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Archive for Monika Miles

Update On Economic Nexus Around The Country

Monika Miles

Economic nexus continues to be a hot topic in the sales tax world. Since the U.S. Supreme Court Case of South Dakota v. Wayfair (June 2018), almost all states have enacted economic nexus laws as they want their share of revenue from businesses selling to customers in their state. In this week’s blog, we’ll take a look at Kansas and their struggle to get an economic nexus law on their books as well as an update on other states that have economic nexus laws.

Reminder- What is Economic Nexus?

In the past, companies needed to have physical presence, or “boots on the ground,” in a state in order to have nexus (or taxable presence) in a state. This meant that a company needed to have offices, inventory, employees, or contractors in a state for a certain amount of time. Companies now don’t necessarily need to have physical presence in a state in order to create nexus; they now can have nexus in a state by virtue of economic nexus. Economic nexus means that companies need to have sales of a certain dollar amount or needs to have a certain number of transactions within a state. Some states require both criteria.

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How Does Economic Nexus Apply To More Than Just Sales Tax?

Monika Miles

Last year’s Wayfair v. South Dakota decision changed the way states define nexus for sales tax purposes. In the past, a business needed to establish physical presence, but the Supreme Court’s decision set precedent for states to establish economic nexus parameters, thereby mandating a certain percentage of sales made within the state are subject to sales tax.

However, it’s important to note that economic nexus doesn’t only affect sales tax. If your company conducts a certain amount of business within the state, it may also be responsible for collecting and remitting all applicable taxes, not just sales tax.

AccountingWeb does a terrific job explaining the following ways states and cities are applying economic nexus to their jurisdiction. Note that some are not necessarily new, but more states ARE considering economic nexus in areas beyond sales tax. Here’s a quick summary to get you started.

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State Of Utah Business Climate And Taxes

Monika Miles

Utah is a state in the western United States. It became the 45th state admitted to the union on January 4, 1896. It is the 13th largest state by area, the 30th most populous and the 11th most densely populated state.

Utah is known for its natural diversity and is home to features ranging from arid deserts with sand dunes to thriving pine forests in the mountain valleys. It is a rugged and geographically diverse state that is at the convergence of three distinct geological regions: the Rocky Mountains, the Great Basin, and the Colorado Plateau.

Utah features a dry semi-arid to desert climate, although its many mountains feature a large variety of climates, with the highest points in the Unita Mountains being above the timberline. The dry weather is a result of the state’s location in the rain shadow of the Sierra Nevada in California. The eastern half of the states lies in the rain shadow of the Wasatch Mountains. The Primary Source of precipitation for the state is the Pacific Ocean, with the state usually lying in the path of the large Pacific Storms from October to May. In Summer, the state, especially southern and eastern Utah, lies in the path of the monsoon moisture from the Gulf of California.
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The Chicago Lease Tax: Important Details For SAAS Companies

Monika Miles

Understanding sales tax compliance for SaaS companies is difficult. Some states tax it, some don’t. But what about cities?

Although Illinois doesn’t tax SaaS at the state level, Chicago’s Personal Property Lease Transaction Tax (or Chicago lease tax) is one that these types of businesses need to know about. While it’s not a sales tax, it’s applicable to any entity leasing personal property – including cloud services – to customers in the city.

What Is The Chicago Lease Tax?

Chicago’s lease tax applies to businesses or individuals that either have a lease or lease out personal property that’s used in the city.

Why not just charge a sales tax like other jurisdictions? As the Chicago Bar Association’s Samantha Breslow explains on BloombergTax.com, “Chicago is barred from taxing services, causing it to develop tax rules capturing transactions for the usage of property through a lease or license.”

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Economic Nexus And Exempt Sales?

Monika Miles And Nexus

If you’re an avid reader of our blog, you know that economic nexus is the hot topic when it comes to determining if a company has created taxable presence in a state. Since the Supreme Court’s decision in South Dakota v. Wayfair Inc. in June 2018, we’ve been helping clients to make sense of this  somewhat confusing concept.  While physical presence nexus (employees, inventory, office space) in a state is also still in play and creates a filing requirement, companies find themselves tripping into nexus much more quickly now because of the sales and transaction thresholds of economic nexus legislation, which varies from state to state.

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New State Tax Laws Effective October 1, 2019: What You Need To Know

Monika Miles

Are you curious what state tax updates are on the horizon? October 1, 2019 is a big date coming up; numerous states have new online sales tax provisions, amnesty programs and other legislative changes going into effect in just a few weeks. Keep reading for a quick summary of new laws and programs to keep an eye out for beginning next month.

Alabama’s Simplified Sellers Use Tax

As of October 1, Alabama requires remote retailers selling more than $250,000 in total sales (taxable and nontaxable) to begin collecting and remitting sales tax. Although sellers need to file their Alabama state tax returns monthly, these sales and use taxes fall into the “simplified” category because they’re a flat 8 percent on all purchases, regardless of the shopper’s locality in the state.

Arizona Eases Into Online Sales Tax

Arizona’s transaction privilege tax (TPT) is designed to ease the smaller out-of-state retailers into online sales tax compliance. As the Arizona Department of Revenue explains, the threshold for remote alleges to pay TPT is:

  • $200,000 in 2019 (beginning October 1)
  • $150,000 in 2020
  • $100,000 in 2021 and thereafter

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California State Tax Rules For The Cannabis Industry

California Cannabis Tax Rules

The cannabis industry is the new hot evolving industry in CA. California became the first state to legalize medical marijuana in 1996. On November 8, 2016, the state’s voters chose to legalize recreational use of marijuana.

The California Tax and Fee Administration (CDTFA) has put together an online guide to help business owners better understand the tax obligations specific to their cannabis business. In the following article, we will summarize these nuances that business owners need to know about this industry. Also, stay tuned for future articles on this topic.

Taxes Involved

In addition to state sales and use tax, effective January 1, 2018, a 15% excise tax is imposed upon retail purchasers of cannabis and cannabis products.  Additionally, a tax on all harvested cannabis that enters the commercial market is imposed on cultivators at a rate of:

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What You Need To Know About State Sales Tax Holidays

State Sales Tax Holidays

Although not all states offer sales tax holidays to consumers, 17 states across the country (as well as Puerto Rico) currently offer specific dates where shoppers can buy certain items without paying the sales tax on them. While they’re designed as an incentive for consumers to support local businesses, and they’re an interesting approach some states take, it’s difficult to know if they’re really all that effective in driving the local economy – plus these holidays can cause quite a headache for retailers. Which States Offer Sales Tax Holidays?

Here is a quick summary:

  • Alabama: Severe weather preparedness, February 22-24 and back to school, July 19-21
  • Arkansas: Back to school, August 3-4
  • Connecticut: Clothing and footwear, August 18-24
  • Iowa: Clothing and footwear, August 2-3

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Focus On Washington State Tax Climate

Monika Miles On Washington State Tax Climate

Washington is a state in the Pacific Northwest. It is the 18thlargest state and the 13th most populous state. The state was admitted to the union as the 42nd state in 1889.

The Puget Sound in Washington is an inlet of the Pacific Ocean consisting of numerous islands, deep fjords, and bays carved out by glaciers. The remainder of the state consists of deep temperate rainforests in the west; mountain ranges in the west, central, northeast and far southeast; and a semi-arid basin region in the east, central and south, given over to the intensive agriculture. Washington is the second most populous state on the West Coast, after California. Mount Rainier, an active stratovolcano, is the state’s highest elevation, at almost 14,411 feet, and is the 2nd topographically prominent mountain in the continental United States, the first being Denali in Alaska.

Business Climate

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What You Need To Know About The Taxability Of SaaS In Nine Eastern States

Monika Miles

Are you curious if you need to be paying taxes on or charging your customers sales tax on your sales of these revenue streams: Software-as-a-Service (SaaS), cloud computing and electronically downloaded software? The answer is, maybe. Because these three areas are defined differently by each state, it’s important to understand how each state’s tax codes approaches them.

Being aware of the tax ramifications in any state your company has established nexus is incredibly important, especially considering last summer’s Wayfair decision. While the U.S. Supreme Court’s decision may seem like it was only directed at online sellers, the truth is that multi-state sellers (such as those generating revenue from SaaS and software) are also affected. Because of the ruling, it will be even easier to establish nexus in more states across the country; companies need to know which taxes they’re responsible for in regards to SaaS, cloud computing and electronically downloaded software.

Here’s a guide to the taxability of SaaS in these nine key eastern states:

  1. Florida
  2. Georgia
  3. Illinois
  4. Indiana
  5. Massachusetts
  6. New York
  7. Ohio
  8. Pennsylvania
  9. South Carolina Read more

California: Relief For Marketplace Sellers?

Monika Miles

The state of California is at it again! But this time offering some relief for out of state sellers. In a continuing quest to require out of state sellers who created nexus as a result of engaging in programs like Fulfillment by Amazon (FBA) to register and retroactively file in the state, CA has passed SB 92 and the California Department of Tax and Fee Administration (CDTFA) has issued guidance. On July 1, 2019, the CDTFA issued Special Notice L-681 pertaining to Senate Bill 92 that discusses a special tax relief program. This program is only available for “qualifying retailers.”

Who Qualifies?

A “qualifying retailer” is a marketplace seller that meets certain requirements. Please note that all of the following conditions must be met:

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What You Need To Know About The Taxability Of SAAS In Nine Western States

Monika Miles

When it comes to Software-as-a-Service (SaaS) companies, there’s often confusion regarding both nexus and the taxability of this revenue stream.

And while the Wayfair decision seems like it’s directed only at online sellers, traditional multi-state sellers (including those that generate revenue from SaaS and software) are also affected, as nexus is now easier to establish. Once it is established – either by traditional physical presence or by sales volume – then companies will need to consider the taxability rules of SaaS in each state in which they have nexus.

Is SaaS even taxable? Because SaaS and cloud computing don’t always clearly fall into existing tax definitions, different states interpret its taxability in different ways. Some regard it as similar to electronically downloaded software, while others consider it a service, which may be taxable or not. And what about electronically downloaded software? Is it treated differently from SaaS?

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