If my business only runs ads or referral links for other merchants — paid per click or per view — am I a 'marketplace facilitator' that has to collect Utah sales tax on whatever those shoppers buy?
Plain-English summary
A company ran two kinds of online business. First, an online marketplace where third-party merchants sell — it agreed that for those sales it is a marketplace facilitator and will collect and remit Utah tax. Second, two internet-advertising business lines: it shows ads for third-party merchants and gets paid per click or per view (CPC/CPM). When a shopper clicks an ad, they're sent to the merchant's own website, where they may or may not buy. The ad company doesn't know whether a sale happened, the amount, the items, or the shipping address, and never touches payment processing. It asked whether Utah's brand-new marketplace facilitator law (2019 Senate Bill 168, § 59-12-107.6, effective Oct. 1, 2019) makes it collect tax on those ad-driven purchases.
The Commission said no — the ad business is not a marketplace facilitator for those sales.
The whole question turned on one phrase in the definition of "marketplace facilitator" (§ 59-12-102(68)(a)): a facilitator is a person who, for consideration, helps "facilitate the sale of a seller's product through a marketplace that the person owns, operates, or controls." The ad company does contract with sellers for consideration to help their sales — but the actual sale completes on the third-party merchant's own website, not through a marketplace the ad company owns, operates, or controls. That one element fails, so the company isn't a facilitator for ad-driven sales. The Commission didn't even need to work through the law's detailed activity checklists (§ 59-12-102(68)(a)(i) and (ii)) — failing the "through a marketplace it controls" requirement was enough.
The contrast within the same company is the lesson: where the sale actually completes decides who must collect. Sales completed on the company's own marketplace → it's a facilitator and collects. Sales completed on someone else's site after an ad click → it's just an advertiser, and the duty to collect (if any) falls on the merchant or that merchant's own platform.
What this means for you
Ad networks, affiliate marketers, referral and lead-gen sites, publishers
If you're paid to send traffic to merchants — display ads, search ads, affiliate links, comparison/referral pages, coupon sites — and the purchase completes on the merchant's site, this ruling says you're an advertiser, not a marketplace facilitator, and you don't collect Utah sales tax on those downstream sales. Getting paid per click or per view (rather than per completed sale) reinforces that: you're selling advertising, not facilitating a checkout. The merchant — or the actual platform where the sale closes — carries the collection duty.
Businesses that do both (marketplace + advertising)
Don't let one label swallow the other. Running a marketplace makes you a facilitator for the sales that close on your marketplace — but bolting on an ad/referral business that points shoppers elsewhere doesn't extend that collection duty to those off-site sales. Map each revenue line to where the transaction completes, and apply the facilitator rules line by line, not company-wide.
The deciding question: who owns/operates/controls the marketplace where the sale closes?
Utah's facilitator definition is built around a marketplace the person owns, operates, or controls. If the checkout, payment, and order happen on a platform you don't run, you're almost certainly not the facilitator for that sale. Conversely, the more you take over the actual transaction (hosting the listing, processing payment, handling the order), the more you look like a facilitator. Note the statute's own carve-out: a person who only provides payment processing is expressly not a marketplace facilitator (§ 59-12-102(68)(b)).
Accountants and multistate tax professionals
This is a clean reading of post-Wayfair marketplace-facilitator statutes: the operative limit is "through a marketplace that the person owns, operates, or controls." Referral/advertising models that stop at the click generally fall outside. Two cautions: (1) states word their facilitator and "referrer" rules differently — some have explicit referrer-notice or election regimes — so don't port this Utah result wholesale; and (2) it doesn't address the merchant's own nexus. A separate Utah ruling on the table (PLR 21-004, "sales to merchants for advertising space on web pages, emails") addresses advertising from the other direction and is worth pairing with this one.
Common questions
Q: We run ads/affiliate links for merchants and get paid per click. Do we collect Utah sales tax on what those shoppers buy?
A: No, under this ruling. Because the sale completes on the merchant's own website — not through a marketplace you own, operate, or control — you're not a "marketplace facilitator" for those sales and have no collection or remittance duty under § 59-12-107.6 for them.
Q: What's the single fact that decides this?
A: Whether the sale happens through a marketplace you own, operate, or control. If the click hands the shopper off to the merchant's site and the purchase closes there, you're not the facilitator. If the purchase closes on your platform, you are.
Q: Does it matter that we're paid per click or per view rather than per sale, and don't see the sale data?
A: It's consistent with the result. The Commission noted the company doesn't know whether a sale occurred, its amount, items, or shipping address and never processes payment — all hallmarks of advertising rather than facilitating a transaction.
Q: We run both a marketplace and an ad business. Are we a facilitator for everything?
A: No. The company here was a marketplace facilitator (and agreed to collect) for sales completed on its own marketplace, but not for sales completed on third-party merchants' sites after an ad click. Apply the test to each line based on where the sale closes.
Q: Does this mean nobody collects tax on those ad-driven sales?
A: No — it just isn't the advertiser's job. The third-party merchant (or the platform where that sale actually completes) may still have its own Utah collection obligation, depending on its nexus and whether it's itself a marketplace seller/facilitator.
Q: Can we rely on this ruling?
A: Not as binding. A Utah private letter ruling binds the Commission only for the taxpayer and facts it was issued to; its weight for anyone else depends on how closely the facts match.
Citations and references
Statutes (Utah Code Ann.):
- § 59-12-107.6 (effective 10/1/19) — marketplace facilitators must collect/remit if they meet the § 59-12-107(2) thresholds (over \$100,000 or 200+ transactions); enacted by 2019 SB 168
- § 59-12-102(68) (effective 10/1/19) — definition of "marketplace facilitator" (facilitating a sale "through a marketplace that the person owns, operates, or controls"); (68)(b) excludes payment-processing-only providers
- § 59-12-102(67) (effective 10/1/19) — definition of "marketplace" (a place/platform/forum where property, a product transferred electronically, or a service is offered for sale)
- § 59-12-102(69) (effective 10/1/19) — definition of "marketplace seller"
- § 59-12-102(120) (effective 10/1/19) — "seller" includes a marketplace facilitator
- § 59-12-107(2) — general collection-and-remittance obligation
- § 59-12-103(1) — imposition of Utah sales and use tax
Legislation: 2019 Senate Bill 168 (Utah marketplace facilitator act, effective October 1, 2019)
Rule: Utah Admin. Code R861-1A-34 (private letter ruling procedure and appeal rights)
Source
- Landing page: Utah State Tax Commission — Private Letter Rulings
- Original PDF: 19-004.pdf
Original ruling text
FINAL PRIVATE LETTER RULING
REQUEST LETTER
19-004
On Tue, Jul 2, 2019 at 1:18 PM, NAME-1, EMAIL ADDRESS, wrote:
Good afternoon NAME-2,
Thank you for taking the time to discuss the application of the new marketplace facilitator law
(SB 168, effective Oct. 1, 2019) to our client’s two advertising business lines last month.
As discussed on the call, our client is prepared to begin collecting and remitting tax to the Utah
State Tax Commission (“USTC”) for third-party sales that are made through its marketplace
platforms. In addition to those marketplace platforms, the client also has two distinct advertising
service business lines that merely advertise third-party goods and services. For these advertising
models, our client is compensated almost exclusively based on the number of clicks that an
advertising merchant’s ad receives and the client only knows whether a potential customer
clicked on the link to the advertising merchant’s website (i.e., the client does not know whether a
sale was completed, the amount of the sale, the items within the sale, or the shipping address of
the customer making the purchase). The client is never involved in the payment processing of
the ultimate sale (if any) completed on the third-party merchant’s website. As discussed, many
other states have explicitly enacted laws to impose certain obligations on these “referral”
business models.
The company is seeking informal written confirmation from the USTC that the “referrals” made
via its two advertising service business lines do not give rise to a collection and remittance
obligation to our client. We believe this is the case under Utah law (as amended by SB 168) for
the following reasons:
The client does not “facilitate the sale of a seller’s product through a marketplace that the person
owns, operates or controls” for the referrals because the client does not do any of activities listed
in Utah Code Ann. § 59-12-102(68)(a)(ii) (as amended by SB 168, effective October 1, 2019).
In addition, the client does not make any “sales” through either advertising business line. Any
potential “sales” that may occur are traditional remote sales that take place on the third-party
advertising merchant’s website or platform after the referral is complete. Our client is not
privileged to any such “sales” data for the vast majority of referrals made through the two
advertising business lines.
Thank you for your time and attention to this matter. If you or your USTC colleagues need
additional information from the client to consider this request for informal written confirmation,
please do not hesitate to reach out.
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NAME-1
Associate
LAW FIRM, ADDRESS
PHONE NUMBER, EMAIL
[WORDS REMOVED]
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RESPONSE LETTER
August 21, 2019
NAME-1
LAW FIRM
ADDRESS
CITY, STATE
EMAIL
Dear NAME-1:
This letter is in response to your request for information for your unnamed client
(“Client”). Client facilitates third-party sales through the Client’s marketplace. These sales are
not at issue for this private letter ruling. Client also sells internet-based advertising of third-party
merchants’ goods and services. For this advertising, the third-party merchants compensate
Client based on either the number of clicks or the number of views that the advertisements
receive. By clicking an advertisement, an internet user is transferred to a third-party merchant’s
website, through which that internet user might choose to make a purchase from that third-party
merchant.
You have asked about the applicability of 2019 Senate Bill 168, effective October 1,
2019, to Client for the sales by third-party merchants to internet users who have clicked on the
advertisement linking the internet users with the third-party merchants’ websites. This private
letter ruling applies 2019 Senate Bill 168 and concludes that Client does not have a Utah sales
and use tax collection/remittance requirement for the sales by third-party merchants to internet
users who have clicked on the advertisements linking the internet users with the third-party
merchants’ websites.
I. Facts
You explained your facts, as follows:
[O]ur client is prepared to begin collecting and remitting tax to the Utah State Tax
Commission (“USTC”) for third-party sales that are made through its marketplace
platforms. In addition to those marketplace platforms, the client also has two
distinct advertising service business lines that merely advertise third-party goods
and services. For these advertising models, our client is compensated almost
exclusively based on the number of clicks that an advertising merchant’s ad
receives and the client only knows whether a potential customer clicked on the
link to the advertising merchant’s website (i.e., the client does not know whether a
sale was completed, the amount of the sale, the items within the sale, or the
shipping address of the customer making the purchase). The client is never
involved in the payment processing of the ultimate sale (if any) completed on the
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third-party merchant’s website. As discussed, many other states have explicitly
enacted laws to impose certain obligations on these “referral” business models.
....
In response to questions, you explained the compensation that Client receives when Client is not
compensated based on the number of clicks. More specifically, you explained that in those
situations, Client is compensated based on the number of times an advertising merchant’s
advertisement is viewed.
II. Applicable Law
In general, Utah Code Ann. § 59-12-103(1) imposes sales and use taxes on sales of
tangible personal property, on products transferred electronically, and on certain enumerated
services when those sales are located in Utah.
In general, Utah Code Ann. § 59-12-107(2) requires certain sellers to pay or collect and
remit Utah sales and use taxes.
2019 Senate Bill 168 enacted Utah Code Ann. § 59-12-107.6 (effective 10/1/19). Section
59-12-107.6 (effective 10/1/19) requires marketplace facilitators to pay or collect and remit Utah
sales and use taxes under certain circumstances. Section 59-12-107.6 (effective 10/1/19) states
the following in part:
(1) A marketplace facilitator shall pay or collect and remit sales and use taxes
imposed by this chapter in accordance with Section 59-12-107:
(a) if the marketplace facilitator meets one or more of the criteria provided
for in Subsection 59-12-107(2)(a) or (b); and
(b) on the sales the marketplace facilitator made on the marketplace
facilitator’s own behalf.
(2)
(a) A marketplace facilitator shall pay or collect and remit sales and use
taxes imposed by this chapter in accordance with Subsection (3) if the
marketplace facilitator, in the previous calendar year or the current
calendar year, makes sales of tangible personal property, products
transferred electronically, or services on the marketplace facilitator’s
own behalf or facilitates sales on behalf of one or more marketplace
sellers:
(i) that exceed $100,000; or
(ii) in 200 or more separate transactions.
(b) For purposes of determining if a marketplace facilitator meets or exceeds
one or both thresholds described in this Subsection (2), a marketplace
facilitator shall separately total:
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(i) the marketplace facilitator’s sales; and
(ii) any sales the marketplace facilitator makes or facilitates for a
marketplace seller.
....
Additionally, 2019 Senate Bill 168 amended Utah Code Ann. § 59-12-102 to add definitions for
“affiliate,” “marketplace,” “marketplace facilitator,” and “marketplace seller.” Section 59-12-102
(effective 10/1/19) states the following in part:
(4) “Affiliate” or “affiliated person” means a person that, with respect to another
person:
(a) has an ownership interest of more than 5%, whether direct or indirect, in
that other person; or
(b) is related to the other person because a third person, or a group of third
persons who are affiliated persons with respect to each other, holds an
ownership interest of more than 5%, whether direct or indirect, in the
related persons.
....
(67) (a) “Marketplace” means a physical or electronic place, platform, or forum
where tangible personal property, a product transferred electronically, or
a service is offered for sale.
(b) “Marketplace” includes a store, a booth, an Internet website, a catalog, or
a dedicated sales software application.
(68) (a) “Marketplace facilitator” means a person, including an affiliate of the
person, that enters into a contract, an agreement, or otherwise with
sellers, for consideration, to facilitate the sale of a seller’s product
through a marketplace that the person owns, operates, or controls and
that directly or indirectly:
(i) does any of the following:
[Subsections (68)(a)(i)(A)-(68)(a)(i)(I) enumerate certain activities.]
. . . and
(ii) does any of the following:
[Subsections (68)(a)(ii)(A)-(68)(a)(ii)(E) enumerate certain
activities.]
(b) “Marketplace facilitator” does not include a person that only provides
payment processing services.
(69) “Marketplace seller” means a seller that makes one or more retail sales
through a marketplace that a marketplace facilitator owns, operates, or
controls, regardless of whether the seller is required to be registered to collect
and remit the tax under this part.
....
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Furthermore, 2019 Senate Bill 168 amended Utah Code Ann. § 59-12-102(120) (effective
10/1/19) to expand the definition of “seller” to include Subsection (120)(b). Section 59-12-
102(120) (effective 10/1/19) (prior version at § 59-12-102(116)) defines “seller” as follows in
part:
(a) “Seller” means a person that makes a sale, lease, or rental of:
(i) tangible personal property;
(ii) a product transferred electronically; or
(iii) a service.
(b) “Seller” includes a marketplace facilitator.
Utah Code Ann. § 59-12-102 (effective 10/1/19) defines other terms mentioned in this
private letter ruling. “Person” is defined in § 59-12-102(89) (effective 10/1/19) (prior version at
§ 59-12-102(85)) as follows:
“Person” includes any individual, firm, partnership, joint venture, association,
corporation, estate, trust, business trust, receiver, syndicate, this state, any county,
city, municipality, district, or other local governmental entity of the state, or any
group or combination acting as a unit.
“Sale” is defined in § 59-12-102(114) (effective 10/1/19) (prior version at § 59-12-102(110)) as
follows in part:
(a) “Sale” means any transfer of title, exchange, or barter, conditional or
otherwise, in any manner, of tangible personal property or any other taxable
transaction under Subsection 59-12-103(1), for consideration.
....
III. Analysis
In general, Utah Code Ann. § 59-12-103(1) imposes sales and use taxes on sales of
tangible personal property, on products transferred electronically, and on certain enumerated
services when those sales are located in Utah.1 This private letter ruling assumes that at least
some third-party merchant sales to Utah purchasers meet § 59-12-103(1). The sales meeting
§ 59-12-103(1) are generally subject to Utah sales and use taxes.
In general, § 59-12-107(2) requires certain sellers to pay or collect and remit Utah sales
and use taxes. Under § 59-12-107.6(1) (effective 10/1/19), a marketplace facilitator has a
collection and remittance requirement in accordance with § 59-12-107 if that marketplace
facilitator has certain levels of sales in Utah. “Marketplace facilitator” is defined in
§ 59-12-102(68) (effective 10/1/19).
Under § 59-12-102(68) (effective 10/1/19), a “marketplace facilitator” is a person that,
first, meets the requirements found in Subsection (68)(a); second, performs at least one of the
1
Utah Code Annotated §§ 59-12-211 through 59-12-215 provide the locations of various transactions.
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activities listed in Subsection (68)(a)(i); third, performs at least one of the activities listed in
Subsection (68)(a)(ii); and fourth, is not “a person that only provides payment processing
services,” as provided in Subsection (68)(b). This private letter ruling will analyze the
requirements found in Subsection (68)(a). Based on the conclusions from that analysis, this
private letter ruling will not analyze the requirements found in Subsections (68)(a)(i) or
(68)(a)(ii); those analyses are unnecessary for this private letter ruling.
Subsection (68) of § 59-12-102 defines “marketplace facilitator,” and Subsection (68)(a)
states the following in part:2
“Marketplace facilitator” means a person, including an affiliate of the person, that
enters into a contract, an agreement, or otherwise with sellers, for consideration,
to facilitate the sale of a seller’s product through a marketplace that the person
owns, operates, or controls . . .
The definition of “marketplace facilitator” uses the term “marketplace.” Subsection
59-12-102(67) (effective 10/1/19) defines “marketplace” as follows:
(a) “Marketplace” means a physical or electronic place, platform, or forum
where tangible personal property, a product transferred electronically, or a
service is offered for sale.
(b) “Marketplace” includes a store, a booth, an Internet website, a catalog, or a
dedicated sales software application.
The definitions of “marketplace facilitator” and “marketplace” relate to the definition of
“marketplace seller.” Subsection § 59-12-102(69) (effective 10/1/19) defines “marketplace
seller” as follows:
“Marketplace seller” means a seller that makes one or more retail sales through a
marketplace that a marketplace facilitator owns, operates, or controls, regardless
of whether the seller is required to be registered to collect and remit the tax under
this part.
You explained that Client will begin collecting and remitting Utah sales and use taxes for third-
party sales made through the Client’s marketplace platforms. Client is the “marketplace
facilitator” for these sales. These sales are made through the Client’s “marketplace(s).” The
sellers for these sales are “marketplace sellers.” As a marketplace facilitator, Client has a
2
The definition of “marketplace facilitator” uses the term “person.” “Person” is defined in § 59-12-102(89)
(effective 10/1/19). Client is a person.
The definition of “marketplace facilitator” uses the term “affiliate.” “Affiliate” is defined in § 59-12-102(4)
(effective 10/1/19). You have presented no facts suggesting that this private letter ruling involves affiliates.
The definition of “marketplace facilitator” uses the term “seller.” “Seller” is defined in § 59-12-102(120) (effective
10/1/19). “Sale” is defined in § 59-12-102(114) (effective 10/1/19). These terms are not at issue for this private
letter ruling.
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collection and remittance requirement under § 59-12-107.6(1) (effective 10/1/19), in accordance
with § 59-12-107, for these sales.
The question for this private letter ruling, though, is whether Client is a marketplace
facilitator for the sales made through third-party merchants’ websites after internet users click on
the advertisements for which Client is compensated.
This private letter ruling again considers the definition of “marketplace facilitator.” Part
of that definition is repeated below:
“Marketplace facilitator” means a person, including an affiliate of the person, that
enters into a contract, an agreement, or otherwise with sellers, for consideration,
to facilitate the sale of a seller’s product through a marketplace that the person
owns, operates, or controls . . .
§ 59-12-102(68)(a) (Emphasis added.) This analysis will now apply the above definition. For
the sales made through the third-party merchant’s websites after internet users click on the
advertisements for which Client is compensated, Client is a “person . . .that enters into a contract
. . . with sellers, for consideration, to facilitate the sale of a seller’s product.” However, that
“sale of a seller’s product” is not “through a marketplace that [Client] owns, operates, or
controls.” Instead, that sale occurs through the third-party merchants’ websites. Therefore,
Client is not a “marketplace facilitator” for purposes of those sales. Thus, Client does not have a
collection and remittance requirement under § 59-12-107.6(1) (effective 10/1/19) for those sales.
IV. Conclusion
This private letter ruling concludes that Client is not a marketplace facilitator for
purposes of the sales made through the third-party merchants’ websites after internet users click
on the advertisements for which the Client is compensated. Client does not have a collection
and remittance requirement under § 59-12-107.6(1) (effective 10/1/19) for those sales.3
The Tax Commission’s conclusions are based on the facts as you described them and the
Utah law currently in effect. Should the facts be different or if the law were to change, 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,
please feel free to contact the Commission.
Additionally, you may also appeal the private letter ruling in the following two ways.
First, you may file a petition for declaratory order, which would serve to challenge
the Commission's interpretation of statutory language or authority under a statute. This petition
must be in written form, and submitted within thirty (30) days after the date of this private letter
3
The Client agrees that it will have a collection and remittance requirement for the third-party sales made through
the Client’s marketplace. You explained that Client is prepared to begin collecting and remitting taxes for those
sales.
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ruling. You may submit your petition by any of the means given below. Failure to submit
your petition within the 30-day time frame could forfeit your appeal rights and will be
deemed a failure to exhaust your administrative remedies. Declaratory orders are discussed
in Utah Administrative Code R861-1A-34 C.2., available online
at http://tax.utah.gov/commission/effective/r861-01a-034.pdf, and in Utah Administrative Code
R861-1A-31, available online at http://tax.utah.gov/commission/effective/r861-01a-031.pdf.
Second, you may file a petition for redetermination of agency action if your private letter
ruling leads to an audit assessment, a denial of a claim, or some other agency action at a division
level. This petition must be written and may use form TC-738, available online
at http://tax.utah.gov/forms/current/tc-738.pdf. Your petition must be submitted by any of the
means given below, within thirty (30) days, generally, of the date of the notice of agency action
that describes the agency action you are challenging.
You may access general information about Tax Commission Appeals online
at http://tax.utah.gov/commission-office/appeals. You may file an appeal through any of the
means provided below:
• Best way—by email: [email protected]
• By mail: Tax Appeals
USTC
210 North 1950 West
Salt Lake City, UT 84134
• By fax: 801-297-3919
For the Commission,
Lawrence C. Walters
Commissioner
LCW/aln
19-004
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