Utah Legislature passes requirement for online sales tax

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SALT LAKE CITY (AP) — Utah lawmakers on Wednesday passed legislation forcing online companies to collect sales tax beginning in 2019, although much of the new revenue has already been earmarked for a tax break for manufacturers.

The vote in a special Legislative session came roughly one month after the U.S. Supreme Court ruled to allow states to demand that online shoppers pay sales tax.

Supporters called it leveling the playing field for businesses.

"It's simply collecting tax that has been and always been owed by the purchaser," said Rep. Steve Eliason, a Republican who sponsored the bill in the state House.

Republican Gov. Gary Herbert supported the measure, his office said.

Utah already collects roughly $140 million in taxes under voluntary agreements with major online businesses such as Amazon and Airbnb. To incentivize those companies, the state has allowed them to keep up to 18 percent of collected sales taxes. That incentive will end once the law requiring companies to collect taxes takes effect in January.

Officials expect that an additional $60 million is up for grabs from companies not under the current tax umbrella.

However, about $55 million has already been earmarked for a tax break for manufacturers that lawmakers approved in anticipation of the Supreme Court's ruling.

Supporters Wednesday called the tax break a boost to the state's economy.

Opponents called it a giveaway to major corporations.

"When do we say enough to manufacturers, enough to EnergySolutions, enough to private little tax cut deals to people?" said Sen. Jim Dabakis, a Democrat. EnergySolutions, a company that manages radioactive waste, was granted a $1.7 million annual break in fees by the Legislature in February.

The requirement to collect sales tax will apply to companies that do at least 200 sales or $100,000 worth of sales in Utah in a year. It was modeled after the South Dakota law involved in the Supreme Court case, lawmakers said.

The online sales tax bill was one of several approved by lawmakers Wednesday, in their second special session of the year following a 45-day regular period this spring.

The Legislature also approved modifications for a proposed shipping hub in Salt Lake City that has been met with opposition from local officials, among additional tax reforms and other issues.

In April, lawmakers convened to overrule Herbert's vetoes on a pair of separation-of-powers issues partly stemming from last year's special election to replace Rep. Jason Chaffetz in the U.S. Congress.

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