Marketplaces to be responsible for Utah sales tax, October 2019

Utah is one of more than 30 states that already or soon will require marketplaces to collect and remit tax on behalf of third-party sellers, as well as on their own sales into the state.

Effective October 1, 2019, Senate Bill 168 imposes a sales tax collection obligation on remote marketplaces that have more than $100,000 in gross revenue in the state or make at least 200 separate transactions in the state. When calculating the threshold, a marketplace should include all sales made through the platform, its own and third-party sales.

The measure states that a marketplace facilitator isn’t liable for the amount it fails to collect due to an error that’s equal to the error rate. The error rate is calculated by taking the total sales and use taxes due on sales sourced to Utah and made through the marketplace, excluding sales made directly by the marketplace or its affiliates that year.

The error rate isn’t to exceed 7 percent during the 2019 and 2020 calendar years, 5 percent during the 2021 calendar year, or 3 percent during the 2022 calendar year.

Economic nexus rules continue to apply to remote marketplace sellers that sell into Utah through multiple channels, including their own ecommerce site or a non-collecting marketplace.

Thus, a marketplace seller is responsible for collecting and remitting Utah sales and use tax if in the previous or current calendar year its sales into the state (other than through a marketplace facilitator) exceed $100,000 or occur in 200 or more separate transactions. For additional details, see the text of SB 168.

To learn about sales tax collection requirements for marketplace facilitators in other states, check out our state-by-state guide to marketplace facilitator laws.