TaxConnections

 
 

Access Leading Tax Experts And Technology
In Our Global Digital Marketplace

Please enter your input in search

Archive for George Rendziperis, J.D.

How Will States Deal With Budgetary Issues?

How Will States Deal With Budgetary Issues?

As we begin a new year, new issues arise for states. As states are dealing with budgets for the year, spending has increased and tax revenue have decreased. The COVID-19 pandemic has changed our lives, the way we work, shop and interact with others.

A few states are seeing their residents, like California, New York and New Jersey, all high tax jurisdictions, moving to and becoming permeant residents of Florida, Texas, and Nevada, all states with low taxes or no state tax on companies or individuals.

How will states deal with these budgetary issues?  Decrease spending? Increase tax rates? Expand the tax base? Tax out-of-state companies and Individuals?  Increase tax credits and incentives, to attract investment? My guess, all the above, except for decreases to spending.

Read more

State And Local Tax: Controlling Interest Transfer Tax

State And Local Tax: Controlling Interest Transfer Tax

Do you own an entity that holds real estate?  Are you thinking about selling real estate?  Are you considering selling the real estate asset or selling the entity that owns the real estate?

Generally, a real estate transfer tax is imposed on documents that convey an interest in real estate from one person to another person. The transfer tax, generally, is imposed on the recordation of a deed and is based on the consideration paid or the fair market value of the property (the “Real Estate Transfer Tax”).

Taxpayers utilized loopholes to avoid paying the Real Estate Transfer Tax, by selling the entity that owns the real estate instead of selling the real estate itself.  Approximately 17 states have closed such loopholes.

Read more

Why State And Local Tax Due Diligence Is Important

Why State And Local Tax Due Diligence Is Important

Why is State and Local Tax (SALT) due diligence important in mergers and acquisitions?  Someone else’s issues may be your headache and cost you a lot of money!

What is due diligence? Due diligence is the process of identifying and analyzing the risk associated with acquiring a business or selling a business. Tax risk, particularly state and local tax, is a key part of that analysis.

There are many different types of taxes that businesses should take into consideration when doing due diligence, such as property taxes; sales and use taxes; gross receipts taxes; income taxes; and franchise taxes.  Each of these tax types have unique rules and implications, and state and local jurisdictions apply those taxes in different ways. It can get complex quickly based on where a company is doing business.

Read more

SALT ALERT: Apportionment Rules Change

SALT ALERT: Apportionment Rules Change

Texas has updated its rules regarding the sourcing of revenue for apportionment purposes.  The Comptroller has indicated that the change in the rules reflects statutory changes, court decisions, current guidance, update definitions and improve readability.

The amendments bring both favorable and adverse changes for taxpayers subject to the Texas Margins Tax, with changes to the sourcing provisions for receipts from services, including advertising services, transportation services and internet hosting, and receipts from sales of computer hardware and digital products, capital assets and investments, interests in single-member limited liability companies (SMLLCs) and sales of securities through an exchange.

Services

Read more

Salt Alert: Nevada Amnesty Program

Salt Alert: Nevada Amnesty Program

The Nevada Legislature has enacted a one-time tax amnesty program for qualified businesses or individuals doing business in Nevada.

Benefits Of Amnesty

The program allows for penalty and interest to be waived on outstanding taxes that were due and payable on or before June 30, 2020, which includes monthly tax returns due on May 31, 2020 or before, and quarterly tax returns due April 30, 2020 or before.

Amnesty Period

The amnesty period is February 1, 2021 – May 1, 2021.

Taxes Covered Under Amnesty Program

The following tax types are eligible for amnesty:

Read more

State And Local Tax Audit Process

State And Local Tax Audit Process

This article is the third part of a three-part series regarding the State and Local Tax consequences of doing business in multiple states.  This article will discuss a State Tax Audit. Part 1 discussed Nexus and Part 2 discussed Voluntary Disclosure.

Questions we get from companies regarding its multistate activities are:  “How will states find me?”  “How will states enforce these new economic standards for sales and use taxes and income, franchise or gross receipts taxes?”   The answer is “do you really want to find out!”  The cost of states finding you and then assessing tax, interest, and penalties versus being proactive and compliant with state tax laws, as discussed in Part 1 of this series, can be a lot of money, as tax, interest, and penalties multiply very quickly.

Read more

State And Local Tax: Entity Formation For Certain Texas Activity

State And Local Tax: Entity Formation For Certain Texas Activity

My colleague, Matthew Roberts, recently posted an article regarding choice-of-entity, “Starting a Business in Texas:  Choice of Entity.”   The article provided a summary of the tax and non-tax implications of each potential entity type.

We will discuss “passive entities” under Texas law.  Please note the definition of a passive entity under Texas law is not the same as the definition under the Internal Revenue Code.   Depending on the business being conducted in Texas, a certain type of entity may be more beneficial to reduce or eliminate your  Texas Margin Tax (the “Margin Tax”).

Read more

On-Line Retailers And Remote Sellers: Sales And Use Taxes

On-Line Retailers And Remote Sellers: Sales And Use Taxes

The Supreme Court of the United States’ decision in Wayfair, in June 2018, changed the landscape for sales and use taxes nexus for on-line retailers and remote sellers.  Due to budgetary deficits the states are facing due to the downturn in the economy and the Covid-19 Pandemic, states will increase audit activity to raise money.  Companies must be prepared and be proactive in order to avoid or reduce any state tax assessments.

The Wayfair decision lowered the bar in which a company has nexus with a state.   Prior to Wayfair, a company needed a physical presence in the state to be required to collect and remit sales and use taxes.  After Wayfair, states now require an economic presence, generally based on a threshold of sales into the state to create nexus with the state.  Please note, even if a company does not meet the economic thresholds for sales or transactions, as the case may be, but has a physical presence in the state, then the company has nexus with the state because of the physical presence and must register for sales and use taxes in such state.

Read more

State And Local Voluntary Disclosure

State And Local Voluntary Disclosure

This article is the second of a three-part series regarding the State and Local Tax consequences of doing business in multiple states. This article will discuss Voluntary Disclosure, Part 1 discussed Nexus and Part 3 will discuss the Audit Process.

The Wayfair decision changed the landscape for nexus in the sales and use tax area. It lowered the bar to establish nexus with a state, which gives a state the right to require the collection and remittance of sales and use taxes. The Supreme Court’s decision changed the nexus focus from the existence of a physical presence to an economic presence—which generally may be based on sales into the state themselves. As a result, many taxpayers may have triggered the nexus threshold, especially if a state imposes a factor presence standard for income, franchise or gross receipts taxes.

Read more

Frequently Asked Questions: Sales And Use Taxes Economic Nexus And Wayfair (Part 2)

SALES AND USE TAXES ECONOMIC NEXUS AND WAYFAIR

PART 2:  IF A TAXPAYER MEETS THE SALES THRESHOLD IN A STATE, WHAT MUST WE DO NOW?

These frequently asked questions build on our prior series of FAQs.

Q:  Once a taxpayer meets the sales threshold of a state, what must be done to be compliant with the state’s tax laws?

A:  You must register for sales and use taxes with the state.  Depending on the state and jurisdiction, you may need to register with the local jurisdiction or parish.  Please note some states may require you to register with the state’s Secretary of State before obtaining a sales tax permit from the state.

Q:  How often will I need to file sales and use tax returns? 

A:  It will depend on each state.  The state will assign you a filing frequency based on certain criteria it has established.  The frequency will be either monthly, quarterly or yearly.

Read more

Frequently Asked Questions On Sales And Use Taxes Economic Nexus And Wayfair

Frequently Asked Questions On Sales And Use Taxes Economic Nexus And Wayfair

PART 1:  HOW DOES WAYFAIR IMPACT MY BUSINESS AS A REMOTE SELLER

 Q:  How many states have passed economic nexus sales and use tax law?

A:  All states that impose sales and use taxes except for Florida and Missouri have passed economic nexus laws for sales and use tax purposes.  Please note that Alaska, Delaware, Montana, New Hampshire and Oregon do not impose a state sales and use tax.

Q:  Which sales are used to determine economic nexus threshold?

A:  It will depend on the state.  Some states use gross sales, other use retail sales (sale for resale sales are not included) and others use taxable sales (exempt sales are not included).

Q:  When determining nexus threshold, do I review Customer Bill to Location or Customer Ship to Location?

Read more

State and Local Tax Nexus

State and Local Tax Nexus

This article is the first of a three-part series regarding the State and Local Tax consequences of doing business in multiple states.  Part 1 will discuss Nexus, Part 2 will discuss Voluntary Disclosures, and Part 3 will discuss the Audit Process.

What is Nexus?  In order for a state to impose an income, franchise, or gross receipts tax on a taxpayer or require a taxpayer to collect and remit sales and use taxes, the taxpayer must have nexus with the state.  Nexus is some type of connection with the state.   Such connection could be a physical presence in the state, an economic presence in the state (i.e., taking advantage of the market in the state (such as an intangible asset)) or some type of factor presence in the state (certain dollar amount of sales into a state).

Are there different nexus standards for Income, Franchise and Gross Receipts taxes and Sales and Use taxes?  Yes.

Read more