Sales Tax Articles
Sales Tax State Activity Update - January 2008
Paper Chase – Utah Tackles the Taxability of Printed Materials
In a Private Letter Ruling the Commissioner reasoned that material printed in Utah and shipped to the taxpayer's customers located outside of Utah were exempt from sales and use tax, even if the taxpayer supplied the paper.
Facts
The taxpayer engaged a Utah vendor to print items such as monthly statements, disclosure documents and similar material. The taxpayer also compiles a print file in its data center that includes the data and the mailing addresses of its customers. These files are then sent electronically to the Utah printer for printing and fulfillment. The taxpayer may on occasion ship paper to the Utah printer. The taxpayer's customers are located both within and outside Utah. Sometimes the printed material is shipped out of state to the corporate offices of the taxpayer and then shipped to the Utah customers.
Analysis
Utah sales tax is imposed on retail sales of tangible personal property made within the state per Utah Code ยง59-12-103(1). Tax Commission rule R865-19S-80 (3) clarifies that a printer shall collect sales and use tax on charges for printed material, even though the customer may provide the paper. However, pursuant to the Tax Commission rule R865-19S-80 and R865-19S-44, sales made from Utah via interstate commerce are not subject to Utah sales tax, provided the materials, including pre-press materials are physically shipped out of state.
Conclusion
Utah sales tax is due on items shipped to Utah customers when the Utah printer performs the printing and provides the paper/supplies. Tax would also be due in the latter case even if the paper was supplied by the taxpayer. On those occasions when items are reshipped to Utah customers from out of state, use tax is due and a credit for sales tax paid to another state on the paper would be allowed if tax was due to that state.
Utah sales and use tax are not applicable to printed materials shipped to non-Utah customers, provided the printed material and all pre-press material are shipped outside of Utah. The latter includes paper supplied to the printer by the taxpayer.
This private letter ruling may be viewed on the Utah State tax Commission Website.
(Utah State Tax Commission, Private Letter Ruling No. 07-004, 10/29/2007)Subscribe to CyberTax News and receive the latest indirect tax news, including rate changes, rule updates, compliance issues, and more, delivered directly to your email.
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