UTAH – Like not paying taxes on those online Amazon purchases, Utahns?
Well, wrap it up while you can, because starting Jan. 1 the online sales giant starts collecting state taxes. Besides, we should have been paying it all along anyway, according to the Utah State Tax Commission.
It was announced Wednesday that the state of Utah and Amazon.com reached an agreement in which the website would start applying Utah’s 4.7 percent sales tax to online purchases.
That 4.7 percent is only the baseline, as individual county and municipal sales tax also apply.
Utahns have actually been required to pay sales tax on online purchases and are supposed to report those buys through their state income tax. However, few actually do it.
“It’s tax we actually owe and should be paying: it’s called a use tax, and you should be paying,” said Charlie Roberts, a spokesman for the Utah State Tax Commission, as reported by Fox 13 News.
He confirmed the agreement between the state and Amazon had been reached. Utah is the 30th state to have such an agreement with Amazon.
Gov. Gary Herbert’s Office has estimated taxes already owed to the state on online purchases to be around $200 million, according to The Salt Lake Tribune,
Uncollected county and municipal taxes run an estimated $100 million.
Since Amazon agreed to voluntarily collect the state sales tax, it could be entitled to an 18 percent vendor discount. That discount would have allowed the company to keep up to that percentage of the tax it collects on behalf of Utah for its role as a “collection arm” of the state.
The vendor discount is offered as an incentive to remote retailers who voluntarily agree to collect the taxes. The incentive was a part of a law passed by the Legislature in 2013.
However, the online retailer will remain at a standard 1.31 percent discount via negotiations with the Tax Commission, The Deseret News reported Friday.
Thus far Amazon in the only online retailer that has entered into the agreement to voluntarily collect the sales tax.
Jonathan Johnson, Overstock.com’s chairman of the board, and Gov. Herbert’s recent GOP opponent, told both The Salt Lake Tribune and Deseret News that he believes there’s more to the deal than is being shared – such as Amazon’s potentially having a physical presence in the state.
“As for Amazon’s ‘voluntary’ tax collection, I would question if there’s another shoe to drop on this story,” Johnson told The Salt Lake Tribune Thursday. “Historically, Amazon has cut a tax deal only when they plan to create a physical presence in a state and they have extracted tax incentives from a state. So I’m suspicious. It would surprise me if the governor’s office isn’t giving Amazon a large tax subsidy.”
That physical presence could be something akin to a call center or warehouse, Johnson told the Deseret News.
However, Aimee Edwards, spokeswoman for the Governor’s Office of Economic Development, told the Deseret News there hasn’t been any word from Amazon potentially coming to Utah.
“We are not aware of any negotiations or conversations with Amazon,” Edwards said.
Revenue collected through the sales taxes will not only go to the state, but also the county and the municipalities within them. However, no numbers have been put forth on how much that could be.
On top of the 4.7 percent state sales tax, Washington County residents will be paying a total rate of 6.05 percent, as will residents of Apple Valley, Enterprise, Hildale, Hurricane, Ivins, LaVerkin, New Harmony, Rockville, Toquerville and Virgin.
Santa Clara, St. George and Washington City have a sales tax of 6.35 percent.
Springdale has the highest sales tax in the county at 7.65 percent.
Iron County’s sales tax is 5.95 percent, as do the municipalities of Enoch, Kanarravile, Paragonah and Parowan. Cedar City has a sales tax rate of 6.05, while Brian Head has a rate of 7.95 percent.
Among the cities with the lowest sales tax in the state are Richfield and Filmore at 5.95 percent, with Moab and Alta claiming the top posts at 8.1 and 8.35 percent respectively.
State sale tax rates can be found on the Utah State Tax Commission’s website here.
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