Is bottled water subject to Utah sales tax at retail and at wholesale, and what does an out-of-state bottler need to do to register and collect Utah sales tax?

Plain-English summary

A bottled water company wrote to the Commission with a straightforward set of registration and compliance questions: is bottled water (still or carbonated) taxable at retail, is it taxable at wholesale, does wholesale require an exemption certificate, what are the applicable regulations and registration forms, and are there any local municipal reporting requirements.

The Commission's answer starts from the statutory text: Utah's definition of taxable "tangible personal property" expressly includes "water in bottles, tanks or other containers" (§ 59-12-102(23)), and retail sales of tangible personal property are taxable under § 59-12-103 unless a specific exemption applies. So:

• Retail sales of bottled water (still or carbonated) are subject to Utah sales and use tax. There's no special exemption carved out for bottled water as a food/beverage item — the statute treats bottled water as ordinary taxable tangible personal property.
• Wholesale sales (sales for resale) are exempt, but the seller needs a completed exemption certificate from each wholesale purchaser to document the tax-free sale for its own records.
• Nexus and registration: an out-of-state seller must collect and remit Utah tax if it has sufficient presence in Utah to create nexus. Either because nexus requires it, or voluntarily if the company simply chooses to collect anyway, the company must apply for a Utah sales tax license using Form TC-69. Once licensed, a vendor must keep records of all Utah sales, including exemption certificates for every tax-free sale.
• Local rates: Utah counties and cities have adopted local option sales taxes, so the combined tax rate varies by community — and can even depend on how a given sale is made (e.g., sold from a fixed retail location versus by mail order). Once licensed, the Commission sends the seller the appropriate return forms with rate instructions; questions about a specific local ordinance go to that county or municipality directly.

What this means for you

Bottled water producers, bottlers, and distributors

Don't assume bottled water gets food-exemption treatment in Utah — it's taxed as ordinary tangible personal property at retail, expressly by statutory definition. Structure your wholesale/distributor relationships to collect proper exemption certificates so those resale transactions stay untaxed.

Out-of-state beverage companies selling into Utah

Confirm whether your Utah activity creates nexus (the ruling references Utah's general nexus guidance, covered in other PLRs on independent contractors, inventory, and delivery activity). If you have nexus — or even if you don't but want to collect voluntarily — you need a Utah sales tax license via Form TC-69 before collecting.

Accountants advising beverage distributors on multi-jurisdiction sales

Factor in Utah's local option sales taxes when setting prices or invoicing — the applicable rate isn't uniform statewide and can depend on the sale channel (retail location vs. mail order), so confirm current rates once licensed rather than assuming a single statewide rate.

Common questions

Q: Is bottled water taxed the same as tap water or other beverages in Utah?
A: Bottled water (still or carbonated) is expressly included in Utah's statutory definition of taxable tangible personal property, so retail sales are taxable. This ruling doesn't address other beverages separately.

Q: Do I need an exemption certificate to sell bottled water wholesale tax-free in Utah?
A: Yes. Wholesale sales for resale are exempt, but the seller should keep a completed exemption certificate from each wholesale purchaser as documentation.

Q: Does an out-of-state bottled water company have to collect Utah sales tax?
A: Only if it has sufficient nexus with Utah — though it can also register and collect voluntarily even without nexus. Either way, it needs a Utah sales tax license (Form TC-69).

Q: Is the Utah sales tax rate on bottled water the same everywhere in the state?
A: No. Local option sales taxes adopted by individual counties and cities mean rates vary by location, and can depend on how the sale is made.

Q: Does this ruling apply to my bottled water business?
A: Not automatically. This is a private letter ruling binding only on the Commission as to this taxpayer's specific facts. It can't be relied on as binding by anyone else, though it may carry weight if your facts closely match.

Citations and references

Statutes and rules:

• Utah Code Ann. § 59-12-102(23) (tangible personal property includes water in bottles, tanks, or other containers)
• Utah Code Ann. § 59-12-103 (imposition of sales tax on retail sales of tangible personal property)

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/97-048.pdf

Original ruling text

97-048

Response
August 25, 1997

July
18, 1997

Re: Sales & Use Tax on Sale of Bottled
Water

Dear
W. Val Oveson:

Please
provide answers to the following questions on the taxability of bottled water
(still and carbonated) within your state.

1.) Are retail sales of bottled water (still and carbonated)
subject to sales tax?

2.) Are wholesale sales of bottled water
(still and carbonated) subject to sales tax?

Is
it necessary to register only wholesale?

3.) Do wholesale sales (sale and resale)
require receipt of an exemption certificate

from
the purchaser? Please provide a copy of such certificate.

4.) If the answer to question #1 or #2 above
is yes, please provide a copy of the

applicable
state tax regulations along with a copy of the applicable registration

forms.

5.) In addition, please provide any
reporting requirements for municipalities

within
your state.

If
you have any questions, please call. I
can be reached at ##### . Thank you
for your help.

Kind
Regards:

NAME

August
25, 1997

NAME

ADDRESS

CITY
STATE ZIP

Advisory
Opinion - Application of sales tax to Utah sales of bottled water.

Dear
NAME,

We have received your request for
sales tax guidance pertaining to bottled water. We advise as follows:

Under Utah law, sales of tangible
personal property are subject to sales tax unless otherwise exempt. The term �tangible personal property�
includes �water in bottles, tanks or other containers.� See Utah Code Ann. ��59-12-102 (23) and
59-12-103. Retail sales of bottled
water in Utah are subject to Utah sales and use tax. Wholesale sales (sales for resale) in Utah are exempt.

If your company operates outside of
Utah, but makes sales in Utah, it is required to collect and remit sales tax on
its Utah sales if it has sufficient presence in Utah to create nexus. A publication explaining Utah�s nexus
guidelines is enclosed for your information.
If your company has nexus in Utah or if your company has no nexus but
opts to collect and remit sales tax voluntarily, you must apply for a sales tax
license. An application form (TC-69) is
enclosed. If you need assistance with
the licensing process, contact our Customer Service Division at (801) 297-7741.

As a vendor licensed to collect
sales tax in Utah, your company must keep appropriate records of all Utah sales
transactions, including exemption certificates for all tax free sales. A copy of our exemption certificate is
enclosed. You may copy it for use by
your Utah wholesale customers as needed.

Various counties and cities have
adopted local option sales taxes. As a
result, tax rates vary from one community to another. The tax rates that apply to your Utah sales may depend upon how
or where you make Utah sales (e.g. from a fixed retail location vs. mail
order). I have enclosed a tax rate
schedule for your information However,
once you are licensed, the Tax Commission will send you the appropriate tax
return forms with instructions about tax rates. If you have questions about local ordinances passed by any
particular county or municipality, please contact that entity directly.

If you have further questions,
please contact us again.

For
the Commission,

Joe
B. Pacheco,

Commissioner

^^