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Got questions about Utah's new Amazon sales tax deal? We've got answers

Utahns will be making payments next year that they’re probably not accustomed to.

As our own Lisa Riley Roche reported, Gov. Gary Herbert announced a new deal with Amazon.com that will require those in the Beehive State to pay online sales tax when they order purchases from the online shopping company.

"News flash: Amazon has agreed," Herbert told the Deseret News and KSL editorial boards Wednesday. "We have been working to get a voluntary agreement with Amazon, and it looks like we’ve done that now."

Utah State Tax Commission spokesman Charlie Roberts told the Deseret News that the deal will be similar to those in other states and that it’s unknown how much money the agreement is worth.

But what does his mean for the average Utahn? We’ve broken down some of your questions about this decision.

When will I start paying sales tax when I shop at Amazon?

Amazon will begin collecting state and local tax on purchases on Jan. 1, according to the Deseret News.

How is this different from now?

Sales tax currently is not collected when Utahns buy online through Amazon.

Does Amazon collect sales tax in other states?

According to Forbes, Amazon collects taxes in 24 states: Arizona, California, Connecticut, Florida, Georgia, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin.

Amazon will start collecting state and local tax on purchases on Jan. 1. Do you have questions? We've got answers. Credit: DepositPhotos

Why wasn’t I charged this tax before?

Actually, you kind of were. Utah law requires shoppers who aren't charged sales tax by online retailers to pay those taxes with their state income taxes, the Deseret News reported.

This is called a use tax.

What is a use tax?

While a sales tax applies to retail transactions in the state, a use tax is applied when shoppers buy from outside vendors that don’t require taxes on their sales, according to the Sales Tax Institute.

So let’s say you buy something on Amazon, but you aren't charged sales tax. You still owe your state the tax on that item.

For example, Daniel Gottfried of Connecticut bought something on Amazon for $22.98. He owed Connecticut $1.40 for that purchase, according to NPR. During tax season, Gottfried will go through each of his online receipts to make sure he pays the amount owed, according to NPR.

Currently, 45 states have a use tax, according to the Sales Tax Institute. The states without the use tax are also the ones without sales taxes: Alaska, Delaware, Montana, New Hampshire and Oregon.

Why haven’t I heard about this before?

The use tax is something people across the country often avoid or forget about because it’s not often enforced, according to NPR.

There have been efforts to require online retailers to charge sales taxes because so many people avoid paying use taxes.

Gov. Gary Herbert talks about his annual budget proposal at the Utah Highway Patrol's headquarters in Murray on Wednesday, Dec. 7, 2016. (Kristin Murphy, Deseret News)

What items fall under the use tax?

According to the Utah State Tax Commission, use taxes must be paid on items such as magazine subscriptions, internet products, clothing, toys, books and grocery food when you don’t pay sales taxes on those items.

What if I paid sales taxes in other state?

You can claim a tax credit for what you owe in Utah, according to the Utah State Tax Commission. However, if you buy something in another state and their sales tax is lower than Utah’s, you owe the difference. If it’s more than Utah’s sales tax, no refund or credit will be given.

So how much do I have to pay in use tax?

It depends on the items and your location. You can review this list from the tax commission to see what your county’s use tax rate is.

Gov. Gary Herbert talks about his annual budget proposal at the Utah Highway Patrol's headquarters in Murray on Wednesday, Dec. 7, 2016.(Kristin Murphy, Deseret News)

Will I get in trouble for violating this in the past?

Probably not. According to NPR, most states don’t go after anyone who violates the use tax. Some states have pushed to end the use tax, hoping that they’ll require online retailers to push an online sales tax, like Amazon just did with Utah.

Wait, so do I have to pay more taxes now?

Yes and no. You will have to pay taxes on the items you buy on Amazon. And if you didn’t file your use taxes before, you will notice an increase.

However, you won’t be charged a use tax and a sales tax. According to the Sales Tax Institute, a sales tax and use tax are “mutually exclusive,” meaning you only have to pay one or the other.

With the governor’s new Amazon deal, Utahns won’t have to pay use tax on their Amazon purchases anymore. This still applies, however, to purchases made through other online retailers.