The Utah State Tax Commission has issued a private letter ruling discussing sales and use tax registration requirements and affiliate nexus.
Out-of-state based Internet retailers affiliated with an out-of-state company that sells gift codes to Utah consumers are not required to collect and remit tax on their separate sales of property to Utah consumers because the Internet retailers engage in business from facilities located outside of Utah. The commission advises that a more detailed analysis can be found in Utah Private Letter Ruling 09-024 . Further, the Internet retailers do not have to register in Utah under the affiliate nexus rules. Retailers are only required to register to collect and remit tax based on another entity’s presence in Utah if that other entity is a related seller under Utah law and has a certain ownership relationship with the Internet retailers. The company and its website operator are not related sellers as they have no place of business in Utah. The retail establishments, other Internet retailers, the processor of gift cards and the wholesalers are located in Utah, but they do not have the requisite ownership relationships with the Internet retailers.
In addition, sales of gift codes by the out-of-state company directly to Utah consumers over the Internet are not taxable. The company is not required to register to collect and remit sales and use tax. Again, the commission advises that more detailed analyses can be found in Utah Private Letter Ruling 09-024 .
None of the above conclusions would change if the company sold the gift codes directly to retail establishments in Utah. The commission advises the analysis is the same as in Utah Private Letter Ruling 09-024 . Currently, the company sells gift codes through wholesalers.
Private Letter Ruling, Opinion No. 12-010 , Utah State Tax Commission, February 8, 2013 , ¶400-837