Did an out-of-state mail-order seller have to register and collect Utah tax when Utah customers could place orders by telephone or mail?

Plain-English summary

Utah Private Letter Ruling 90-001DJ addressed an out-of-state mail-order seller advertising in nationally circulated publications.

The seller had no Utah employees, office, or inventory. Customers could place orders by telephone or mail, and goods would ship from another state through U.S. mail or common carrier.

In its revised February 26, 1990 response, the Commission said the seller had to register and collect tax because it accepted Utah orders by a method other than direct-mail solicitation.

Historical statutory rule

The response quoted Utah Code section 59-12-107(5)(a)(iii) and (iv).

That provision required a vendor to collect and remit tax when the vendor or its representatives regularly solicited Utah orders, unless the Utah activity consisted solely of advertising or direct-mail solicitation.

It also addressed regular delivery in Utah by means other than common carrier or U.S. mail.

Telephone orders

The Commission stated a direct operational rule: a seller taking Utah customer orders in any way other than direct-mail solicitation had to register and collect tax on Utah shipments.

The proposed business accepted telephone orders as well as mail orders.

Its solicitation and order-taking activity therefore was not limited solely to direct mail.

Registration and collection

The Commission required the seller to become registered and collect tax on shipments into Utah.

It attached a registration application to the response.

Holding

Under the law and facts applied in 1990:

• The seller advertised nationally and had no Utah employees, office, or inventory.
• Goods shipped through U.S. mail or common carrier.
• Utah customers could order by telephone or mail.
• Telephone order-taking meant the activity was not solely direct-mail solicitation.
• The seller had to register and collect tax on Utah shipments.
• The February 26 revised response controls over the February 22 version included in the source.

What this means for you

Remote and mail-order sellers

This ruling shows how Utah treated telephone order-taking under its 1990 solicitation statute, but it is not a current remote-seller threshold guide.

Catalog and remote sellers

Do not use the 1990 physical facts or direct-mail distinction as a substitute for checking current registration and collection rules.

Accountants and tax professionals

Identify the controlling revised response, then separately verify current law before advising on collection duties.

Common questions

Q: Did the seller have to collect Utah tax?

A: Yes, under the law applied in the revised 1990 response.

Q: Did the seller have Utah employees, an office, or inventory?

A: No.

Q: Why did the Commission still require collection?

A: The seller accepted telephone orders, so its activity was not limited solely to direct-mail solicitation.

Q: Which response date controls?

A: February 26, 1990, labeled as the revised response.

Key source language

• Collection standard: “A seller who takes orders from Utah customers in any way other than direct mail solicitation is required to become registered.”
• Tax duty: the seller had “to collect tax on shipments into Utah.”
• Direct-mail exception: the quoted statute excluded activity consisting “solely of advertising or of solicitation by direct mail.”
• Delivery clause: the quoted statute referred to delivery other than by “common carrier or United States mail.”

Citations and references

• Utah Code Ann. § 59-12-107(5)(a)(iii) and (iv)

Source

• Landing page: Utah Private Letter Rulings
• Official ruling: Utah PLR 90-001DJ
• Date note: the source contains both a February 22 response and a revised February 26 response; this page uses the revised date and wording.
• Fetch note: the exact official URL returned HTTP 404 to a direct request and was then retrieved through Sofya.

Original ruling text

Revised
Response February 26, 1990

Response
February 22, 1990

February
26, 1990

XXXXX

Re: Advisory Opinion, Mail Order Sales

Dear
XXXXX:

This
letter is in response to your January 5, 1990 request for an advisory opinion regarding your client's possible liability for collection of use tax on mail order shipments into Utah. It is the policy of the Tax Commission to refer such requests to its division most qualified to analyze the request and make recommendations for rendering an opinion. Your request was referred to the Auditing Division whose recommendations are as follows:

1. Utah Code Section 59-12-107 (5) (a) (iii)
   states "Each vendor shall pay or collect and remit the sales and use taxes imposed by this chapter if within this state the vendor directly or by any agent or other representatives: regularly solicits orders whether or not such orders are accepted in this state, unless the activity in this state consists solely of advertising or of solicitation by direct mail: (iv) regularly engages in the delivery or property in this state other than by common carrier or Unites States mail:"....

2. A seller who takes orders from Utah
   customers in any way other than direct mail solicitation is required to become registered and to collect tax on shipments into Utah. An application is attached.

If
you do not agree with this determination, you may appeal to the Tax Commission for a formal hearing. The results of that hearing would constitute a declaratory judgement and be appealable to the Utah State Supreme Court. A notice of appeal rights is attached.

Sincerely,

Joe
B. Pacheco

Commissioner

February
22, 1990

XXXXX

Re: Advisory Opinion, Mail Order Sales

Dear
XXXXX:

1. Utah Code Section 59-12-107(5)(a)(iii)
   states "Each vendor shall pay or collect and remit the sales and use taxes imposed by this chapter if within this state the vendor directly or by any agent or other representatives: regularly solicits orders whether or not such orders are accepted in this state, unless the activity in this state consists solely of advertising or of solicitation by direct mail; (iv) regularly engages in the delivery of property in this state other than by common carrier or United states mail;"....

Sincerely,

Joe
B. Pacheco

Commissioner

MEMORANDUM

TO: COMMISSIONER JOE PACHECO

FROM: XXXXX, Director

DATE: February 16, 1990

RE: Declaratory Judgement/Advisory Opinion

Attached
is our recommendation for an answer to XXXXX's request for the department's position on the requirement for an out of state mail order house to collect tax.

MEMORANDUM

TO: XXXXX

FROM: XXXXX

DATE: February 13, 1990

SUBJECT: Request for Advisory Opinion

XXXXX
has requested a declaratory judgment/advisory opinion on sales and use tax collection for mail order business.

Please
respond according to the guidelines established by the Commission. Thank you.

January
5, 1990

XXXXX

Chairman

State
Tax Commissioner

Heber
Wells Office Bldg.

160
East 300 South

Salt
Lake City, UT 84134

Re: Sales and Use Tax Collection For Mail Order Business

Dear
Mr. XXXXX:

We
are writing to obtain the Department's current position as to whether our client is required to collect and remit Utah sales and/or use tax.

Our
client, who is in the mail order business will place ads offering merchandise for sale in publications which have a national circulation. Orders will be taken either by phone or mail at our client's office in XXXXX State. Orders will be filled by shipping goods from inventory in XXXXX State via the U.S. mail or common carrier. Our client will have no employees nor a place of business nor inventory in your state, nor will our client advertise in local media in your state.

Under
the circumstances, will our client be required to collect sales/and or use tax from customers in Utah?

If
our client must collect and remit sales and use tax please notify us as to why they are required to do so and send us the forms necessary to comply with the law along with any other information on the sales and use tax that would be helpful to our client.

Your
prompt response is much appreciated.

Very
truly yours,

XXXXX