Excite Tax's answer: yes, once it pays wages. A Utah employer gets a free licence on TC-69 first, then files TC-941E every quarter.
Excite Tax's short answer: any business with employees working in Utah. The Tax Commission's list is wages for work done in Utah, wages to Utah residents working elsewhere, and certain payments reported on Forms 1099, and the licence has to exist before the business pays wages here. Who counts as an employee is below.
Usually not, unless the owner is on payroll. People in business for themselves are generally not employees, and payments to partners are exempt from withholding. An S corporation is the exception owners miss: its payments to an owner who works in it are wages, so the first owner paycheck needs a Utah withholding account. The entity-by-entity answers are in the questions further down.
Get the federal EIN first, because Utah registration needs it. Then apply in Taxpayer Access Point under Apply for a tax account(s), TC-69; the account information arrives by email. Unemployment insurance is a second, separate registration with the Department of Workforce Services. The full sequence is below.
No. The statute says the licence is issued without a licence fee. The cost shows up only for an owner with a bad record: after a history of filing or paying late, a bond of $25,000 to $500,000 may be required.
The quarterly return is TC-941E, due April 30, July 31, October 31 and January 31, and the January return doubles as the annual reconciliation. The TC-941R is not current: TC-941 and TC-941R are only for 2017 and earlier periods. The payment schedule depends on how much is withheld; see the filing calendar.
File anyway. A period with no withholding still needs a return showing zeros, or the Tax Commission assesses an estimated tax, and the annual reconciliation is due for every year the account is open. The Department of Workforce Services wants a quarterly unemployment report showing zero wages as well. An account that will never be used again should be closed.
(2) The following persons are guilty of a criminal violation as provided in Section 59-1-401 : (a) a person that: (i) is required to withhold, report, or remit any amounts under this part; and (ii) engages in business within the state before obtaining a license under this section; or (b) a person that: (i) pays wages under this part; and (ii) engages in business within the state before obtaining a license under this section.
In plain words: the licence comes before the first Utah paycheck, not after it. The Tax Commission's own guide puts it more bluntly: having Utah employees without a withholding licence is a class B misdemeanor. The licence is free and cannot be assigned to another person, so a buyer of a business registers under its own name.
Under Publication 14, an employer withholds Utah income tax when it does any of these:
Wages here mean the federal definition: Utah withholding is figured on the wages subject to federal withholding. Two narrow exceptions exist.
An out-of-state employer that does business in Utah for 60 days or less in a calendar year may be exempt, with Tax Commission approval; the approval comes first, and day 61 brings withholding for the whole period.
A nonresident who works in Utah 20 days or less, has no other Utah income and lives in a state with no income tax or a similar exclusion is not withheld on. Neither exception covers an ordinary Utah business with local staff.
One trap for owners with a past: if an owner, partner or officer has a history of late withholding, the old balance is paid, and a surety bond may be required, before a new account is issued. A fresh entity does not wipe the slate.
Every employer files the same quarterly return, TC-941E; what changes with size is how often the money goes in.
Utah withholding filing and payment schedules, per Publication 14
A due date on a weekend or holiday moves to the next business day, and the Tax Commission reviews the schedule every year against the prior year's filings, so a growing business can be moved to monthly payments without asking.
Utah does not copy the federal calendar: the semiweekly and $100,000 next-day deposit rules do not apply to Utah withholding. A payroll provider set up for the IRS schedule still needs the Utah schedule entered on its own.
An illustration, not a client: a Provo landscaping company pays each employee $4,000 a month, all of it wages subject to federal withholding, and each employee has a single-status W-4. Utah's monthly Schedule 4 for single filers gives the withholding for one employee:
Utah withholding on $4,000 of monthly wages, single, per Publication 14, Schedule 4
| Line | Rule | Amount |
|---|---|---|
| Tax before allowance | 4.45% of wages | $4,000 × 4.45% = $178 |
| Base allowance | $40 | $40 |
| Allowance phase-out | 1.3% of wages above $779 | ($4,000 − $779) × 1.3% = $41.87 |
| Allowance left | Not less than zero | $40 − $41.87, so $0 |
| Utah withholding | Tax before allowance, less allowance left | $178 a month |
With 3 employees, the company withholds $534 a month, under $1,000, so it files and pays quarterly: $1,602 for January to March, due April 30 on the TC-941E.
Hire 3 more at the same pay and the company withholds $1,068 a month, which is $1,000 or more, so it still files quarterly but pays monthly: January's $1,068 is due by the end of February.
A lower wage keeps part of the allowance. At $2,000 a month, 4.45% is $89, the phase-out is ($2,000 − $779) × 1.3% = $15.87, $24.13 of the $40 allowance survives, and the withholding is $64.87.
(6) (a) Each employer that deducts and withholds any amount under this part shall hold the amount in trust for the state for the payment of the amount to the commission in the manner and at the time provided for in this part.
The money withheld is never the business's money, and handing payroll to a provider does not hand over the liability. A payroll service provider may handle the filings and payments, but the employer is responsible when they are late, and a late withholding return draws the greater of $20 or 2%, 5% or 10% of the unpaid tax, depending on how late it is.
Excite Tax does not register employers or file withholding returns. Excite Tax keeps the books in step with what the provider filed, so the Utah withholding payable in the ledger matches each TC-941E and a missed payment shows up in the month it happens.
The fourth-quarter return is also the annual reconciliation, due January 31, and the W-2s go to Utah electronically by January 31 as part of it. Each W-2 that reports Utah wages carries the 14-digit account number ending in WTH.
Lateness costs twice. The Tax Commission charges $50 for a reconciliation more than 14 days late, plus $30, $60 or $100 for each late W-2 or 1099, and the employees wait: no Utah refund goes out before March 1 unless the complete reconciliation is filed by January 31.
Keep the withholding records for at least four years from the due date of the return reporting the wages. The year-end bookkeeping checklist lists the payroll ties to check before January.
A withholding account belongs to one EIN. A new EIN means closing the old account and opening a new one, which is what happens when a sole proprietor forms a partnership or a corporation.
Selling or stopping the business needs a closing too: an account left open is assessed an estimated tax with penalties and interest, and the licence does not transfer to a buyer. Filing zero returns forever is the expensive way to forget.
No. People in business for themselves are generally not employees, and owner draws are not wages. The first hire changes that: the licence comes before that person is paid.
Partners are not withheld on, since payments to partners are exempt from withholding. The partnership still registers the day it hires an employee who is not a partner.
Yes. An S corporation's payments to an owner who works in it are wages to the extent they are reasonable pay, so the owner's salary is Utah wages and needs a withholding account through TC-69. The S corporation basis guide covers the distributions side.
Same answer: corporate officers who work in the business are employees of the corporation, so their pay is withheld on and the corporation registers.
Hand the books over when keeping them costs more hours than the business can spare, or when they stop agreeing with the bank.
Forms W-2 and the Utah withholding returns are filed by your payroll provider or by you; payroll filing is not a service Excite Tax offers.
Excite Tax keeps these books; the return they feed is reviewed and signed by a licensed CPA at TBD CPA LLC.
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