59-12-106.  Definitions — Sales and use tax license requirements — Penalty — Application process and requirements — No fee — Bonds — Presumption of taxability — Exemption certificates — Exemption certificate license number to accompany contract bids.

(1)  As used in this section:

Terms Used In Utah Code 59-12-106

  • Agreement: means the Streamlined Sales and Use Tax Agreement adopted on November 12, 2002, including amendments made to the Streamlined Sales and Use Tax Agreement after November 12, 2002. See Utah Code 59-12-102
  • Certified service provider: means an agent certified:
(a) by the governing board of the agreement; and
(b) to perform a seller's sales and use tax functions for an agreement sales and use tax, as outlined in the contract between the governing board of the agreement and the certified service provider, other than the seller's obligation under Section 59-12-124 to remit a tax on the seller's own purchases. See Utah Code 59-12-102
  • Contract: A legal written agreement that becomes binding when signed.
  • Employee: means the same as that term is defined in Section 59-10-401. See Utah Code 59-12-102
  • Fiduciary: A trustee, executor, or administrator.
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Person: includes any individual, firm, partnership, joint venture, association, corporation, estate, trust, business trust, receiver, syndicate, this state, any county, city, municipality, district, or other local governmental entity of the state, or any group or combination acting as a unit. See Utah Code 59-12-102
  • Process: means a writ or summons issued in the course of a judicial proceeding. See Utah Code 68-3-12.5
  • Property: includes both real and personal property. See Utah Code 68-3-12.5
  • Purchaser: means a person to whom:
    (a) a sale of tangible personal property is made;
    (b) a product is transferred electronically; or
    (c) a service is furnished. See Utah Code 59-12-102
  • Sale: includes :
    (i) installment and credit sales;
    (ii) any closed transaction constituting a sale;
    (iii) any sale of electrical energy, gas, services, or entertainment taxable under this chapter;
    (iv) any transaction if the possession of property is transferred but the seller retains the title as security for the payment of the price; and
    (v) any transaction under which right to possession, operation, or use of any article of tangible personal property is granted under a lease or contract and the transfer of possession would be taxable if an outright sale were made. See Utah Code 59-12-102
  • Seller: includes a marketplace facilitator. See Utah Code 59-12-102
  • State: means the state of Utah, its departments, and agencies. See Utah Code 59-12-102
  • Statute: A law passed by a legislature.
  • Storage: means any keeping or retention of tangible personal property or any other taxable transaction under Subsection 59-12-103(1), in this state for any purpose except sale in the regular course of business. See Utah Code 59-12-102
  • Tangible personal property: includes :
    (i) electricity;
    (ii) water;
    (iii) gas;
    (iv) steam; or
    (v) prewritten computer software, regardless of the manner in which the prewritten computer software is transferred. See Utah Code 59-12-102
  • Trustee: A person or institution holding and administering property in trust.
  • Use: means the exercise of any right or power over tangible personal property, a product transferred electronically, or a service under Subsection 59-12-103(1), incident to the ownership or the leasing of that tangible personal property, product transferred electronically, or service. See Utah Code 59-12-102
    • (a)  “Applicant” means a person that:

    (i)  is required by this section to obtain a license; and

    (ii)  submits an application:

    (A)  to the commission; and

    (B)  for a license under this section.

    (b)  “Application” means an application for a license under this section.

    (c)  “Fiduciary of the applicant” means a person that:

    (i)  is required to collect, truthfully account for, and pay over a tax under this chapter for an applicant; and

    (ii) 

    (A)  is a corporate officer of the applicant described in Subsection (1)(c)(i);

    (B)  is a director of the applicant described in Subsection (1)(c)(i);

    (C)  is an employee of the applicant described in Subsection (1)(c)(i);

    (D)  is a partner of the applicant described in Subsection (1)(c)(i);

    (E)  is a trustee of the applicant described in Subsection (1)(c)(i); or

    (F)  has a relationship to the applicant described in Subsection (1)(c)(i) that is similar to a relationship described in Subsections (1)(c)(ii)(A) through (E) as determined by the commission by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.

    (d)  “Fiduciary of the licensee” means a person that:

    (i)  is required to collect, truthfully account for, and pay over a tax under this chapter for a licensee; and

    (ii) 

    (A)  is a corporate officer of the licensee described in Subsection (1)(d)(i);

    (B)  is a director of the licensee described in Subsection (1)(d)(i);

    (C)  is an employee of the licensee described in Subsection (1)(d)(i);

    (D)  is a partner of the licensee described in Subsection (1)(d)(i);

    (E)  is a trustee of the licensee described in Subsection (1)(d)(i); or

    (F)  has a relationship to the licensee described in Subsection (1)(d)(i) that is similar to a relationship described in Subsections (1)(d)(ii)(A) through (E) as determined by the commission by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.

    (e)  “License” means a license under this section.

    (f)  “Licensee” means a person that is licensed under this section by the commission.

    (g)  “Special event” means an event that lasts six months or less where taxable sales occur.

    • (2) 

    (a)  It is unlawful for any person required to collect a tax under this chapter to engage in business within the state without first having obtained a license to do so.

    (b)  The license described in Subsection (2)(a):

    (i)  shall be granted and issued by the commission;

    (ii)  is not assignable;

    (iii)  is valid only for the person in whose name the license is issued;

    (iv)  is valid until:

    (A)  the person described in Subsection (2)(b)(iii):

    (I)  ceases to do business; or

    (II)  changes that person’s business address; or

    (B)  the license is revoked by the commission; and

    (v)  subject to Subsection (2)(d), shall be granted by the commission only upon an application that:

    (A)  states the name and address of the applicant; and

    (B)  provides other information the commission may require.

    (c)  At the time an applicant makes an application under Subsection (2)(b)(v), the commission shall notify the applicant of the responsibilities and liability of a business owner successor under Section 59-12-112.

    (d)  The commission shall review an application and determine whether the applicant:

    (i)  meets the requirements of this section to be issued a license; and

    (ii)  is required to post a bond with the commission in accordance with Subsections (2)(e) and (f) before the applicant may be issued a license.

    (e) 

    (i)  Except as provided in Subsection (2)(e)(iii), an applicant shall post a bond with the commission before the commission may issue the applicant a license if:

    (A)  a license under this section was revoked for a delinquency under this chapter for:

    (I)  the applicant;

    (II)  a fiduciary of the applicant; or

    (III)  a person for which the applicant or the fiduciary of the applicant is required to collect, truthfully account for, and pay over a tax under this chapter; or

    (B)  there is a delinquency in paying a tax under this chapter for:

    (I)  the applicant;

    (II)  a fiduciary of the applicant; or

    (III)  a person for which the applicant or the fiduciary of the applicant is required to collect, truthfully account for, and pay over a tax under this chapter.

    (ii)  If the commission determines it is necessary to ensure compliance with this chapter, the commission may require a licensee to:

    (A)  for a licensee that has not posted a bond under this section with the commission, post a bond with the commission in accordance with Subsection (2)(f); or

    (B)  for a licensee that has posted a bond under this section with the commission, increase the amount of the bond posted with the commission.

    (iii)  The commission may waive the bond requirement described in Subsection (2)(e)(i), if the applicant is in compliance with a payment agreement that:

    (A)  relates to the delinquency; and

    (B)  is approved by the commission.

    (f) 

    (i)  A bond required by Subsection (2)(e) shall be:

    (A)  executed by:

    (I)  for an applicant, the applicant as principal, with a corporate surety; or

    (II)  for a licensee, the licensee as principal, with a corporate surety; and

    (B)  payable to the commission conditioned upon the faithful performance of all of the requirements of this chapter including:

    (I)  the payment of any tax under this chapter;

    (II)  the payment of any:

    (Aa)  penalty as provided in Section 59-1-401; or

    (Bb)  interest as provided in Section 59-1-402; or

    (III)  any other obligation of the:

    (Aa)  applicant under this chapter; or

    (Bb)  licensee under this chapter.

    (ii)  Except as provided in Subsection (2)(f)(iv), the commission shall calculate the amount of a bond required by Subsection (2)(e) on the basis of:

    (A)  commission estimates of:

    (I)  an applicant’s tax liability under this chapter; or

    (II)  a licensee’s tax liability under this chapter; and

    (B)  any amount of a delinquency described in Subsection (2)(f)(iii).

    (iii)  Except as provided in Subsection (2)(f)(iv), for purposes of Subsection (2)(f)(ii)(B):

    (A)  for an applicant, the amount of the delinquency is the sum of:

    (I)  the amount of any delinquency that served as a basis for revoking the license under this section of:

    (Aa)  the applicant;

    (Bb)  a fiduciary of the applicant; or

    (Cc)  a person for which the applicant or the fiduciary of the applicant is required to collect, truthfully account for, and pay over a tax under this chapter; or

    (II)  the amount of tax that any of the following owe under this chapter:

    (Aa)  the applicant;

    (Bb)  a fiduciary of the applicant; and

    (Cc)  a person for which the applicant or the fiduciary of the applicant is required to collect, truthfully account for, and pay over a tax under this chapter; or

    (B)  for a licensee, the amount of the delinquency is the sum of:

    (I)  the amount of any delinquency that served as a basis for revoking the license under this section of:

    (Aa)  the licensee;

    (Bb)  a fiduciary of the licensee; or

    (Cc)  a person for which the licensee or the fiduciary of the licensee is required to collect, truthfully account for, and pay over a tax under this chapter; or

    (II)  the amount of tax that any of the following owe under this chapter:

    (Aa)  the licensee;

    (Bb)  a fiduciary of the licensee; and

    (Cc)  a person for which the licensee or the fiduciary of the licensee is required to collect, truthfully account for, and pay over a tax under this chapter.

    (iv)  Notwithstanding Subsection (2)(f)(ii) or (2)(f)(iii), a bond required by Subsection (2)(e) may not:

    (A)  be less than $25,000; or

    (B)  exceed $500,000.

    (g)  Subject to Subsection (2)(h), if business is transacted at two or more separate places by one person, a separate license for each place of business is required.

    (h)  A license is not required for any person:

    (i)  engaged exclusively in the business of selling commodities that are exempt from taxation under this chapter; or

    (ii)  exempt from collecting sales and use tax under Section 59-12-104 and the place of business is a special event.

    (i)  If a person is not required to obtain a license under Subsection (2)(h), a political subdivision, as defined in Subsection 63A-15-102(5), may not require the person to obtain a license as a prerequisite to obtaining a business license or any other right to conduct business.

    (j) 

    (i)  The commission shall, on a reasonable notice and after a hearing, revoke the license of any licensee violating any provisions of this chapter.

    (ii)  A license may not be issued to a licensee described in Subsection (2)(j)(i) until the licensee has complied with the requirements of this chapter, including:

    (A)  paying any:

    (I)  tax due under this chapter;

    (II)  penalty as provided in Section 59-1-401; or

    (III)  interest as provided in Section 59-1-402; and

    (B)  posting a bond in accordance with Subsections (2)(e) and (f).

    (k)  Any person required to collect a tax under this chapter within this state without having secured a license to do so is guilty of a criminal violation as provided in Section 59-1-401.

    (l)  A license shall be issued to the person by the commission without a license fee.

    (m) 

    (i)  The commission shall include on an application for a temporary sales tax license and special event sales tax return the following statement:
         “You are not required to complete or return this form or to collect sales and use tax if you are not regularly engaged in the business of selling the items you are offering at this event or all of the items that you are selling at this event are exempt from sales and use tax under Section 59-12-104.”

    (ii)  The notice described in Subsection (2)(m)(i) shall be in bold font no smaller than the font of the main content and shall appear at the top of the application form.

    (3) 

    (a)  For the purpose of the proper administration of this chapter and to prevent evasion of the tax and the duty to collect the tax, it shall be presumed that tangible personal property or any other taxable transaction under Subsection 59-12-103(1) sold by any person for delivery in this state is sold for storage, use, or other consumption in this state unless the person selling the property, item, or service has taken from the purchaser an exemption certificate:

    (i)  bearing the name and address of the purchaser; and

    (ii)  providing that the property, item, or service was exempted under Section 59-12-104.

    (b)  An exemption certificate described in Subsection (3)(a):

    (i)  shall contain information as prescribed by the commission; and

    (ii)  if a paper exemption certificate is used, shall be signed by the purchaser.

    (c) 

    (i)  Subject to Subsection (3)(c)(ii), a seller or certified service provider is not liable to collect a tax under this chapter if the seller or certified service provider obtains within 90 days after a transaction is complete:

    (A)  an exemption certificate containing the information required by Subsections (3)(a) and (b); or

    (B)  the information required by Subsections (3)(a) and (b).

    (ii)  A seller or certified service provider that does not obtain the exemption certificate or information described in Subsection (3)(c)(i) with respect to a transaction is allowed 120 days after the commission requests the seller or certified service provider to substantiate the exemption to:

    (A)  establish that the transaction is not subject to taxation under this chapter by a means other than providing an exemption certificate containing the information required by Subsections (3)(a) and (b); or

    (B)  subject to Subsection (3)(c)(iii), obtain an exemption certificate containing the information required by Subsections (3)(a) and (b), taken in good faith.

    (iii)  For purposes of Subsection (3)(c)(ii)(B), an exemption certificate is taken in good faith if the exemption certificate claims an exemption that:

    (A)  was allowed by statute on the date of the transaction in the jurisdiction of the location of the transaction;

    (B)  could be applicable to that transaction; and

    (C)  is reasonable for the purchaser’s type of business.

    (d)  Except as provided in Subsection (3)(e), a seller or certified service provider that takes an exemption certificate from a purchaser in accordance with this Subsection (3) with respect to a transaction is not liable to collect a tax under this chapter on that transaction.

    (e)  Subsection (3)(d) does not apply to a seller or certified service provider if the commission establishes through an audit that the seller or certified service provider:

    (i)  knew or had reason to know at the time the purchaser provided the seller or certified service provider the information described in Subsection (3)(a) or (b) that the information related to the exemption claimed was materially false; or

    (ii)  otherwise knowingly participated in activity intended to purposefully evade the tax due on the transaction.

    (f) 

    (i)  Subject to Subsection (3)(f)(ii) and except as provided in Subsections (3)(f)(iii) and (iv), if there is a recurring business relationship between a seller or certified service provider and a purchaser, the commission may not require the seller or certified service provider to:

    (A)  renew an exemption certificate;

    (B)  update an exemption certificate; or

    (C)  update a data element of an exemption certificate.

    (ii)  For purposes of Subsection (3)(f)(i), a recurring business relationship exists if no more than a 12-month period elapses between transactions between a seller or certified service provider and a purchaser.

    (iii)  Notwithstanding any other provision of this Subsection, the commission shall require a seller to renew an exemption certificate if more than 12-months have elapsed between transactions between a seller or certified service provider and a purchaser.

    (iv)  If there is a recurring business relationship between a seller or certified service provider and a purchaser, the commission shall require an exemption certificate the seller or certified service provider takes from the purchaser to meet the requirements of Subsections (3)(a) and (b).

    (4)  A person filing a contract bid with the state or a political subdivision of the state for the sale of tangible personal property or any other taxable transaction under Subsection 59-12-103(1) shall include with the bid the number of the license issued to that person under Subsection (2).

    Amended by Chapter 83, 2023 General Session
    Amended by Chapter 355, 2023 General Session

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