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7 LONG TITLE
8 General Description:
9 This bill modifies provisions of the sale and use tax license requirements.
10 Highlighted Provisions:
11 This bill:
12 ▸ clarifies that the commission requires a seller to renew an exemption certificate
13 when more than 12-months elapse between transactions between a seller or certified
14 provider and a purchaser.
15 Money Appropriated in this Bill:
16 None
17 Other Special Clauses:
18 This bill provides retrospective operation.
19 Utah Code Sections Affected:
20 AMENDS:
21 59-12-106, as last amended by Laws of Utah 2021, Chapter 16
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23 Be it enacted by the Legislature of the state of Utah:
24 Section 1. Section 59-12-106 is amended to read:
25 59-12-106. Definitions -- Sales and use tax license requirements -- Penalty --
26 Application process and requirements -- No fee -- Bonds -- Presumption of taxability --
27 Exemption certificates -- Exemption certificate license number to accompany contract
28 bids.
29 (1) As used in this section:
30 (a) "Applicant" means a person that:
31 (i) is required by this section to obtain a license; and
32 (ii) submits an application:
33 (A) to the commission; and
34 (B) for a license under this section.
35 (b) "Application" means an application for a license under this section.
36 (c) "Fiduciary of the applicant" means a person that:
37 (i) is required to collect, truthfully account for, and pay over a tax under this chapter
38 for an applicant; and
39 (ii) (A) is a corporate officer of the applicant described in Subsection (1)(c)(i);
40 (B) is a director of the applicant described in Subsection (1)(c)(i);
41 (C) is an employee of the applicant described in Subsection (1)(c)(i);
42 (D) is a partner of the applicant described in Subsection (1)(c)(i);
43 (E) is a trustee of the applicant described in Subsection (1)(c)(i); or
44 (F) has a relationship to the applicant described in Subsection (1)(c)(i) that is similar to
45 a relationship described in Subsections (1)(c)(ii)(A) through (E) as determined by the
46 commission by rule made in accordance with Title 63G, Chapter 3, Utah Administrative
47 Rulemaking Act.
48 (d) "Fiduciary of the licensee" means a person that:
49 (i) is required to collect, truthfully account for, and pay over a tax under this chapter
50 for a licensee; and
51 (ii) (A) is a corporate officer of the licensee described in Subsection (1)(d)(i);
52 (B) is a director of the licensee described in Subsection (1)(d)(i);
53 (C) is an employee of the licensee described in Subsection (1)(d)(i);
54 (D) is a partner of the licensee described in Subsection (1)(d)(i);
55 (E) is a trustee of the licensee described in Subsection (1)(d)(i); or
56 (F) has a relationship to the licensee described in Subsection (1)(d)(i) that is similar to
57 a relationship described in Subsections (1)(d)(ii)(A) through (E) as determined by the
58 commission by rule made in accordance with Title 63G, Chapter 3, Utah Administrative
59 Rulemaking Act.
60 (e) "License" means a license under this section.
61 (f) "Licensee" means a person that is licensed under this section by the commission.
62 (g) "Special event" means an event that lasts six months or less where taxable sales
63 occur.
64 (2) (a) It is unlawful for any person required to collect a tax under this chapter to
65 engage in business within the state without first having obtained a license to do so.
66 (b) The license described in Subsection (2)(a):
67 (i) shall be granted and issued by the commission;
68 (ii) is not assignable;
69 (iii) is valid only for the person in whose name the license is issued;
70 (iv) is valid until:
71 (A) the person described in Subsection (2)(b)(iii):
72 (I) ceases to do business; or
73 (II) changes that person's business address; or
74 (B) the license is revoked by the commission; and
75 (v) subject to Subsection (2)(d), shall be granted by the commission only upon an
76 application that:
77 (A) states the name and address of the applicant; and
78 (B) provides other information the commission may require.
79 (c) At the time an applicant makes an application under Subsection (2)(b)(v), the
80 commission shall notify the applicant of the responsibilities and liability of a business owner
81 successor under Section 59-12-112.
82 (d) The commission shall review an application and determine whether the applicant:
83 (i) meets the requirements of this section to be issued a license; and
84 (ii) is required to post a bond with the commission in accordance with Subsections
85 (2)(e) and (f) before the applicant may be issued a license.
86 (e) (i) Except as provided in Subsection (2)(e)(iii), an applicant shall post a bond with
87 the commission before the commission may issue the applicant a license if:
88 (A) a license under this section was revoked for a delinquency under this chapter for:
89 (I) the applicant;
90 (II) a fiduciary of the applicant; or
91 (III) a person for which the applicant or the fiduciary of the applicant is required to
92 collect, truthfully account for, and pay over a tax under this chapter; or
93 (B) there is a delinquency in paying a tax under this chapter for:
94 (I) the applicant;
95 (II) a fiduciary of the applicant; or
96 (III) a person for which the applicant or the fiduciary of the applicant is required to
97 collect, truthfully account for, and pay over a tax under this chapter.
98 (ii) If the commission determines it is necessary to ensure compliance with this
99 chapter, the commission may require a licensee to:
100 (A) for a licensee that has not posted a bond under this section with the commission,
101 post a bond with the commission in accordance with Subsection (2)(f); or
102 (B) for a licensee that has posted a bond under this section with the commission,
103 increase the amount of the bond posted with the commission.
104 (iii) The commission may waive the bond requirement described in Subsection
105 (2)(e)(i), if the applicant is in compliance with a payment agreement that:
106 (A) relates to the delinquency; and
107 (B) is approved by the commission.
108 (f) (i) A bond required by Subsection (2)(e) shall be:
109 (A) executed by:
110 (I) for an applicant, the applicant as principal, with a corporate surety; or
111 (II) for a licensee, the licensee as principal, with a corporate surety; and
112 (B) payable to the commission conditioned upon the faithful performance of all of the
113 requirements of this chapter including:
114 (I) the payment of any tax under this chapter;
115 (II) the payment of any:
116 (Aa) penalty as provided in Section 59-1-401; or
117 (Bb) interest as provided in Section 59-1-402; or
118 (III) any other obligation of the:
119 (Aa) applicant under this chapter; or
120 (Bb) licensee under this chapter.
121 (ii) Except as provided in Subsection (2)(f)(iv), the commission shall calculate the
122 amount of a bond required by Subsection (2)(e) on the basis of:
123 (A) commission estimates of:
124 (I) an applicant's tax liability under this chapter; or
125 (II) a licensee's tax liability under this chapter; and
126 (B) any amount of a delinquency described in Subsection (2)(f)(iii).
127 (iii) Except as provided in Subsection (2)(f)(iv), for purposes of Subsection
128 (2)(f)(ii)(B):
129 (A) for an applicant, the amount of the delinquency is the sum of:
130 (I) the amount of any delinquency that served as a basis for revoking the license under
131 this section of:
132 (Aa) the applicant;
133 (Bb) a fiduciary of the applicant; or
134 (Cc) a person for which the applicant or the fiduciary of the applicant is required to
135 collect, truthfully account for, and pay over a tax under this chapter; or
136 (II) the amount of tax that any of the following owe under this chapter:
137 (Aa) the applicant;
138 (Bb) a fiduciary of the applicant; and
139 (Cc) a person for which the applicant or the fiduciary of the applicant is required to
140 collect, truthfully account for, and pay over a tax under this chapter; or
141 (B) for a licensee, the amount of the delinquency is the sum of:
142 (I) the amount of any delinquency that served as a basis for revoking the license under
143 this section of:
144 (Aa) the licensee;
145 (Bb) a fiduciary of the licensee; or
146 (Cc) a person for which the licensee or the fiduciary of the licensee is required to
147 collect, truthfully account for, and pay over a tax under this chapter; or
148 (II) the amount of tax that any of the following owe under this chapter:
149 (Aa) the licensee;
150 (Bb) a fiduciary of the licensee; and
151 (Cc) a person for which the licensee or the fiduciary of the licensee is required to
152 collect, truthfully account for, and pay over a tax under this chapter.
153 (iv) Notwithstanding Subsection (2)(f)(ii) or (2)(f)(iii), a bond required by Subsection
154 (2)(e) may not:
155 (A) be less than $25,000; or
156 (B) exceed $500,000.
157 (g) Subject to Subsection (2)(h), if business is transacted at two or more separate places
158 by one person, a separate license for each place of business is required.
159 (h) A license is not required for any person that is:
160 (i) engaged exclusively in the business of selling commodities that are exempt from
161 taxation under this chapter; or
162 (ii) exempt from collecting sales and use tax under Section 59-12-104 and the place of
163 business is a special event.
164 (i) (i) The commission shall, on a reasonable notice and after a hearing, revoke the
165 license of any licensee violating any provisions of this chapter.
166 (ii) A license may not be issued to a licensee described in Subsection (2)(i)(i) until the
167 licensee has complied with the requirements of this chapter, including:
168 (A) paying any:
169 (I) tax due under this chapter;
170 (II) penalty as provided in Section 59-1-401; or
171 (III) interest as provided in Section 59-1-402; and
172 (B) posting a bond in accordance with Subsections (2)(e) and (f).
173 (j) Any person required to collect a tax under this chapter within this state without
174 having secured a license to do so is guilty of a criminal violation as provided in Section
175 59-1-401.
176 (k) A license shall be issued to the person by the commission without a license fee.
177 (l) (i) The commission shall include on an application for a temporary sales tax license
178 and special event sales tax return the following statement:
179 "You are not required to complete or return this form or to collect sales and use tax if
180 you are not regularly engaged in the business of selling the items you are offering at this event
181 or all of the items that you are selling at this event are exempt from sales and use tax under
182 Section 59-12-104."
183 (ii) The notice described in Subsection (2)(l)(i) shall be in bold font no smaller than the
184 font of the main content and shall appear at the top of the application form.
185 (3) (a) For the purpose of the proper administration of this chapter and to prevent
186 evasion of the tax and the duty to collect the tax, it shall be presumed that tangible personal
187 property or any other taxable transaction under Subsection 59-12-103(1) sold by any person for
188 delivery in this state is sold for storage, use, or other consumption in this state unless the
189 person selling the property, item, or service has taken from the purchaser an exemption
190 certificate:
191 (i) bearing the name and address of the purchaser; and
192 (ii) providing that the property, item, or service was exempted under Section
193 59-12-104.
194 (b) An exemption certificate described in Subsection (3)(a):
195 (i) shall contain information as prescribed by the commission; and
196 (ii) if a paper exemption certificate is used, shall be signed by the purchaser.
197 (c) (i) Subject to Subsection (3)(c)(ii), a seller or certified service provider is not liable
198 to collect a tax under this chapter if the seller or certified service provider obtains within 90
199 days after a transaction is complete:
200 (A) an exemption certificate containing the information required by Subsections (3)(a)
201 and (b); or
202 (B) the information required by Subsections (3)(a) and (b).
203 (ii) A seller or certified service provider that does not obtain the exemption certificate
204 or information described in Subsection (3)(c)(i) with respect to a transaction is allowed 120
205 days after the commission requests the seller or certified service provider to substantiate the
206 exemption to:
207 (A) establish that the transaction is not subject to taxation under this chapter by a
208 means other than providing an exemption certificate containing the information required by
209 Subsections (3)(a) and (b); or
210 (B) subject to Subsection (3)(c)(iii), obtain an exemption certificate containing the
211 information required by Subsections (3)(a) and (b), taken in good faith.
212 (iii) For purposes of Subsection (3)(c)(ii)(B), an exemption certificate is taken in good
213 faith if the exemption certificate claims an exemption that:
214 (A) was allowed by statute on the date of the transaction in the jurisdiction of the
215 location of the transaction;
216 (B) could be applicable to that transaction; and
217 (C) is reasonable for the purchaser's type of business.
218 (d) Except as provided in Subsection (3)(e), a seller or certified service provider that
219 takes an exemption certificate from a purchaser in accordance with this Subsection (3) with
220 respect to a transaction is not liable to collect a tax under this chapter on that transaction.
221 (e) Subsection (3)(d) does not apply to a seller or certified service provider if the
222 commission establishes through an audit that the seller or certified service provider:
223 (i) knew or had reason to know at the time the purchaser provided the seller or certified
224 service provider the information described in Subsection (3)(a) or (b) that the information
225 related to the exemption claimed was materially false; or
226 (ii) otherwise knowingly participated in activity intended to purposefully evade the tax
227 due on the transaction.
228 (f) (i) Subject to Subsection (3)(f)(ii) and except as provided in Subsections (3)(f)(iii)
229 and (iv), if there is a recurring business relationship between a seller or certified service
230 provider and a purchaser, the commission may not require the seller or certified service
231 provider to:
232 (A) renew an exemption certificate;
233 (B) update an exemption certificate; or
234 (C) update a data element of an exemption certificate.
235 (ii) For purposes of Subsection (3)(f)(i), a recurring business relationship exists if no
236 more than a 12-month period elapses between transactions between a seller or certified service
237 provider and a purchaser.
238 (iii) Notwithstanding any other provision of this Subsection, the commission shall
239 require a seller to renew an exemption certificate if more than 12-months have elapsed between
240 transactions between a seller or certified service provider and a purchaser.
241 [
242 service provider and a purchaser, the commission shall require an exemption certificate the
243 seller or certified service provider takes from the purchaser to meet the requirements of
244 Subsections (3)(a) and (b).
245 (4) A person filing a contract bid with the state or a political subdivision of the state for
246 the sale of tangible personal property or any other taxable transaction under Subsection
247 59-12-103(1) shall include with the bid the number of the license issued to that person under
248 Subsection (2).
249 Section 2. Retrospective operation.
250 This bill provides retrospective operation to January 1, 2023.