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Learn About Arizona’s Tax And Business Climate

Monika Miles Arizona Tax Climate

This southwestern state is best known for the Grand Canyon, the mile-deep chasm carved by the Colorado River. Flagstaff, a ponderosa pine-covered mountain town, is a major gateway to the Grand Canyon. Other natural sites include Saguaro National Park, which protects the cactus-filled Sonoran Desert Landscape. Tucson is home to the University of Arizona and to the Arizona-Sonora Desert Museum.

Southern Arizona is known for its desert climate, with very hot summers and mild winters. Northern Arizona features forests of pine, Douglas fir, and Spruce trees, the Colorado Plateau, some mountain ranges (e.g., the San Francisco Mountains), as well as large deep canyons, with much more moderate summer temperatures and significant winter snowfalls. There are ski resorts in the areas of Flagstaff, Alpine, and Tucson. In addition to the Grand Canyon National Park, there are several national forests, national parks, and national monuments in the state.

Business Climate

Early in its history, Arizona’s economy relied largely on the “five C’s:” copper, cotton, cattle, citrus, and climate (tourism). Copper is still extensively mined from many expansive open-pit and underground mines, accounting for two-thirds of the nation’s output.

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Thinking About An Acquisition? What Are Your State Exposures?

Monika Miles - State Exposures

Thinking About An Acquisition? What Are Your State Exposures?

A Company may be in the process of either acquiring another company or are looking to be acquired themselves. In either case, the company wants to be aware of any potential state tax exposure areas, so they can move forward appropriately. Often however, the due diligence process is the first time the Company has addressed the multi-state landscape. Sometimes deals fall apart because a target company does not have its sales tax house in order. If a suitor company does its due diligence and finds significant exposure related to years of non-compliance with sales tax collection or income tax filing, it can either derail an entire deal, or significantly impact the purchase price.

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Are You An Amazon FBA Seller Who Owes California Taxes? You Need To Act Right Now!

Monika Miles - Amazon FBA

Does your company now, or has it in the past, taken advantage of Fulfillment by Amazon (“FBA”), and did you recently receive a letter stating you owe California taxes? This blog post explains why you cannot ignore this letter. Please contact us right away if you need help navigating your next steps!

Physical Presence Nexus And Fulfillment By Amazon

Back before Wayfair made headlines and the concept of economic nexus became a household term, essentially giving states the ability to pursue collection of sales tax from internet retailers, “physical presence” still established nexus within a state. A variety of factors determined physical presence nexus, such as employees located within a state, or owning or renting property within the state.

One such obvious physical presence item coming into play for a lot of companies that participate in FBA is inventory. If a company’s physical property (inventory) is held within a state (even if held in a third-party warehouse, like Amazon’s), it creates nexus, or taxable presence, for the company. That means that the company is then responsible for collecting and remitting the state’s sales/use tax and also filing income tax returns in the state.

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In The Cloud: Sales Tax And Software-As-A-Service

Monika Miles - In The Cloud Software As A Service

A very important and often misunderstood area in the sales tax arena is the taxability of cloud-computing, cloud-based services, etc., collectively often referred to as Software-as-a-Service (or “SaaS”). The very moniker alone is enough to start the state tax conversation down an interesting path.

The Basics

When we work with clients to determine how something should be taxed, we start with a few basic premises and then work from there.

Premise #1 (Nexus has been created): The taxpayer must have taxable presence (or “nexus”) with a state before the state can require the company to collect and remit sales/use taxes. Nexus is created in a variety of ways. Traditionally, we talked about having a physical presence, including such things as having employees in the state, third party contractors acting on the company’s behalf in the state, owning property (such as inventory) in the state, and owning or leasing office space in the state. Now, with the US Supreme Court’s ruling in South Dakota v. Wayfair in June 2018, many states are enacting economic nexus statutes which require sellers to collect and remit in those states based on sales or transactional thresholds. (For instance in the South Dakota case, which many states have mimicked, sales of $100,000 OR 200 transactions in the state during the year will give rise to economic nexus, and a collection and reporting requirement for sellers.)

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Online Sales Tax And SaaS Companies: What You Need To Know

Monika Miles - Online Sales Tax And Nexus

Although the Wayfair online sales tax ruling doesn’t relate specifically to SaaS, states are enacting laws that make it easier to create nexus, which means all companies – including SaaS – need to be more diligent in determining whether they’re subject to taxes in various states.

What exactly do SaaS companies need to know about Wayfair, the online sales tax debate, and how it may affect them?

How Online Sales Tax Legislation Affects SaaS Companies

Law360 does a good job of explaining why SaaS companies especially need to pay attention to the new online sales tax legislation states are enacting.

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Florida’s State Economy And Favorable Tax Rates

Monika Miles- Florida And Tax

Florida is the southeasternmost U.S. State, with the Atlantic Ocean on one side and the Gulf of Mexico on the other. It has hundreds of miles of beaches. The city of Miami is known for its Latin-American cultural influences and notable arts scene, as well as its nightlife, especially in upscale South Beach. Orlando is famed for its theme parks including Walt Disney World.

Florida is the flattest state in the United States. Lake Okeechobee is the largest freshwater lake in the state.

Central Florida is known as the lightning capital of the United States, as it experiences more lightning strikes than anywhere else in the country. Florida leads the United States in tornadoes per area (when including waterspouts), but they typically do not reach the intensity of those in the Midwest and Great Plains. Hail often accompanies the most severe thunderstorms. Hurricanes pose a severe threat each year during June 1 to November 30, hurricane season, particularly from August to October.

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Online Sales Tax And SAAS: What You Need To Know

Monika Miles-Online Sales Tax And SAAS

Last year was a big one in the online sales tax debate; everything changed following the Wayfair v. South Dakota Supreme Court decision. Once the ruling was announced in June, states began creating and implementing online sales tax provisions for internet retailers selling to state residents. In addition to adding uncertainty for small business trying to sort out tax code for dozens of states across the country, the ruling complicated another already-confusing situation: the taxability of SaaS (Software as a Service).

Online Sales Tax & SaaS In States Across the Country

How does the taxability of SaaS tie in with the Wayfair ruling? The Wayfair ruling doesn’t relate specifically to SaaS – it’s about nexus – but because states are enacting laws which now make it easier to create nexus (for instance, the South Dakota standards that started this all – sales of over $100,000 in a year OR 200 transactions), companies now need to be more diligent in determining whether their products and services are subject to tax in various states. That’s where the analysis of the SaaS revenue stream fits in. Many of our clients that were, perhaps, based in one state and may have had physical presence nexus in one or two other states didn’t have that much to worry about. But now, we need to know where their revenue streams (SaaS and others) are taxable because they are often reaching the minimum thresholds for registration, collection and filing of sales tax.

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Sleeping Giants Awaken: California, Texas And Wayfair

Monika Miles - What Is Nexus.

In the United States, the sales tax landscape has changed drastically due to the recent U.S. Supreme Court Case of South Dakota v. Wayfair (June 2018). Following this landmark decision which made it easier for companies to create nexus in states, many states have enacted legislation which establishes guidelines, thresholds for economic nexus. In a previous blog, we talked about this epic decision.

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 for them to create nexus; they now can have nexus in a state by virtue of economic nexus. Economic nexus essentially means that companies with sales of a certain dollar amount or a certain number of transactions with a state are required to register, collect and remit sales tax. Some states require both criterion. Additionally, note that some states base their economic threshold on taxable sales, while other states mention gross sales.

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Three Fascinating Examples Of State Tax Law Intersecting Technology

Monika Miles - Three Ways State Taxes And Technology Intersect

As we welcome the New Year, I thought it would be fun to look at a few areas where state tax laws and technology are coming together. Keep reading for three different updates that share ways modern tech is affecting states’ revenue.

1. Ohio Accepts Cryptocurrency for State Tax Payments

Cryptocurrency like Bitcoin has been around for a while now, yet Ohio is setting an interesting state tax precedent by allowing businesses to pay their fees with the digital currency.

This is especially interesting as these types of currency are known for volatility. However, the state’s taken this into consideration. OhioCrypto explains:

Payments made on OhioCrypto.com, through our third party cryptocurrency payment processor partner BitPay, are immediately converted to USD before being deposited into a state account. BitPay sets the exchange rate for a 15 minute allotted time window for each transaction once a business taxpayer begins to make their payment at OhioCrypto.com. BitPay assumes the risk of any market fluctuations during the allotted time window.

While the taxpayer will need to pay transaction, network and mining fees, the cost to the business seems to be less than if they paid their state tax fees through Ohio’s credit card service provider.

It will be interesting to see if other states decide to begin accepting cryptocurrency for state tax payments in the future.

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A Helpful Overview Of The 2019 State Sales Tax Ranking

Monika Miles- Overview of 2019 State Sales Tax

Over the past few years we’ve seen how companies have determined where to base operations based on considerations like sales taxcredits and incentives, and overall business climate. When it comes to running a business, which states are friendliest and which are most unfavorable?

The Tax Foundation’s 2019 State Business Tax Climate Index compiles various state details to offer a fascinating comparison for corporate leaders. Keep reading for an overview of how the various states stack up next to each other, especially in regards to sales tax.

2019 State Sales Tax Ranking

The Tax Foundation’s review of this year’s sales tax ranking includes a map with a helpful visual of each state’s placement on the list.

On it you can see the top 10 states are:

  1. New Hampshire
  2. Delaware
  3. Montana
  4. Oregon
  5. Arkansas
  6. Wyoming
  7. Maine
  8. Wisconsin
  9. Nebraska
  10. Virginia

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Holiday Shopping And Online Sales Tax: What You Need To Know

Monika Miles - Holiday Shopping And sales And Use Tax Online

Now that we’re in the midst of the holiday shopping season, businesses and states are starting to see the effects of the Wayfair online sales tax decision. Looking back specifically at Cyber Monday, there are a lot of fascinating results regarding how states and businesses fared. Are states projecting an accurate amount of revenue?

It’s also worth noting how the new online sales tax laws will affect small internet retailers as they struggle to comply with various states’ laws during this busy holiday shopping time. How will they fare given the new regulations?

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Focus On North Carolina And Taxes

North Carolina And Taxes

The Tar Heel State is a southeastern U.S. state with a landscape ranging from Atlantic Ocean beaches to the Appalachian Mountains. Charlotte, the state’s largest city, is home to the NFL’s Carolina Panthers and museums, such as the NASCAR Hall of Fame. The state motto (“First in Flight”) honors the Wright Brothers, who flew their first plane in Kitty Hawk on the Outer Banks.

North Carolina provides a large range of recreational activities, from swimming at the beach to skiing in the mountains. North Carolina also offers everything from theme parks to lighthouses.

Business Climate

North Carolina is the leading U.S. state in the production of flue-cured tobacco and sweet potatoes, and second in the farming of pigs and hogs, trout and turkeys. In the three most recent USDA surveys, North Carolina also ranked second in the production of Christmas trees.

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