The 
state of Utah provides several exemptions to the burden of sales tax. One particular exemption is very important for the purchase of a business because it often allows the transaction to be sales tax-free. This exemption is often referred to as the “occasional or isolated sales” exemption. It can be foundin Utah Code Section §59-12-104(13). This code section allowsa transaction to be exempt from sales tax if the seller is “not regularly
engaged in the business of selling that type of tangible personal property…” This rule exempts most business acquisitions from Utah sales tax because the sale of most businesses is infrequent and only occurs occasionally. However, there are a couple of important exceptions to the exemption.
The first exception to the “occasional or isolated sales” rule results when vehicles or vessels are included as part of a company sale structured as an asset sale (as opposed to a stock or entity sale). Utah Code Section §59-12-104(13)(b) states that the sale of a vehicle or vessel is not exempt and that the sale of a vehicle or vessel will be subject to sales tax at its fair market value, which is determined by the amount stated on a bill of sale or, in the absence of a bill of sale, the fair market value as determined by the tax commission. If not taken into consideration at the time a company is sold, a purchaser may be in for a surprise when he or she goes to retitle the vehicle with the Utah Department of Motor Vehicles. This vehicle exception also raises the interesting question as to whether an equitable title transfer and a legal title transfer of a vehicle should be treated the same for sales tax purposes. If not, there is the potential for abuse of the law. For example, a person could set up a single member limitedliability company (“LLC”)and have that LLC only own the vehicle. When the owner wants to sell the vehicle he or she simply sells the LLC, which means the legal title of the vehicle never changes, and the vehicle would never be exposed toUtah sales tax. Of course, there would be costs to set up the LLC but it may be worth the cost for the transfer of a very expensive vehicle.
Another important exception to the “occasional or isolated sales” exemption is when the seller is regularly engaged (or holds themselves out as being engaged) in the selling of the type of tangible personal property beingtransferred, even if it is part of an overall asset sale of a business. However, Utah Code Section §59-12-104(25) provides another exemption which excludes from sales tax “a product purchased for resale in this state, in the regular course of business…”
It should be noted that the above information is only applicable for sales tax and not for other taxes such as income tax.