 0 voting against            6 absent
 General Description:
        This bill amends the requirements governing when a seller has to pay or collect and
 remit sales and use tax.
 Highlighted Provisions:
        This bill:
        < repeals the requirement that a seller has to pay or collect and remit the sales and use
 tax if the seller sells tangible personal property, products transferred electronically,
 or services for storage, use, or consumption in the state in more than a certain
 number of separate transactions; and
        < makes technical and conforming changes.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        This bill provides a special effective date.
 Utah Code Sections Affected:
                                                                                                        H.B. 17
 AMENDS:
        59-12-107, as last amended by Laws of Utah 2022, Chapter 273
     *HB0017*
       H.B. 17                                                                     12-19-23 4:46 PM
         59-12-107.6, as last amended by Laws of Utah 2023, Chapter 361
29
 Be it enacted by the Legislature of the state of Utah:
         Section 1. Section 59-12-107 is amended to read:
         59-12-107. Definitions -- Collection, remittance, and payment of tax by sellers or
 other persons -- Returns -- Reports -- Direct payment by purchaser of vehicle -- Other
 liability for collection -- Rulemaking authority -- Credits -- Treatment of bad debt --
 Penalties and interest.
         (1) As used in this section:
         (a) "Ownership" means direct ownership or indirect ownership through a parent,
 subsidiary, or affiliate.
         (b) "Related seller" means a seller that:
         (i) meets one or more of the criteria described in Subsection (2)(a)(i); and
         (ii) delivers tangible personal property, a service, or a product transferred electronically
 that is sold:
         (A) by a seller that does not meet one or more of the criteria described in Subsection
 (2)(a)(i); and
         (B) to a purchaser in the state.
         (c) "Substantial ownership interest" means an ownership interest in a business entity if
 that ownership interest is greater than the degree of ownership of equity interest specified in 15
 U.S.C. Sec. 78p, with respect to a person other than a director or an officer.
         (2) (a) Except as provided in Subsection (2)(f), Section 59-12-107.1, or Section
 59-12-123, and subject to Subsection (2)(g), each seller shall pay or collect and remit the sales
 and use taxes imposed by this chapter if within this state the seller:
         (i) has or utilizes:
         (A) an office;
         (B) a distribution house;
         (C) a sales house;
         (D) a warehouse;
         (E) a service enterprise; or
         (F) a place of business similar to Subsections (2)(a)(i)(A) through (E);
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         (ii) maintains a stock of goods;
         (iii) regularly solicits orders, regardless of whether or not the orders are accepted in the
 state, unless the seller's only activity in the state is:
         (A) advertising; or
         (B) solicitation by:
         (I) direct mail;
         (II) electronic mail;
         (III) the Internet;
         (IV) telecommunications service; or
         (V) a means similar to Subsection (2)(a)(iii)(A) or (B);
         (iv) regularly engages in the delivery of property in the state other than by:
         (A) common carrier; or
         (B) United States mail; or
         (v) regularly engages in an activity directly related to the leasing or servicing of
 property located within the state.
         (b) A seller is considered to be engaged in the business of selling tangible personal
 property, a product transferred electronically, or a service for use in the state, and shall pay or
 collect and remit the sales and use taxes imposed by this chapter if:
         (i) the seller holds a substantial ownership interest in, or is owned in whole or in
 substantial part by, a related seller; and
         (ii) (A) the seller sells the same or a substantially similar line of products as the related
 seller and does so under the same or a substantially similar business name; or
         (B) the place of business described in Subsection (2)(a)(i) of the related seller or an in
 state employee of the related seller is used to advertise, promote, or facilitate sales by the seller
 to a purchaser.
         (c) Subject to Section 59-12-107.6, each seller that does not meet one or more of the
 criteria provided for in Subsection (2)(a) or is not a seller required to pay or collect and remit
 the sales and use taxes imposed by this chapter under Subsection (2)(b) shall pay or collect and
 remit the sales and use tax imposed by this chapter if the seller:
         (i) sells tangible personal property, products transferred electronically, or services for
 storage, use, or consumption in the state; and
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        (ii) in either the previous calendar year or the current calendar year[: (A)], receives
 gross revenue from the sale of tangible personal property, products transferred electronically, or
 services for storage, use, or consumption in the state of more than $100,000[; or].
        [(B) sells tangible personal property, products transferred electronically, or services for
 storage, use, or consumption in the state in 200 or more separate transactions.]
        (d) A seller that does not meet one or more of the criteria provided for in Subsection
 (2)(a) or is not a seller required to pay or collect and remit sales and use taxes under Subsection
 (2)(b), Subsection (2)(c), or Section 59-12-107.6 may voluntarily:
        (i) collect a tax on a transaction described in Subsection 59-12-103(1); and
        (ii) remit the tax to the commission as provided in this part.
        (e) The collection and remittance of a tax under this chapter by a seller that is
 registered under the agreement may not be used as a factor in determining whether that seller is
 required by this Subsection (2) to:
        (i) pay a tax, fee, or charge under:
        (A) Title 10, Chapter 1, Part 3, Municipal Energy Sales and Use Tax Act;
        (B) Title 10, Chapter 1, Part 4, Municipal Telecommunications License Tax Act;
        (C) Section 19-6-714;
        (D) Section 19-6-805;
        (E) Title 69, Chapter 2, Part 4, Prepaid Wireless Telecommunications Service Charges;
 or
        (F) this title; or
        (ii) collect and remit a tax, fee, or charge under:
        (A) Title 10, Chapter 1, Part 3, Municipal Energy Sales and Use Tax Act;
        (B) Title 10, Chapter 1, Part 4, Municipal Telecommunications License Tax Act;
        (C) Section 19-6-714;
        (D) Section 19-6-805;
        (E) Title 69, Chapter 2, Part 4, Prepaid Wireless Telecommunications Service Charges;
 or
        (F) this title.
        (f) A person shall pay a use tax imposed by this chapter on a transaction described in
 Subsection 59-12-103(1) if:
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          (i) the seller did not collect a tax imposed by this chapter on the transaction; and
          (ii) the person:
          (A) stores the tangible personal property or product transferred electronically in the
 state;
          (B) uses the tangible personal property or product transferred electronically in the state;
 or
          (C) consumes the tangible personal property or product transferred electronically in the
 state.
          (g) The ownership of property that is located at the premises of a printer's facility with
 which the retailer has contracted for printing and that consists of the final printed product,
 property that becomes a part of the final printed product, or copy from which the printed
 product is produced, shall not result in the retailer being considered to have or maintain an
 office, distribution house, sales house, warehouse, service enterprise, or other place of
 business, or to maintain a stock of goods, within this state.
          (3) (a) Except as provided in Section 59-12-107.1, a seller shall collect a tax under this
 chapter from a purchaser.
          (b) A seller may not collect as tax an amount, without regard to fractional parts of one
 cent, in excess of the tax computed at the rates prescribed by this chapter.
          (c) (i) Each seller shall:
          (A) give the purchaser a receipt for the tax collected; or
          (B) bill the tax as a separate item and declare the name of this state and the seller's
 sales and use tax license number on the invoice for the sale.
          (ii) The receipt or invoice is prima facie evidence that the seller has collected the tax
 and relieves the purchaser of the liability for reporting the tax to the commission as a
 consumer.
          (d) A seller is not required to maintain a separate account for the tax collected, but is
 considered to be a person charged with receipt, safekeeping, and transfer of public money.
          (e) Taxes collected by a seller pursuant to this chapter shall be held in trust for the
 benefit of the state and for payment to the commission in the manner and at the time provided
 for in this chapter.
          (f) If any seller, during any reporting period, collects as a tax an amount in excess of
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        H.B. 17                                                                       12-19-23 4:46 PM
 the lawful state and local percentage of total taxable sales allowed under this chapter, the seller
 shall remit to the commission the full amount of the tax imposed under this chapter, plus any
 excess.
           (g) If the accounting methods regularly employed by the seller in the transaction of the
 seller's business are such that reports of sales made during a calendar month or quarterly period
 will impose unnecessary hardships, the commission may accept reports at intervals that, in the
 commission's opinion, will better suit the convenience of the taxpayer or seller and will not
 jeopardize collection of the tax.
           (h) (i) For a purchase paid with specie legal tender as defined in Section 59-1-1501.1,
 and until such time as the commission accepts specie legal tender for the payment of a tax
 under this chapter, if the commission requires a seller to remit a tax under this chapter in legal
 tender other than specie legal tender, the seller shall state on the seller's books and records and
 on an invoice, bill of sale, or similar document provided to the purchaser:
           (A) the purchase price in specie legal tender and in the legal tender the seller is
 required to remit to the commission;
           (B) subject to Subsection (3)(h)(ii), the amount of tax due under this chapter in specie
 legal tender and in the legal tender the seller is required to remit to the commission;
           (C) the tax rate under this chapter applicable to the purchase; and
           (D) the date of the purchase.
           (ii) (A) Subject to Subsection (3)(h)(ii)(B), for purposes of determining the amount of
 tax due under Subsection (3)(h)(i), a seller shall use the most recent London fixing price for the
 specie legal tender the purchaser paid.
           (B) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
 commission may make rules for determining the amount of tax due under Subsection (3)(h)(i)
 if the London fixing price is not available for a particular day.
           (4) (a) Except as provided in Subsections (5) through (7) and Section 59-12-108, the
 sales or use tax imposed by this chapter is due and payable to the commission quarterly on or
 before the last day of the month next succeeding each quarterly calendar period.
           (b) (i) Each seller shall, on or before the last day of the month next succeeding each
 quarterly calendar period, file with the commission a return for the preceding quarterly period.
           (ii) The seller shall remit with the return under Subsection (4)(b)(i) the amount of the
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        12-19-23 4:46 PM                                                                          H.B. 17
 tax required under this chapter to be collected or paid for the period covered by the return.
        (c) Except as provided in Subsection (5)(c), a return shall contain information and be in
 a form the commission prescribes by rule.
        (d) (i) Subject to Subsection (4)(d)(ii), the sales tax as computed in the return shall be
 based on the total nonexempt sales made during the period for which the return is filed,
 including both cash and charge sales.
        (ii) For a sale that includes the delivery or installation of tangible personal property at a
 location other than a seller's place of business described in Subsection (2)(a)(i), if the delivery
 or installation is separately stated on an invoice or receipt, a seller may compute the tax due on
 the sale for purposes of Subsection (4)(d)(i) based on the amount the seller receives for that
 sale during each period for which the seller receives payment for the sale.
        (e) (i) The use tax as computed in the return shall be based on the total amount of
 purchases for storage, use, or other consumption in this state made during the period for which
 the return is filed, including both cash and charge purchases.
        (ii) (A) As used in this Subsection (4)(e)(ii), "qualifying purchaser" means a purchaser
 that is required to remit taxes under this chapter, but is not required to remit taxes monthly in
 accordance with Section 59-12-108, and that converts tangible personal property into real
 property.
        (B) Subject to Subsections (4)(e)(ii)(C) and (D), a qualifying purchaser may remit the
 taxes due under this chapter on tangible personal property for which the qualifying purchaser
 claims an exemption as allowed under Subsection 59-12-104(23) or (25) based on the period in
 which the qualifying purchaser receives payment, in accordance with Subsection (4)(e)(ii)(C),
 for the conversion of the tangible personal property into real property.
        (C) A qualifying purchaser remitting taxes due under this chapter in accordance with
 Subsection (4)(e)(ii)(B) shall remit an amount equal to the total amount of tax due on the
 qualifying purchaser's purchase of the tangible personal property that was converted into real
 property multiplied by a fraction, the numerator of which is the payment received in the period
 for the qualifying purchaser's sale of the tangible personal property that was converted into real
 property and the denominator of which is the entire sales price for the qualifying purchaser's
 sale of the tangible personal property that was converted into real property.
        (D) A qualifying purchaser may remit taxes due under this chapter in accordance with
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        H.B. 17                                                                     12-19-23 4:46 PM
 this Subsection (4)(e)(ii) only if the books and records that the qualifying purchaser keeps in
 the qualifying purchaser's regular course of business identify by reasonable and verifiable
 standards that the tangible personal property was converted into real property.
         (f) (i) Subject to Subsection (4)(f)(ii) and in accordance with Title 63G, Chapter 3,
 Utah Administrative Rulemaking Act, the commission may by rule extend the time for making
 returns and paying the taxes.
         (ii) An extension under Subsection (4)(f)(i) may not be for more than 90 days.
         (g) The commission may require returns and payment of the tax to be made for other
 than quarterly periods if the commission considers it necessary in order to ensure the payment
 of the tax imposed by this chapter.
         (h) (i) The commission may require a seller that files a simplified electronic return with
 the commission to file an additional electronic report with the commission.
         (ii) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
 commission may make rules providing:
         (A) the information required to be included in the additional electronic report described
 in Subsection (4)(h)(i); and
         (B) one or more due dates for filing the additional electronic report descr