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University of Utah Sales Tax Update October 17 th , 2007

University of Utah Sales Tax Update October 17 th , 2007. Presented by: Laura Howat, CPA Associate Director, Accounting Operations & Controls Phone: 581-6699 Email: laura.howat@admin.utah.edu. University of Utah Sales Tax Update October 17th, 2007. New Rates

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University of Utah Sales Tax Update October 17 th , 2007

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  1. University of UtahSales Tax UpdateOctober 17th, 2007 Presented by: Laura Howat, CPA Associate Director, Accounting Operations & Controls Phone: 581-6699 Email: laura.howat@admin.utah.edu

  2. University of UtahSales Tax UpdateOctober 17th, 2007 • New Rates • Reduced sales tax on food & food ingredients • Streamlined Sales Tax • Changes effective January 1, 2008 • Brief Review of Certain Sale Tax Provisions

  3. New Sales Tax Rates • Effective April 1, 2007 • New sales tax rates • The new base sales tax rate is 6.85% for Salt Lake County

  4. New Sales Tax Rates • If you do business in another county, please check the Utah State Tax Commission table • http://tax.utah.gov/sales/rates/07q2combined.xls

  5. Reduction in Sales Tax for Food & Food Ingredients • Effective January 1, 2007 • There was a new 2% reduction in sales tax for certain food and food ingredients • Which foods qualify for the 2% reduction in sales tax is VERY complicated

  6. Reduction in Sales Tax for Food & Food Ingredients • If your department serves or sells food, please look over the Utah State Tax Commission link outlining the new reduced rate for food and food ingredients.http://www.tax.utah.gov/sales/food_rate.html#legislation

  7. Reduction in Sales Tax for Food & Food Ingredients • Food sales qualifying for the new 4.85% Salt Lake County rate are reported on a separate monthly sales tax report • http://www.acs.utah.edu/afs/forms/Sales_Tax_Report_food.pdf

  8. Streamlined Sales Tax (SST) • SST is a nationwide effort by governments to • standardize sales tax collection and administration • Utah, along with many other states, adopted legislation to approve SST • SST effective July 1st, 2006 • Utah already postponed SST twice

  9. How is SST different? • New tax forms • Sales tax will be determined by where products are delivered • Taxable portion of transaction may change • Multi-state standardized definitions have been adopted

  10. SST Sourcing • Sourcing is defined as attributing a sale to a specific taxing jurisdiction in order to determine tax rate to charge • Utah sales tax would change sourcing from point of sale, to point of delivery

  11. SST • During the 2006 General Session, the Utah Legislature adopted S.B. 233, Sales and Use Tax Revisions. In part, S.B. 233 eliminated point of delivery sourcing for required sales and use tax. This means that Utah sellers will continue to collect and remit sales and use tax in the traditional point of sale manner.

  12. SST • In other words, SST is dead • At least for now • The information presented regarding point of sale versus point of delivery sourcing is subject to change based on further action by the Utah Legislature

  13. Clarification on Photocopies • A 2007 bill clarifies that State Institutions of Higher Ed must collect and remit sales tax on photocopies • Governmental entity exemption on photocopies does not apply

  14. Sales Tax Changes Effective January 1, 2008 • Reduces the state sales tax rate from 4.75% to 4.65% • Increases the resort communities tax from up to 1% to up to 1.1%

  15. Sales Tax Changes Effective January 1, 2008 • Provides that the sales tax imposed on food and food ingredients is the sum of: (1) 1.75% state sales tax; (2) 1% local option sales tax; and (3) .25% county option sales tax (or the .25% state tax imposed if a county has not enacted a county option sales tax) • Total 3%

  16. Sale • “Sale” means any transfer of title, exchange, or barter of tangible personal property or any other taxable item or service for consideration, within the state of Utah.  (Utah Code Ann. Sections 59-12-103(1), 59-12-102.)

  17. Some sales cause confusion • Consignment sales of property require assessment and collection of sales tax • Fundraising sales of property are subject to sales tax (Utah sales tax exemption for fundraising sales is for K-12 only)

  18. Sales Tax-Meals • Sales tax applies to certain services, including • sales of meals [Utah Code Ann. § 59-12-103(1)(e)]

  19. Sales of Food-Tourism Tax? • Salt Lake County has adopted the Tourism Tax • This is an extra 1% tax imposed on all prepared foods and beverages • Tourism tax separately reported to General Accounting

  20. Tourism Tax • Applies to soda fountains • Luncheonettes • Restaurants • Catering • Coffee shops • Concessions

  21. Tourism Tax • In general, sale of prepared food for immediate consumption • Does not apply to packaged food • Applies to packaged food sold when prepared food also sold • Does not apply when activity/outlet serves prepared food only occasionally

  22. Sales Tax Exemptions • Utah sales to the University for items used by the University for our mission are exempt from Utah sales tax • To qualify for the exemption, the purchase must be made with University funds • The purchaser must present a completed exemption certificate to the seller

  23. Sales Tax Exemptions-Other States • The University’s Utah sales tax exemption certificate does NOT apply to purchases outside of Utah • If your department is conducting business in another state, contact Tax Services and we can investigate a potential sales tax exemption in such state

  24. Sales Tax Exemptions-Other States • See Tax Services website for current sales tax exemptions in other states • http://www.tax.utah.edu/

  25. University Sales to Purchaser Exempt from Tax •  If a sale is made to a purchaser who is exempt from tax, the purchaser must present a valid Utah State Exemption Certificate.  (Utah Code Ann. 59-12-106(2).)  • Exempt sales are not exempt from being reported to the state so you must include exempt sales on the General Accounting Monthly Sales Tax Report. 

  26. Sales Tax Exemptions • How does a religious or charitable institution get a Utah sales tax exemption number? • Complete an Application for Sales Tax Exemption Number for Religious or Charitable Institutions, Form TC-160 • See Tax Services website for details and links

  27. Transient Room Tax • Salt Lake County has adopted the transient room tax • This is a 4.75% tax on the rental of hotel or motel rooms • Transient room tax is separately reported to General Accounting

  28. Sales Tax Process • Sales tax returns are due by the last day of the month following the sales month • Penalties and interest are assessed on late filing of returns or late payment of sales tax • General Accounting consolidates departmental sales tax information so that the University can prepare its monthly sales tax return

  29. Sales Tax Process • The University’s form “Utah Sales Tax Monthly Report” is due to General Accounting by the 15th of the month following the sales month • Please submit departmental reports timely

  30. Utah Sales Tax Monthly Report • Start with total taxable sales • Do not include inter-departmental transactions • Back out any out of state sales • Total sales should be total Utah taxable sales

  31. Utah Sales Tax Monthly Report • Subtract tax exempt sales where the purchaser was tax exempt • Subtract refunds • Calculate net taxable sales • Calculate tax according to the form • Designate chartfield for the payment of sales tax • Include a contact, contact phone number & email

  32. Record Keeping RequirementsTax Commission Rule R865-19S-22 • Sellers are required to keep complete records used to determine the amount of sales tax liability • Records must be retained for three years from the filing date of the returns • All records are open to the Tax Commission for examination • University departments must maintain back-up documentation for sales and sales tax liability for three years

  33. Record Keeping RequirementsTax Commission Rule R865-19S-22Records Required • Show gross receipts from sales or rental payments from leases of tangible personal property, or services performed in connection with tangible personal property made in Utah regardless of whether the retailer considers the receipts to be taxable or non-taxable • Show deductions and exemptions allowed by law and claimed in filing sales tax returns • Show bills, invoices, or similar evidence of all tangible personal property purchased for sale, consumption, or lease in Utah

  34. Record Keeping RequirementsTax Commission Rule R865-19S-22Records Required con’t • Include the normal account books maintained by an ordinarily prudent business person, together with supporting documents of original entry such as: bills, receipts, invoices, and cash register tapes • All schedules or working papers used in the preparation of tax returns must also be maintained

  35. University of UtahSales Tax UpdateOctober 17th, 2007 Presented by: Laura Howat, CPA Associate Director, Accounting Operations & Controls Phone: 581-6699 Email: laura.howat@admin.utah.edu ???Questions????

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