Does annual attendance at a Utah film festival or trade show, without sales activity, create Utah sales tax or corporate income tax nexus for an out-of-state company or its affiliated retailers?
Apply this to your situation
This page answers the general question as of 2013. Ezel answers yours, under current Utah tax law, with citations.
Plain-English summary
An out-of-state entertainment-industry company ("Entertainment") and its affiliated online retailers ("Retailers") asked the Commission to reconfirm — after a 2012 statutory change — that their limited annual presence in Utah doesn't trigger sales tax registration or corporate income tax filing obligations. This was a follow-up to an earlier ruling, PLR 08-013 (issued May 4, 2009), which had already answered most of these questions before Utah amended its Affiliate Nexus Statute (§ 59-12-107) effective July 1, 2012.
The facts: Entertainment sends employees to a 10-day Utah film festival each year purely for networking, relationship-building, and observing industry trends — no sales are negotiated or contracts executed in Utah, and Entertainment has no offices, property, or employees based in the state. Its affiliated Retailers (unrelated by name, selling tangible goods and digital products online, including to Utah customers) similarly send employees to one Utah trade show per year for less than two weeks, for the same networking-only purposes.
The Commission reconfirmed no nexus, on all five questions asked:
- Entertainment's festival attendance doesn't create sales tax nexus. The law here didn't substantively change, so the 2009 answer stood: Entertainment doesn't have an office, warehouse, or other Utah presence under § 59-12-107(2)(a), and doesn't solicit orders or deliver property in the state.
- Retailers' trade show attendance (a new question) also doesn't create sales tax nexus, on the same reasoning — plus the Commission's longstanding trade-show policy from Advisory Opinion 98-021 (1998): attendance at one trade show per year for less than two weeks, without other regular or systematic Utah contact, doesn't create nexus.
- Entertainment's presence doesn't get attributed to Retailers under the 2012-amended Affiliate Nexus Statute. Even under the new, broader "related seller" definition, Entertainment still doesn't meet the underlying § 59-12-107(2)(a)(i) criteria (no Utah office, warehouse, etc.) — so it can't be a "related seller" whose Utah presence gets attributed to its affiliated Retailers. This particular answer's reasoning changed from the 2009 ruling (since the statute itself changed), but the bottom-line result — no attributed nexus — stayed the same.
- Entertainment has no Utah corporate income tax filing requirement for the same reasons as the sales tax analysis — no substantive law change here either.
- Retailers likewise have no Utah corporate income tax filing requirement based on their single annual trade show attendance, extending the Advisory Opinion 98-021 trade-show reasoning to the income tax context as well.
What this means for you
Out-of-state companies attending Utah trade shows, conventions, or festivals
A single annual event of under two weeks, limited to networking, relationship-building, and observing the market — with no sales negotiated or contracts signed in Utah — should not by itself create Utah sales tax or income tax nexus, even for a business with no other Utah presence. But attending more than one event a year, staying longer, or doing anything that looks like regular/systematic Utah activity could tip the analysis the other way.
Corporate groups with affiliated retailers or subsidiaries
Utah's Affiliate Nexus Statute can attribute one affiliate's Utah presence to another related company's sales tax obligations — but only if the in-state affiliate itself independently satisfies the underlying nexus criteria (office, warehouse, regular solicitation, etc.). An affiliate whose only Utah contact is trade-show attendance generally won't trigger that attribution for its sister companies, even under the broadened 2012 definition of "related seller."
Accountants and tax professionals
This ruling is a useful two-generation comparison: it shows exactly how a 2012 statutory amendment did and didn't change an existing nexus analysis — the "doing business" threshold questions were unaffected, but the affiliate-attribution mechanics had to be re-run under the new statutory language (even though the ultimate answer didn't change). Note the ruling's own caveat that it's based on current law and can change with later legislation or case law — this is a pre-Wayfair (2018) ruling and doesn't address economic nexus.
Common questions
Q: Does attending a trade show in Utah ever create nexus?
A: This ruling's holding was fact-specific: one annual event, under two weeks, with no sales activity in the state. More frequent, longer, or sales-oriented Utah presence could create nexus even under the same trade-show policy.
Q: Can my affiliate's presence in Utah create sales tax obligations for my separate company?
A: Only if your affiliate independently meets Utah's nexus criteria (office, warehouse, regular solicitation, etc.) AND the specific "related seller" tests in the Affiliate Nexus Statute are met. An affiliate whose only Utah contact is trade-show attendance generally won't trigger that.
Q: Is this ruling still good law today?
A: The ruling predates the U.S. Supreme Court's 2018 South Dakota v. Wayfair decision and Utah's subsequent economic-nexus rules (physical presence is no longer required to create sales tax nexus for online sellers meeting revenue/transaction thresholds). This ruling addresses only physical-presence-style nexus questions; confirm current law before relying on it.
Citations and references
Statutes and rules:
- Utah Code Ann. § 59-12-107(2)(a) (nexus-creating activities)
- Utah Code Ann. § 59-12-107(1)(b), (2)(b) (Affiliate Nexus Statute, as amended 2012)
- Utah Code Ann. § 59-7-104 (corporate income tax, doing business in Utah)
- Utah Code Ann. § 59-7-101(12)(a) (doing business definition)
- Utah Admin. Code R865-6F-6 (Rule 6 — doing-business activities)
Prior Commission rulings cited:
- PLR 08-013 (issued May 4, 2009 — the original ruling this request sought to reconfirm)
- Advisory Opinion 98-021 (March 20, 1998 — trade-show attendance under two weeks doesn't create nexus)
Source
- Landing page: https://tax.utah.gov/commission/rulings/
- Original PDF: https://files.tax.utah.gov/tax/commission/ruling/12-009.pdf
Original ruling text
FINAL PRIVATE LETTER RULING
REQUEST LETTER
12-009
September 27, 2012
Mr. Marc B. Johnson
Commissioner
Utah State Tax Commission
210 North 1950 West
Salt Lake City, UT 84134
Re: Taxpayer Request for a Private Letter Ruling
Dear Mr. Johnson:
Pursuant to Utah Admin. R. R861-1A-34, COMPANY (“COMPANY ”) submits this
Request for a Private Letter Ruling on behalf of its client, respectfully asking whether certain
entities have a Utah sales and use tax registration and collection requirement and a Utah
corporate income tax filing requirement. On December 15, 2008, COMPANY submitted a
Request for a Private Letter Ruling (attached hereto as Attachment 1) for the same client
involving substantially similar facts to those described below. On May 4, 2009, the Utah State
Tax Commission (the “Commission”) responded by issuing a Private Letter Ruling (attached
hereto as Attachment 2) consistent with the ruling requested by COMPANY. As a result of a
change in Utah law regarding sales and use tax registration and collection requirements effective
July 1, 2012, COMPANY’s respectfully requests confirmation that the new law does not change
its client’s Utah sales and use tax registration and collection obligation. This request also asks for
reconfirmation that the entities do not have a Utah corporate income tax filing requirement.
I. Facts
Entertainment Company (“Entertainment”) is an out-of-state corporation. It is part of an
affiliated group of companies. Entertainment provides services that relate to movies
and television, including access to industry information and industry advertising. Entertainment
also maintains two divisions - one division provides remote/online registration services for
filmmakers and film festivals and the other division provides online entertainment industry
reporting services.
Entertainment has sent some of its employees to attend the annual FESTIVAL Film
Festival (“FESTIVAL”) in CITY, Utah since 2009. The employees typically stay at FESTIVAL
for 10 days – the full length of the festival. The employees attend FESTIVAL for the purpose of
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promoting Entertainment’s businesses, building relationships, networking and meeting potential
customers. While in Utah, the employees do not negotiate the sale or provision of any of
Entertainment’s business services nor do they execute any contracts for the provision of services.
All sales of services and the performance of any services occur outside of Utah. Entertainment
does not have any tangible or real property in Utah and it does not have any employees in the
state.
Entertainment is also affiliated with other entities, including Retailers, Internet sellers of
tangible property and digital goods to customers around the world, including customers in Utah.
Retailers are located outside of Utah. Retailers do not operate any retail stores, own or lease any
property, or have employees in Utah, and are not registered as retail merchants in Utah.
Retailers’ sales of tangible personal property to customers located in Utah are delivered from
outside the state by common carrier. Retailers’ business and legal entity names are not similar to
Entertainment’s name.
One or more Retailers may also have employees attend one trade show per year in Utah.
Employees attending a trade show will be in Utah for less than two weeks. Retailers’ employees
will attend trade shows for the purpose of promoting Retailers’ businesses, building
relationships, networking and meeting potential customers. While in Utah, the employees will
not negotiate the sale of any of Retailers’ products nor will they execute any contracts for the
sale of products.
II. Issues
A. Sales Tax
1. Would Entertainment be required to register to collect and remit Utah
sales and use tax based on its annual presence at FESTIVAL?
2. Would Retailers be required to register to collect and remit Utah sales and
use tax based on their annual presence at a Utah trade show?
3. Would Retailers be required to register to collect and remit Utah sales and
use tax based on the presence of Entertainment in the state to attend
FESTIVAL?
B. Income Tax
1 Would Entertainment be required to file a Utah corporate income tax
return based on its annual presence at FESTIVAL?
2. Would a Retailer be required to file a Utah corporate income tax return
based on its presence at a trade show in Utah?
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III. Legal Framework for Analysis
A. Sales Tax
1. Registration and Collection Requirement
Utah imposes a sales tax on sellers meeting certain statutory requirements. Utah Code §
59-12-107. A “seller” is a person that makes a sale, lease or rental of tangible personal property,
a product transferred electronically or a service. Utah Code § 59-12-102(110). Sellers are
required to register to collect and remit sales and use tax if the seller has or utilizes:
(a) an office;
(b) distribution house;
(c) sales house;
(d) warehouse;
(e) service enterprise; or
(f) place of business.
Utah Code § 59-12-107(2)(a)(i).
In addition, a seller is required to register to collect and remit sales and use tax if the
seller engages in any the following activities:
(a) Maintains a stock of goods within the state;
(b) Regularly solicits orders in the state, unless the seller’s only activity is:
(i) advertising or solicitation by:
(aa) direct mail;
(bb) electronic mail;
(cc) the internet;
(dd) telecommunications service; or
(ee) or another similar means;
(c) Regularly engages in the delivery of property in the state by means other
than common carrier or U.S. Mail; or
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(d) Regularly engages in an activity directly related to the leasing or servicing
of property located within the state.
Utah Code § 59-12-107(2)(a)(ii)-(v).
a. Affiliate Nexus
Effective July 1, 2012, Utah tax law requires that a seller register to collect and remit
sales and use tax if the seller holds a substantial ownership interest in, or is owned in whole or in
substantial part by, a related seller; and either:
(1) the seller sells the same or a substantially similar line of products as the
related seller and does so under the same or a substantially similar
business name; or
(2) the place of business described in Subsection (2)(a)(i) of section 59-12-
107 of the related seller or an in state employee of the related seller is used
to advertise, promote, or facilitate sales by the seller to a purchaser.
Utah Code § 59-12-107(2)(b). Under the new law, “related seller” is defined as a seller that:
(1) has a place of business described in Subsection (2)(a)(i) of section 59-12-
107; and
(2) delivers tangible personal property, a service, or a product transferred
electronically that is sold by a seller that does not have place of business in
the Utah and to a purchaser in Utah.
Utah Code § 59-12-107(2)(b) (collectively provisions are referenced as “Affiliate Nexus
Statute”). Further, “ownership” means direct ownership or indirect ownership through a parent,
subsidiary, or affiliate. Utah Code § 59-12-107(1)(a). “Substantial ownership interest” means an
ownership interest in a business entity if that ownership interest is greater than the degree of
ownership of equity interest specified in 15 U.S.C. Sec. 78p,1 with respect to a person other than
a director or an officer.
b. Tradeshows
While the aforementioned provisions set forth the statutory standard, the Commission has
consistently held that a physical presence in the state for certain purposes will not create a sales
and use tax registration and collection requirement. For example, the Commission has indicated
that it is their policy not to consider participants who are in the state for less than two weeks to
attend a trade show to create a sales and use tax registration and collection requirement unless
the participants have some other nexus creating contact with Utah or their trade show presence in
Utah is regular or systematic. Advisory Opinion 98-021, Utah State Tax Commission, March 20,
1998.
1
The ownership of equity interest specified in 15 U.S.C. Sec. 78p is 10 percent of any class of any equity security.
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B. Income Tax
1. Filing Requirement
Utah tax law imposes an income tax on all taxpayers doing business in Utah. Utah Code
§ 59-7-104. “Doing business” is defined as any transaction in the course of its business by a
domestic or foreign corporation qualified to do or doing intrastate business. Utah Code § 59-7-
101(12)(a). Doing business includes the right to do business through incorporation or
qualification; the owning, renting, or leasing of real or personal property within the state; and the
participation in joint ventures, working agreements and operating agreements when the
performance of those ventures and agreements takes place in the state. Utah Code § 59-7-
101(12). Utah regulations also provide further guidance on the types of activities that constitute
doing business, including, but not limited to making delivery from stocks of goods in the state,
performing the necessary duties to fulfill contracts or subcontracts in the state and deriving
income from revenue producing properties located in the state or moving through Utah or from
services performed by personnel in the state. Utah Admin. R. R865-6F-6.
The Commission has also indicated, as described above, that it is their policy not to
consider participants who are in the state for less than two weeks for purposes of attending a
trade show in Utah to have income tax nexus in the state. Advisory Opinion 98-021, Utah State
Tax Commission, March 20, 1998.
IV. Legal Analysis of Questions Presented
A. Sales Tax
1. Entertainment is Not Required to Register to Collect and Remit Utah
Sales and Use Tax
Entertainment is not required to register to collect and remit Utah sales and use tax
because it would not meet the statutory requirements to be considered doing business in
Utah. Entertainment will not maintain an office, distribution house, sales house, warehouse,
service enterprise or place of business in Utah. Entertainment’s only presence in Utah is the 10-
day annual attendance of FESTIVAL. Entertainment’s presence in Utah at FESTIVAL is limited
to establishing and furthering client relationships, observing industry trends and businesses, and
attending film screenings and events. In addition, Entertainment will also post reports of the
events on their website. These “blogs” are prepared and posted during the event. Entertainment’s
website and servers are operated and maintained outside Utah. It also does not maintain a stock
of goods in the state, nor does it solicit orders while in the state. Any contracts for business
services and the provision of any services are conducted outside Utah. Thus, Entertainment does
not meet any of the statutory requirements for registration and collection of Utah sales and use
tax and therefore, does not have a Utah sales and use tax registration requirement.
Utah’s guidance regarding participants at trade shows in the state provides further
support for the conclusion that Entertainment does not have a Utah sales and use tax registration
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requirement. The Commission has ruled that attendance at a trade show in Utah for less than
two weeks, without other regular presence in the state, will not create a Utah sales and use tax
registration and collection requirement. Advisory Opinion 98-021, Utah State Tax
Commission, March 20, 1998. Film and entertainment industry persons attend FESTIVAL for
the purpose of seeing new films and interacting and building business relationships, similar to
the way businesses attend trade shows to review new products and meet vendors. The
Commission acknowledged in the Private Letter Ruling issued to Entertainment on May 4, 2009
by stating that the “principles of PLR 98-021 . . . apply to attendance of the Festival. Annual
attendance at the ten-day festival, alone, is not sufficiently “regular” and “systematic” to create
nexus.” Thus, Entertainment’s continued annual attendance at FESTIVAL for 10 days should
continue to be afforded the same treatment as attending a trade show and should not lead to a
Utah sales and use tax registration and collection requirement.
2. Retailers are Not Required to Register to Collect and Remit Utah
Sales and Use Tax
Retailers are not required to register to collect and remit Utah sales and use tax because
they do not meet the statutory requirements to be considered doing business in Utah. Retailers do
not maintain an office, distribution house, sales house, warehouse, service enterprise or place of
business in Utah. In addition, Retailers do not maintain a stock of goods in the state, regularly
solicit orders in the state, other than by the Internet, regularly engage in the delivery of property
in the state by other than common carrier or regularly engage in an activity related to the leasing
or servicing of property located in the state. Retailers’ only presence in Utah will be the annual
attendance of a trade show for less than two weeks, which the Commission has indicated does
not create a sales and use tax registration requirement. Retailers’ presence at a Utah trade show is
limited to building relationships, networking and meeting potential customers. Thus, Retailers
will not meet any of the statutory requirements for registration and collection of Utah sales and
use tax and therefore do not have a Utah sales and use tax registration requirement.
3. Retailers Do Not Have a Utah Sales and Use Tax Registration or
Collection Requirement Based on the Presence of Entertainment in
the State to Attend FESTIVAL
Retailers do not have a Utah sales and use tax registration and collection obligation based on
Entertainment’s presence in the state. Utah’s Affiliate Nexus Statute requires the in-state entity
and the out-of-state entity be “related sellers” (which definition has several components) and
additionally meet one of two statutory tests - (1) the out-of-state seller sells the same or a
substantially similar line of products as the related seller and does so under the same or a
substantially similar business name; or (2) the related seller’s place of business or its in-state
employee is used to advertise, promote or facilitate sales for the out-of-state seller to purchasers.
With respect to the requirement to be “related sellers,” Retailers and Entertainment are
related entities and their relationship meets the definition of “ownership” and “substantial
ownership interest” as set forth under Utah’s Affiliate Nexus Statute. However, Entertainment
does not meet the definition of “related seller” because it does not have a place of business in
Utah nor does it deliver tangible personal property, a service, or a product transferred
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electronically by Retailers to a purchaser in Utah. Regardless, even if Entertainment did meet the
definition of “related seller,” Retailers would still not have a Utah sales and use tax registration
and collection obligation because Entertainment does not have a name that is similar to any of
the Retailers nor will it advertise, promote, or facilitate sales to Retailers’ purchasers through its
employees or an in-state place of business. In fact, Entertainment does not maintain a place of
business in Utah. As a result, Entertainment’s presence in the state to attend FESTIVAL or
another similar tradeshow will not trigger Utah’s Affiliate Nexus Statute and will not create a
Utah sales and use tax registration and collection requirement for Retailers.
B. Income Tax
1. Entertainment Does Not Have a Utah Corporate Income Tax Filing
Requirement
Entertainment does not have a corporate income tax filing requirement in Utah because it
is not doing business in Utah. In order to be considered “doing business” for Utah corporate
income tax purposes, Entertainment must be incorporated or qualified in the state; own, rent, or
lease real or personal property within the state; participate in joint ventures, working agreements
and operating agreements if the performance of those ventures and agreements takes place in the
state; delivering stock of goods in the state or deriving revenue from services performed by
personnel in the state. Entertainment is not qualified or incorporated in Utah nor does it own,
rent, or lease any real or personal property in Utah. In addition, Entertainment does not
participate in any joint ventures or agreements that take place in Utah. Entertainment does not
sell tangible property maintained or delivered in the state and it does not have employees that are
performing services in the state. Entertainment’s presence in Utah will continue to be limited to
the attendance of FESTIVAL for 10 days for the purpose of networking with industry
professionals and building relationships – similar to attendance at a tradeshow which the
Commission has indicated would not create corporate income tax nexus. Entertainment’s
business is located outside of Utah and all of the services it provides are performed outside of
Utah. Therefore, Entertainment would not have a corporate income tax filing requirement in
Utah. The Commission has agreed with this conclusion, as reflected in the May 4, 2009 Private
Letter Ruling issued by the Commission to Entertainment.
2. Retailers Do Not Have a Utah Corporate Income Tax Filing
Requirement Based on Utah Statutory Provisions
Similar to Entertainment, Retailers will also not have a corporate income tax filing
requirement in Utah because they are not doing business in Utah. Retailers are not qualified or
incorporated in Utah and do not own, rent, or lease any real or personal property in Utah.
Retailers do not participate in any joint ventures or agreements that take place in Utah. Further,
Retailers do not make deliveries from stocks of goods in the state and they do not have
employees that are performing services in the state. Retailers’ presence in Utah is limited to the
attendance of a trade show for less than two weeks for the purpose of networking with industry
professionals and building relationships. Therefore, Retailers do not have a corporate income tax
filing requirement in Utah.
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V. Conclusions
Entertainment and Retailers seek confirmation of the Commissioner’s agreement with the
following conclusions, which result from application of Utah’s statutory and judicial guidance.
Sales Tax
1. Because Entertainment does not maintain a place of business in Utah and it is not
doing business in Utah, it is not considered a seller and is not required to register
to collect or remit Utah sales and tax.
2. Because Retailers do not maintain a place of business in Utah and they are not
considered to be doing business in Utah, they are not considered sellers and are
not required to register to collect or remit Utah sales and tax.
3. Because Retailers affiliate, Entertainment, is not a “related seller” and the
statutory requirements to trigger Utah’s Affiliate Nexus Statute are not triggered,
Retailers do not have a Utah sales and use tax registration and collection
requirement.
Income Tax
1. Because Entertainment is not doing business in Utah for corporate income tax
purposes, it does not have a corporate income tax filing requirement in Utah.
2. Because Retailers are not doing business in Utah for corporate income tax
purposes, they do not have a corporate income tax filing requirement in Utah.
************************************************************************
In advance of the issuance of a response to this request for a ruling, we respectfully
request that the Commission contact us to discuss any facts or questions that may potentially
result in an adverse ruling.
Please feel free to contact NAME 1at PHONE 1 or NAME 2 at PHONE 2 if you have
any questions.
Very truly yours,
NAME 1 NAME 2
cc: Mr. Bruce Johnson, Commissioner, Utah State Tax Commission
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RESPONSE LETTER
February 8, 2013
NAME 1 and
NAME 2
COMPANY
ADDRESS
Re: Private Letter Ruling Request—Sales Nexus and Corporate Franchise Tax Nexus
Analysis for Out-of-State Companies Attending Festival and Tradeshow in Utah
Dear NAME 1and NAME 2:
You have again requested a ruling as to whether a company (“Entertainment”) that sends
some of its employees to the FESTIVAL Film Festival (“Festival”) will cause Entertainment and
other affiliates (“Retailers”) to acquire nexus within the State of Utah. Previously, we had
answered your questions through Private Letter Ruling (“PLR”) 08-013 issued on May 4, 2009,
available online at http://tax.utah.gov/commission/ruling/08-013.pdf. However, you now seek
additional guidance because some of the law applied in PLR 08-013 has changed.
I. Facts
You stated that you request this PLR for the same client under substantially similar facts
as your prior PLR request. In PLR 08-013 we summarized the facts as follows:
Entertainment Company (“Entertainment”) is an out-of-state corporation.
It is part of an affiliated group of companies. Entertainment provides services that
relate to movies and television, including access to industry information and
industry advertising. Entertainment also maintains two divisions – one division
provides remote/online registration services for filmmakers and film festivals and
the other division provides online entertainment industry reporting services.
Entertainment would like to have some of its employees attend the
FESTIVAL Film Festival (“FESTIVAL”) in CITY, Utah in January 2009. The
employees would stay at FESTIVAL for 10 days – the full length of the festival.
They would also attend FESTIVAL in ensuing years. The employees would
attend FESTIVAL for the purpose of promoting Entertainment’s businesses,
building relationships, networking and meeting potential customers. The
employees would not negotiate the sale or provision of any of Entertainment’s
business services while in Utah nor would any contracts for the provision of
services be executed. All sales of services and the performance of any services
would occur outside of Utah.
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Entertainment does not have any tangible or real property in Utah and it
does not have any employees in the state. Entertainment is also affiliated with
other entities, including Retailers, Internet sellers of tangible property and digital
goods to customers around the world, including customers in Utah.
Retailers are located outside of Utah. Retailers do not operate any retail
stores, own or lease any property, or have employees in Utah, and are not
registered as a retail merchants in Utah.
Furthermore, for this PLR you provided the following additional facts:
Retailers’ sales of tangible personal property to customers located in Utah
are delivered from outside the state by common carrier. Retailers’ business and
legal entity names are not similar to Entertainment’s name.
One or more Retailers may also have employees attend one trade show
per year in Utah. Employees attending a trade show will be in Utah for less than
two weeks. Retailers’ employees will attend trade shows for the purpose of
promoting Retailers’ businesses, building relationships, networking and meeting
potential customers. While in Utah, the employees will not negotiate the sale of
any of Retailers’ products nor will they execute any contracts for the sale of
products
II. Issues
For this PLR, you asked the following five questions:
1. Would Entertainment be required to register to collect and remit Utah sales and
use tax based on its annual presence at Festival?
2. Would Retailers be required to register to collect and remit Utah sales and use tax
based on their annual presence at a Utah tradeshow?
3. Would Retailers be required to register to collect and remit Utah sales and use tax
based on the presence of Entertainment in the state to attend Festival?
4 Would Entertainment be required to file a Utah corporate income tax return based
on its annual presence at Festival?
5. Would a Retailer be required to file a Utah corporate income tax return based on
its presence at a tradeshow in Utah?
In PLR 08-013, we previously answered questions 1, 3, and 4; but not 2 and 5.
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III. Applicable Law
Much of the applicable law used in PLR 08-013 is the same. Below are noted the
statutory and administrative law changes that occurred after PLR 08-013 was issued.
A. Sales Tax
Utah Code § 59-12-107 was amended, significantly revising the subsections relating to an
area of the Utah Code that you refer to as the Affiliate Nexus Statute. Section 59-12-107 states
in part:
(1) As used in this section:
(a) "Ownership" means direct ownership or indirect ownership through a
parent, subsidiary, or affiliate.
(b) "Related seller" means a seller that:
(i) meets one or more of the criteria described in Subsection (2)(a)(i);
and
(ii) delivers tangible personal property, a service, or a product
transferred electronically that is sold:
(A) by a seller that does not meet one or more of the criteria
described in Subsection (2)(a)(i); and
(B) to a purchaser in the state.
(c) "Substantial ownership interest" means an ownership interest in a
business entity if that ownership interest is greater than the degree of
ownership of equity interest specified in 15 U.S.C. Sec. 78p, with respect
to a person other than a director or an officer.
(2) (a) . . . . each seller shall pay or collect and remit the sales and use taxes
imposed by this chapter if within this state the seller:
(i) has or utilizes:
(A) an office;
(B) a distribution house;
(C) a sales house;
(D) a warehouse;
(E) a service enterprise; or
(F) a place of business similar to Subsections (2)(a)(i)(A) through
(E);
....
(iii) regularly solicits orders, regardless of whether or not the orders are
accepted in the state, unless the seller's only activity in the state is:
(A) advertising; or
(B) solicitation by:
(I) direct mail;
(II) electronic mail;
(III) the Internet;
(IV) telecommunications service; or
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(V) a means similar to Subsection (12)(a)(iii)(A) or (B);
....
(b) A seller is considered to be engaged in the business of selling tangible
personal property, a service, or a product transferred electronically for
use in the state, and shall pay or collect and remit the sales and use taxes
imposed by this chapter if:
(i) the seller holds a substantial ownership interest in, or is owned in
whole or in substantial part by, a related seller; and
(ii) (A) the seller sells the same or a substantially similar line of
products as the related seller and does so under the same or a
substantially similar business name; or
(B) the place of business described in Subsection (2)(a)(i) of the
related seller or an in state employee of the related seller is used
to advertise, promote, or facilitate sales by the seller to a
purchaser.
....
The Utah State Tax Commission revised Publication 37, available at
http://tax.utah.gov/forms/pubs/pub-37.pdf, to reflect the changes in § 59-12-107.
B. Income Tax
Utah Admin. Code R865-6F-6 (“Rule 6”) was amended to renumber its subsections, with
the subsections referenced in PLR 08-013 renumbered as follows:
Rule 6.A.2. became Rule 6(1)(b)
Rule 6.A.4. became Rule 6(1)(d)
Rule 6.C. became Rule 6(3)
Rule 6.J. became Rule 6(10)
Rule 6.J.1. became Rule 6(10)(a)
Rule 6.J.2. became Rule 6(10)(b)
Rule 6.K. became Rule 6(11)
Rule 6.L. became Rule 6(12)
Rule 6 was also amended to remove the subsection K.20. of Rule 6 (2009). However, that
revision does not affect the analysis of this PLR.
IV. Application
Answers to your five questions are below. The first three answers are found under “Sales
Tax” and the last two are under “Income Tax.” Your questions deal with Utah nexus only.
A. Sales Tax
Please note that your request does not ask for a determination about the taxability of
Entertainment’s services in general, nor have you provided enough detailed information to make
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such a determination. If Entertainment’s services/products are not subject to Utah sales and use
tax, then there would be no sales tax collection or reporting requirement and the question of sales
tax nexus would be moot.
Question 1: Would Entertainment be required to register to collect and remit Utah
sales and use tax based on its annual presence at Festival?
Entertainment would not be required to register to collect and remit Utah sales tax under
§ 59-12-107(2)(a) (prior version at § 59-12-107(1)(a)) based on its presence at the Festival.
There was no substantive change to the applicable law currently found in § 59-12-107(2)(a). The
answer to this question is the same as it was for PLR 08-013. For the details on the analysis,
please review PLR 08-013.
Question 2: Would Retailers be required to register to collect and remit Utah sales and
use tax based on their annual presence at a Utah tradeshow?
Retailers would not be required to register to collect and remit Utah sales tax under § 59-
12-107(2)(a) based on their annual presence at a Utah tradeshow. Retailers do not have an office,
warehouse, etc. in Utah; they do not regularly deliver property into Utah by means other than
common carrier or U.S. mail; and they do not engage in activities related to leasing or servicing
property in Utah. For purposes of this ruling, we assume Retailers do not maintain a stock of
goods in Utah or regularly solicit orders in Utah by means other than advertising or solicitation
by direct mail, email, Internet, telecommunications services, or similar means. PLR 98-021,
available at http://tax.utah.gov/commission/ruling/98-021.htm, provides that attendance at one
tradeshow in Utah for less than two weeks, without some other contact with Utah, does not
equate to a regular or systematic presence in Utah and likewise does not create sales tax nexus.
Similarly, § 59-12-107(2)(a)(iii) imposes a sales tax collection and remittance requirement on a
seller that “regularly solicits orders. . .” (emphasis added). Based on the facts presented,
Retailers’ annual presence in Utah for less than two weeks to attend one tradeshow per year in
Utah is not sufficiently “regular” and “systematic” to create nexus or to impose a sales tax
collection or remittance requirement. The analysis for this question is quite similar to that for
Question 1.
Question 3: Would Retailers be required to register to collect and remit Utah sales and
use tax based on the presence of Entertainment in the state to attend Festival?
Retailers would not be required to register to collect and remit Utah sales and use tax
based on the presence of Entertainment in the state to attend the Festival. Section 59-12-107 was
recently amended, and under the revised § 59-12-107(2)(b), Retailers can only be required to
register, collect, and remit Utah sales and use tax based on Entertainment’s presence if
Entertainment is a related seller. Section 59-12-107(1)(b) defines a related seller, in part, as a
seller that “meets one or more of the criteria described in Subsection (2)(a)(i) . . .” As explained
previously under Question 1, Entertainment does not meet the criteria found in § 59-12-
107(2)(a). Thus, Entertainment cannot be a related seller and Retailers can not have a
registration, collection, and remittance requirement based on Entertainment’s presence in Utah to
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attend the Festival. The analysis for this question changed from the prior analysis found in
PLR 08-013.
B. Income Tax
Question 4: Would Entertainment be required to file a Utah corporate income tax
return based on its annual presence at Festival?
Entertainment would not be required to file a Utah corporate income tax return based on
its annual presence at the Festival. The substantive law for this area did not change. The answer
to this question is the same as it was for PLR 08-013. For the details on the analysis, please
review PLR 08-013.
Question 5: Would a Retailer be required to file a Utah corporate income tax return
based on its presence at a tradeshow in Utah?
Retailers would not be required to file a Utah corporate income tax return based on their
annual presence of less than two weeks at one tradeshow in Utah. Under § 59-7-104, Utah
imposes income tax on all corporations doing business in Utah. Under § 59-7-101(12)(a),
“‘[d]oing business’ includes any transaction in the course of its business by . . . a foreign
corporation . . . doing interstate business in this state.” We note that, under subsection (10)(a) of
Rule 6, companies selling services are not protected by Rule 6 or by P.L. 86-272. However,
similar to our ruling in PLR 98-021, we find for your situation that Retailers do not have nexus
for sales tax or income tax purposes when their only connection with Utah is attendance of one
tradeshow. The analysis for this question is quite similar to that for Question 4.
V. Conclusion
To summarize, the Commission finds:
-
Entertainment would not be required to register to collect and remit Utah sales tax under
§ 59-12-107(2)(a) based on its presence at the Festival. -
Retailers would not be required to register to collect and remit Utah sales tax under § 59-
12-107(2)(a) based on their presence at the tradeshow. -
Retailers would not be required to register to collect and remit Utah sales and use tax
based on the presence of Entertainment in the state to attend the Festival. -
Entertainment would not be required to file a Utah corporate income tax return based on
its annual presence at the Festival. -
Retailers would not be required to file a Utah corporate income tax return based on their
annual presence at the tradeshow.This ruling is based on current law and could be changed by subsequent legislative action
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or judicial interpretation. Also, our conclusions are based on the facts as described. Should the
facts be different, a different conclusion may be warranted. If you feel we have misunderstood
the facts as you have presented them, you have additional facts that may be relevant, or you have
any other questions, you are welcome to contact the Commission.
For the Commission,
R. Bruce Johnson
Commissioner
RBJ/aln
12-009
15
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