Utah House Passes Sales Tax Fairness Bill

On Thursday, March 1, the Utah House of Representatives passed H.B. 384 [1], legislation that would require remote retailers with nexus in Utah via distribution centers or subsidiaries to collect and remit sales tax for purchases made by state residents.

If the bill were to become law, it would make clear that any remote retailer seeking to open a distribution center in the state, for example, would be unable to skirt collecting and remitting sales tax by opening the center under a separate entity. The bill passed on a 69 - 0 vote and now heads to the Senate.

ABA Board Member Betsy Burton, co-owner of The King’s English Bookshop [2] in Salt Lake City, testified in support of the bill before the House Public Utilities and Technology Interim Committee last Wednesday.

In her testimony before the committee, Burton noted: “We cannot compete with a 10 percent disadvantage. We’re all going to go away if somebody doesn’t address this problem…. It isn’t fair for government to take one piece of retail and give it an advantage over the rest of the retail sector. It also is very destructive to our economy and community, that’s both local and across our state. I would urge you to give us a level playing field. We are tough — we can compete but not if we don’t have a level playing field.”

In testimony before the committee, Bruce Johnson of the Utah State Tax Commission said he viewed H.B. 384 as an “anti-tax avoidance bill” that would prevent a remote retailer from “slicing and dicing its business operations into different entities” to avoid having nexus in Utah.

Dave Davies, president and chief legal officer of the Utah Retail Merchants Association [3], who also testified before the committee, said Burton “did a great job — absolutely fantastic. She’s been a real leader in this effort. She represents an important segment of the retail population … small retailers [are] truly the backbone of the economy.”