Utah Internet Retailer Nexus Bill Passes House and Is Favored in Senate

Utah’s House Bill 384 (H.B. 384) seeking to create an Amazon law for Utah, moved from approval in the House to reading in the Utah Senate this past week.  HB 384 “…expands sales and use tax payment, collection, and remittance obligations to include certain out of state sellers who have a substantial ownership interest in, or are owned in whole or in substantial part by , an in state seller, and:

  • The out of state seller sells the same or a substantially similar line of products as the in state seller and does so under the same or substantially similar business name; or
  • The place of business of the in state seller or an in state employee of the in state seller is used to advertise, promote, or facilitate sales by the out of state seller to a purchaser.”

Testimony regarding the internet retailer nexus bill was presented before the committee by representatives from the local business community, the Utah State Tax Commission and the Utah Retail Merchants Association. “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.”

American Booksellers Association Board Member Betsy Burton, co-owner of The King’s English Bookshop in Salt Lake City stated, “We cannot compete with a 10 percent disadvantage [against online retailers]. 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.”

The bill aims at clearly defining sales tax collection responsibilities for remote retailers with “…nexus in Utah via distribution centers or subsidiaries to collect and remit sales tax for purchases made by state residents.” H.B. 384 passed the House 69-0.

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