Key Takeaways
- Remote work can trigger Utah tax obligations. Even one employee working from Utah may create withholding, sales tax, or income tax filing duties for your business.
- Utah enforces both physical and economic nexus. You can establish Utah nexus through employees, property, or exceeding $100,000 in sales, even without a physical presence.
- Different taxes, different rules. Once nexus is established, your business may owe or need to collect multiple Utah taxes, including sales, income, and payroll taxes.
- Compliance lapses are costly. Ignoring Utah nexus can lead to back taxes, penalties, and unlimited audit exposure if no returns were filed.
- Proactive monitoring prevents surprises. Regularly track employee locations, sales thresholds, and property assets, or partner with experts like Fusion CPA to assess and manage multi-state nexus risk.
Think one remote employee in Utah, can’t affect your taxes? Think again. That single home office could trigger sales tax, income tax, and payroll obligations, even if your business is based out of state. Once nexus exists, Utah can require your business to register, file returns, collect or withhold taxes, and comply with local reporting rules.
The rise of remote and hybrid work has made Utah nexus far more complicated. After all, states are paying attention. Activities that used to be ignored (like an employee occasionally working from a state, or sizable remote sales into a state) can now trigger registration and withholding obligations.
In this blog, we’ll focus on Utah nexus, including what it means and how remote employees can trigger it. We’ll also give you some practical first steps your business should take to avoid surprises.
What is “nexus” in state tax law?
Nexus is the connection between your business and a taxing jurisdiction. It gives the state legal authority to impose tax obligations on your business. Utah defines nexus as any “direct or representational presence” that gives it the authority to impose tax obligations.
There are different kinds of nexus. These include:
- Sales tax (economic and physical nexus). This arises when a seller has enough activity in a state that it must collect and remit sales tax. Most states enforce economic nexus, which is typically triggered by either a dollar threshold of in-state sales or a number of transactions. Utah recently simplified its economic nexus rules, so the main trigger is a gross-sales threshold. Even if you have no physical store or employees in Utah, remote sales that exceed the economic threshold can create nexus.
- Income or corporate nexus. This is sometimes called corporate or franchise tax nexus. It depends on your company’s business activity in a state, based on a mix of physical presence, property, payroll, and sales factors. This includes having remote employees performing services inside a state, because the services generate income sourced to that state.
- Employment or withholding (payroll) nexus. This is triggered when you have employees working in a state, and must withhold the state’s income tax and comply with unemployment wage reporting. Wages paid for services performed in Utah are subject to Utah withholding, as well as wages earned for services performed in the state by nonresidents.
What’s the difference between physical nexus and economic nexus?
Basically, physical nexus arises from a tangible, traditional presence in a state. This could be an office, warehouse, employees, inventory, property, or agents operating there. Economic nexus is activity-based and does not require physical presence. Utah enforces economic nexus for remote sellers and has recently removed the 200-transaction threshold, so the gross-receipts threshold is the main test. Economic nexus can apply to sales tax even when you have zero employees or property in the state.
In practical terms, this means that different activities trigger different obligations. A remote employee working from Utah can create withholding obligations for your business and contribute to income-tax nexus. If that employee also solicits or fulfills sales, this can create sales-tax collection duties.
Utah Nexus Rules: The Basics
Utah looks for the same three classic signals most states use when evaluating nexus. This includes people (employees/agents), property (owned or leased), and economic activity (sales/revenue). Any of those can create an obligation to register, collect or withhold, and file in Utah.
But there are still a few key triggers. These include:
- Employees or contractors physically working in the state: An employee performing services in Utah generally establishes an employer withholding obligation for wages earned in the state. Those payroll activities can also contribute to income (corporate) nexus. If you have even a single employee regularly working from Utah, expect employer registration and withholding duties unless you obtain a specific exemption.
- Owning or leasing property in Utah: Offices, storage, inventory, servers, or other business assets physically located in the state are classic physical-presence nexus triggers. Having inventory or other tangible property in Utah (even if held with a third-party fulfillment center) usually creates sales tax and other filing obligations. The same is true for leased office space or a home office maintained by an employee if the company exerts enough control.
- Deriving significant revenue from Utah customers: This triggers economic nexus, which Utah enforces for sales tax. As of July 2025, Utah relies on gross sales into the state as the primary economic trigger. That means that remote sales alone (even without physical presence) can force a seller to collect and remit Utah sales tax once the revenue threshold is met.
How Remote Work Creates Utah Nexus
Remote work can create nexus in ways business owners often underestimate. So let’s look at a few common scenarios and how Utah is likely to treat them.
A single remote employee working from Utah
Say your company is headquartered in another state. One employee moves to Utah and performs full-time work from their Utah home. Your business must then register for Utah withholding and begin withholding Utah income tax on wages paid for services performed in the state. Your employee’s presence also adds to your company’s payroll factor. Often, it will also contribute to corporate-income nexus in Utah, meaning that you may have to file an income or franchise or corporation return.
Employees using company assets in Utah
If you have no office in the state, but ship equipment, laptops, or inventory to an employee’s Utah address, or place inventory in a Utah fulfillment centers, you can trigger sales-tax nexus.
Remote employees performing sales, client service, or management activities from Utah
If your business has a Utah-based remote employee soliciting sales, negotiating contracts, closing deals, or providing ongoing client services from inside the state, this applies to you. These activities combine both representational and economic factors: your company may gain sales-tax or corporate-income nexus and must evaluate whether the activity is sufficient to be “doing business” in Utah. Sales-driving activities performed in the state are particularly likely to push a company over the economic or income nexus line.
Why Remote Permanence Matters
Utah’s withholding guidance allows an employer to request an exemption if it does business in the state 60 days or less in a calendar year. That narrow safe harbor is mainly for withholding obligations; it doesn’t automatically eliminate other nexus risks. If your employee is only in Utah briefly and your company secures the withholding exemption, it can reduce payroll admin burdens.
But regular, recurring work from inside Utah is more likely to create multiple obligations. These include withholding, unemployment or wage reporting, sales and use tax filing, and corporate income-tax nexus. The longer and more frequent the in-state activity, the stronger Utah’s case that your business is “doing business” there.
Which Utah Taxes Apply Once You Have Nexus?
Utah nexus doesn’t just affect one kind of tax. It determines whether your business must pay or collect several different types. Once nexus is established, your business may have filing, collection, or withholding obligations across multiple Utah tax types. Below is a breakdown of how each category applies.
| Tax Category | Key details |
| Corporate or Pass-Through Income Tax | C Corporations must file Utah corporate franchise or income tax returns if “doing business” in the state. This includes having property, payroll, or sales sourced to the state. Even a single Utah-based employee generating Utah-source income can create filing responsibility. Pass-through entities (PTEs) are not taxed at the entity level by default, but must report Utah-source income and may have withholding obligations for nonresident owners. Multi-state businesses use Utah’s single-sales factor method of apportionment. Payroll or property in Utah can affect this. |
| Sales and Use Tax | This creates economic nexus. Remote sellers exceeding $100,000 in Utah gross receipts must register and collect sales tax, even without physical presence. Marketplace facilitators like Amazon or Etsy must collect sales tax if they meet the threshold, but sellers should still monitor sales for compliance. Many services are exempt, but digital goods and some electronically delivered services may be taxable. |
| Employer Payroll Tax Obligations | When an employee works in Utah (even remotely), you need to register for a Utah withholding account, withhold income tax on wages, and remit unemployment insurance contributions. A 60-day exemption from withholding may apply for short-term in-state activity. You should assess whether your employee’s Utah presence is temporary or ongoing. |
| Possible Local-Level Obligations | Many cities and counties require business registration if your activity occurs within city limits, including remote work and home offices. These local licenses are independent of the state tax nexus, so you should verify requirements on the employee’s city website. |
Risks of Ignoring Utah Nexus
Failing to recognize or comply with Utah nexus rules can have serious tax, legal, and reputational consequences for your business. Even unintentional noncompliance can expose your company to years of back taxes and penalties.
If Utah determines that your business had nexus but never registered or filed returns, it may assess:
- Unpaid back taxes for prior years (sales, income, or withholding taxes).
- Penalties for failure to file or pay (often 10 to 25% of the unpaid amount).
- Interest accruing daily from the original due date of the return.
The state can typically assess tax liabilities for up to three years after a return is filed. But if no return was ever filed, there’s effectively no statute of limitations, meaning liability can extend indefinitely until the issue is corrected.
Multi-state businesses with employees or revenue in different states also risk double taxation if both states claim the right to tax the same income. Utah applies apportionment formulas to prevent over-taxation, but if you fail to file in one state and later file retroactively, it can be difficult to claim credits or refunds.
How to Stay Compliant With Utah Nexus Rules
The good news is that with planning and monitoring, your Utah nexus risk can be managed effectively. This includes a comprehensive nexus study to map your activities across states. By identifying where employees, contractors, inventory, or customers might create tax obligations, you can ensure your business remains compliant.
And if you have remote and hybrid teams, you’ll need to track where employees actually work, not just where they live. Use HR systems or payroll platforms to record work locations, and make sure that your staff updates HR when relocating or working temporarily in another state.
Accurate reporting is also essential. Keep organized records of your sales, payroll and property or inventory locations by state.
Finally, it’s always best to work with professionals who understand multi-state taxes to build a compliance strategy. After all, multi-state taxation rules are dynamic and nuanced. Tax professionals can help you register your business, and manage apportionment across states.
That’s where we come in. Fusion CPA can help you to simplify your multi-state tax management and safeguard your business from unexpected exposure.
To ensure you’re complying with Utah nexus, making the most of your tax strategy, schedule a free Discovery Call with our team today!
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This blog does not provide legal, accounting, tax, or other professional advice. We base articles on current or proposed tax rules at the time of writing and do not update older posts for tax rule changes. We expressly disclaim all liability regarding actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.