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Archive for Monika Miles

Wayfair Two Years Later: What We Have Learned

Monika Miles: Wayfair Two Years Later

It’s hard to believe that it has been two years since the landmark decision in South Dakota v. Wayfair (2018) that changed the sales tax landscape. The high court’s decision on June 21, 2018 was that South Dakota’s economic nexus law was constitutional and that the state could require companies who met certain sales thresholds to collect and remit sales tax on sales to South Dakota customers, even if the company had no physical presence. The decision effectively changed the way states define nexus for sales tax purposes.

The Supreme Court’s ruling did not automatically make this the law of the land for all 50 states. It was a South Dakota case, so the ruling just applied to South Dakota. However, in the last two years, states have been jumping on the economic nexus bandwagon and enacting laws similar to those of South Dakota. States have long been searching for new ways to bring revenue into their state and the Wayfair case gave them a long-awaited opportunity to do so.

What is Economic Nexus?
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A Focus On Puerto Rico’s Business And Tax Climate

A Focus On Puerto Rico’s Tax Climate

In light of recent sales tax changes, this month, we’d like to take you to the Caribbean and discuss the Puerto Rico tax climate. An archipelago, it consists of the main island and a number of smaller ones, including Vieques, Culebra and Mona. Not every island is populated year-round, but many are popular tourist destinations.

Collectively known as the “Island of Enchantment,” Puerto Rico features beautiful sandy beaches, gorgeous tropical forests, coral reefs and balmy weather.

The islands were first populated by the Taíno, an indigenous Caribbean ethnic group, before being colonized by the Spanish following Christopher Columbus’ arrival in 1493. It remained in Spanish hands until the Spanish-American War, when it was ceded to American control with the signing of the Treaty of Paris of 1898.

As an unincorporated territory of the U.S., Puerto Ricans are U.S. citizens and can move freely between the island and the mainland. However, it does not have a vote in the U.S. Congress and is only represented by one non-voting member in the House of Representatives, referred to as a resident commissioner. Various taxes in Puerto Rico are often similar to those in the U.S., but can have significant changes based on local law.
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States Sales Tax Reliance

Monika Miles: States Sales Tax Reliance

Have you ever gone to the store, bought something, looked at your receipt and said to yourself, “This item only cost $25, why did I pay $28 for it?” Well $3 was due to sales tax, which many people STILL fail to mentally figure in before going to the register. You may gasp and think to yourself, “Gosh, this amount is really high.” Well you were probably in a state that relies heavily on sales tax for revenue.

According to a study by the Tax Foundation in 2017, sales tax is the second largest source of state and local tax revenue behind property taxes .

Most states have a layered system of sales tax, which includes a state portion, a county portion, and then local sales taxes. Eight states administer a sales tax only at the state level, but not the local level: Connecticut, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan and Rhode Island. And of the 50 United States, there are 5 which do not levy a state sales tax at all: the “NOMAD” states of New Hampshire, Oregon, Montana, Alaska and Delaware. Note that Alaska does allow local sales tax to be levied.

In this article, we explore various states and how their sales tax rates compare. We also take a look at which states are most dependent on sales tax revenue. As many states are beginning to take stock of the toll the Covid-19 pandemic is taking in terms of sheer dollar cost at the state and local levels, it’s an interesting time to consider where funding is going to come from.
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States Enjoy Boost In Tax Revenue From Increased eCommerce

States Enjoy Boost In Tax Revenue From Increased ECommerce

While the COVID-19 pandemic has been hard, if not downright disastrous, for businesses and governmental agencies across the country, states are now seeing a small ray of hope in the form of online sales tax revenue.

With many people self-quarantining at home and brick and mortar retail locations closed over the last several months, eCommerce has been the shopping avenue of choice across the nation.

Additionally, the adoption of marketplace facilitator and economic nexus legislation over the past two years as a result of the South Dakota v. Wayfair ruling has also played a part. For states that have implemented these laws, the boost in eCommerce has compounded with the increased tax revenue these states are seeing from Wayfair legislation.

How Big Is The Impact of Increased eCommerce?

States have seen an increase in eCommerce across the board. According to data from Adobe Analytics, eCommerce grew by 25 percent from March 13-15 compared to March 1-11. Online retailers have also seen average year-over-year revenue growth of over 68 percent and have recently experienced similar online activity to the 2019 holiday season.
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Business Climate And State Sales Tax Structure In Wyoming

MONIKA MILES: State Sales Tax in Wyoming

This month, we take you to the western mountain region of our country. Wyoming’s natural beauty and mountain ranges offer a sense of adventure, and perhaps a sense of rugged courage that surrounds you with the Western spirit. Popularly known as “The Equality State” and “The Cowboy State”, Wyoming is the least populous state and the 10th largest state by area in the country. The state is also the 2nd most sparsely populated after Alaska. It was named after a Native American word “mscheweamiing” meaning “at the big flats” or “Large Plains.”

Business Climate

Wyoming’s economy has some unique differences when compared to that of other US states. The state’s mining, tourism and agriculture industries serve as an important economic and cultural aspect of the economy. The majority of the residents in Wyoming still make their living from farming and ranching, which makes agriculture an important source of income for the locals. Some important agricultural commodities include livestock, hay, barley, wheat, sugar beets and wool.

Wyoming has been recognized as the top coal-producing state with the largest coal resources in the country. Extracting minerals like coal, oil, gas, crude oil and trona is one of the major economic drivers in the state. The state provides about 40% of the nation’s coal through the top producing mines located in the Powder River Basin. The extracted coal is considered clean and contributes to the betterment of the environment.
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How To Apply For Payment Protection Program Loan Forgiveness

How To Apply For Payment Protection Program Loan Forgiveness

In last week’s blog, we discussed the continuing confusion surrounding the deductibility of eligible expenses by small businesses who have received loans through the Paycheck Protection Program (PPP). While that situation has yet to be fully resolved, another aspect of the PPP program, applying for loan forgiveness, is a bit clearer cut.

You might ask, “why are you writing about the PPP loan forgiveness in a multistate tax blog?” The answer is simple. One of the things we are proudest of, in our state tax consulting space, is that we too, are a small business. And we’ve had first-hand experience in working through the complexities of this process. We felt it was important enough from a national small business perspective to warrant some dedicated space!

Which Expenses Are Eligible For Loan Forgiveness?

Loans through the PPP are applicable for forgiveness, but to be forgiven, the funds must be used to cover the following:

-Payroll costs, including benefits (up to $15,385 per worker)
-Interest on mortgage obligations, entered into before February 15, 2020
-Rent, under lease agreements in force before February 15, 2020
-Utilities, for which service began before February 15, 2020

In addition, employee and compensation levels must be maintained, or employees must be quickly rehired. Plus, no more than 25 percent of the forgiven amount may be for non-payroll costs.

How To Calculate PPP Loan Forgiveness
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Do You Know If You Can Deduct Expenses With A PPP Loan?

Monika Miles: Paycheck Protection Program

It’s been nearly a month and half since the Coronavirus Aid, Relief, and Economic Security Act (CARES) established the Paycheck Protection

Program (PPP). In the time since, countless businesses across the country have applied for aid. Congress has also passed the Paycheck Protection Program and Health Care Enhancement Act, which added an additional $320 billion in funding after the first $349 billion was allocated.

During this time, there have been various criticisms of the program, with many questions coming from small business owners. Many tax experts and economists also have unanswered questions regarding the program. One of the most asked questions is, will small businesses who have received PPP loans be allowed to deduct expenses?

Deductibility For PPP Expenses

While the CARES Act does contain language that specifically excludes loans forgiven under the PPP from being taxable income at the federal level, it also conflicts with other areas of tax code, which initially led to confusion amongst small business owners and tax officials alike.
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California Department Of Tax Fee Administration Amends its “Collection of Use” Tax Regulation (Part 2)

California Department Of Tax Fee Administration Amends its “Collection of Use” Tax Regulation (Part 2)

If you’ve been following along with our blogs, you know that we talked about some new amendments taking place under California Sales and Use Tax Regulation 1684, “Collection of Use Tax by Retailers”. In the first part of our blog, we discussed how California implemented on April 1, 2019 an economic nexus threshold for retailers in addition to the longstanding physical nexus threshold. The State now requires out of state sellers to register and collect use tax in California as soon as they exceed $500,000 of sales of tangible personal property in either the preceding or current calendar year.

In the first blog we focused on three examples from the amended regulation for when economic nexus would be triggered for an out-of-state retailer. In this second part of the blog we will talk about the circumstances that will allow out-of-state retailers to discontinue their obligation to collect and report use tax to California. In other words, when will California no longer require an out-of-state retailer to hold a Certificate of Registration – Use Tax and to collect and report use tax?
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California Department Of Tax And Fee Administration Amends Its Collection Of Use Tax Regulation (Part 1)

MONIKA MILES

The CDTFA (California Department Of Tax And Fee Administration) has updated an important regulation; one that affects all out of state retailers selling to customers in California. California Regulation 1684, “Collection of Use Tax by Retailers,” is not a new regulation, but it is one that needed many updates due to the Wayfair case. The CDTFA recently received approval from the Office of Administrative Law to publish the revised regulation.

In this two-part blog we will address the most important changes to the regulation. In this first blog we will discuss an out-of-state retailer’s registration and collection requirements in California. In the second blog we will discuss when an out-of-state retailer is no longer required to hold a California use tax permit (Certificate of Registration – Use Tax).

Let’s start with what hasn’t changed in Regulation 1684 (“R1684”). Any out of state retailer that has a physical nexus in California (an office, employees or representatives in the state, inventory, etc.) is required to obtain a use tax permit and collect use tax for their sales of tangible personal property into the state from their out of state location. When you have a physical nexus you are required to register for a Certificate of Registration – Use Tax and to collect and report the use tax to the state.
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Wayfair Bills Are On the Horizon Despite Disruptions

Wayfair Bills Are On the Horizon Despite Disruptions

As a result of the COVID-19 pandemic, many states have postponed legislative sessions due to health concerns and to abide by current social distancing recommendations from the Centers for Disease Control and Prevention (CDC).

However, despite these disruptions, lawmakers from several states are still prioritizing legislation related to South Dakota v. Wayfair, which established precedent for economic nexus. These states have been late to the table on such legislation or clarification.

Kansas

After the Wayfair ruling, the Kansas Department of Revenue (DOR) stated all remote sellers, regardless of size, would be required to collect sales and use taxes starting October 1, 2019. However, the Kansas Attorney General determined the Kansas DOR does not have the authority to implement such requirements without providing safe harbor for small sellers. In response, the Kansas DOR disagreed, leaving remote sellers without clear guidance.

In an effort to provide additional direction and address the taxation of digital sales, Kansas lawmakers have introduced two bills.
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What You Need To Know About COVID-19 Federal Tax Relief

What You Need To Know About COVID-19 Federal Tax Relief

Over the last three months, COVID-19 has grown to affect almost every aspect of daily life. From shelter-in-place mandates to the millions of workers currently out of work, we’ve all felt the impact.

As a small business ourselves, we understand that this is a time of financial crisis for so many similarly-sized businesses across the country. If you are a small business owner looking for answers, please keep an eye on this blog. We will continue to provide you with in-depth analysis of the changing situation and what it means for you and your business.

So far, we’ve provided a look at COVID-19 related state tax relief and what state taxes may look like after the crisis subsides. (Check out our recent blog on some sales tax relief being offered by the state of California.) We’ll now dive into federal tax relief and how you can expect to be impacted.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act

The CARES Act, signed into law by President Trump on March 27, offers $2.1 trillion in aid to individuals and businesses.

As part of the act, employers may claim a 50 percent tax credit on the first $10,000 of qualified wages paid to employees from March 13 to December 31, 2020. Qualified wages include wages of employees who were either furloughed or whose hours have been reduced due to COVID-19.
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What You Need To Know About Marketplace Facilitator Legislation

What You Need To Know About Marketplace Facilitator Legislation

As the digital economy continues to expand and online shopping becomes the norm, marketplace facilitator legislation has already been implemented by a number of states across the country. Of those states that don’t currently have marketplace facilitator legislation, many are in the process of implementing it.

The laws that are currently enacted vary on a state by state basis, which has created confusion for sellers and marketplaces alike. As a result, there have been a number of marketplace facilitators that have appealed to state courts regarding the legislation.

What is a Marketplace Facilitator?

So what exactly is a marketplace facilitator?

A marketplace facilitator is an online marketplace, such as Amazon, Etsy or Walmart, which facilitates the sale of goods from third-party sellers. Companies who sell through marketplaces are able to reach a much larger audience than if they only sold through their own websites. What we are seeing with our own client base is that many more companies are marketplace facilitators than the initial legislation seemed to target. And, because there are many creative ways to sell products, it is actually sometime unclear if a company is a marketplace facilitator, which adds some challenge for online sellers.

What Does Marketplace Facilitator Legislation Target?
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