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Second Quarter Remote Sales Tax Revenue Estimates Are In – How Are the Numbers Shaking Out?

Your Utah Taxpayers Association recently received the second quarter data from the Utah State Tax Commission for new revenue coming into the state from the collection of sales tax from remote sales. Since January 1, 2019, larger remote sellers to Utah consumers should be collecting and remitting sales tax after the United States Supreme Court decision in South Dakota v. Wayfair

We discussed the first quarter revenue numbers in the June edition of The Utah Taxpayer, when they were first released. With additional data rolling in, first quarter numbers have been updated from a range of $8 million to $12 million to a higher range of $9.3 million to $14 million. The numbers are expressed in a range because it is not known precisely how many sales tax filers are remitting based on remote sales.

According to the Utah State Tax Commission, the second quarter new revenue came in at a range of $12.8 million to $19.3 million. We have examined the last five years of historical quarterly sales tax data from the Tax Commission to quantify how the various quarters differ because of seasonal purchasing patterns. Using that data, the second quarter revenue usually comes in 5.44% higher than the first quarter, the third quarter at 10.46% higher and the fourth quarter at 12.40% above the 1st quarter.

With the higher first quarter that historical trend puts the projected annualized number at $49.9 million, up from our previous estimate of $42.8 million. This does not include the “marketplace sellers”, which are sellers that use a platform in order to sell products who are currently not being collected by the state. Thanks to the work of Senator Bramble during the 2019 Session, Utah will begin collecting from these sellers on October 1, 2019 and it is estimated to add an additional $20 million. Utah is also expected to receive $50 million to $70 million through the voluntary compliance program the state started a couple of years ago, with these new collections, online sales are tracking even more solidly towards $120 to $140 million annually. 

As the revenue continues to grow, Utah now has another quarter of data that further bolsters the claim for the projected $200 million annually which State Tax Commission Chairman John Valentine spoke about during an interim meeting for the Revenue and Taxation Committee in 2018.

This is new ongoing revenue coming to the Utah’s coffers going forward. Your Utah Taxpayers Association is working to ensure the Legislature keeps its promise to use that revenue to lower taxes and not grow government.

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