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Archive for Monika Miles

State Tax Credits And Incentives: How Much Focus Is Too Much?

Monika Miles - State Tax Credits And Incentives

It’s no secret that lawmakers use legislation like state tax credits to implement change, such as standardizing the legal drinking age or attracting new business to their state. Most of the time, credits and incentives DO cater to specific industries or desired activities, like increasing employment or attracting corporate headquarters to states. But do legislators ever take this method of wielding influence too far?

I’ve included two interesting examples in the news I recently found and included my thoughts; let me know if you agree!

Washington: Microsoft Requests More State Tax

In Washington state, Microsoft is asking the legislature to increase state tax collected from tech companies in an effort to increase funds dedicated to workforce education. The request includes a provision that specifically targets two companies that make more than $100 billion in annual revenue: Microsoft itself and Amazon.

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The Truth About SaaS And Economic Nexus: 5 Myths Exposed

Monika Miles SaaS And Nexus Myths

There are a lot of misconceptions when it comes to SaaS and economic nexus, especially following last year’s Wayfair decision. Although these technology companies generally aren’t selling a tangible product across state lines, many state online sales tax laws are written in a way that make these businesses liable for collecting and remitting state sales tax.

Are you unknowingly exposing your SaaS company to sales tax risk by creating economic nexus? Keep reading for the truth about five common myths!

Myth #1: Because Wayfair online sales tax statutes provide for a clear date to begin filing, we don’t need to worry about retroactive exposure.

While it’s true that most states are not requiring companies to go back and file retroactively based upon the new economic nexus provisions (certain dollar or transactional thresholds of sales into a state during a year), there is still some retroactivity that companies may be forgetting.

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What You Need To Know: States’ Online Sales Tax And Marketplace Facilitators

Monika Miles - What You Need To Kno

Across the country, states continue to update their sales tax laws in an effort to clarify provisions and increase state income. Of course, because company sales extend beyond state borders, it’s extremely important for your business to be aware of various multi-state tax issues and how they may affect your organization.

One major trend we’re seeing (unsurprisingly) is more states’ adoption of economic nexus and online sales tax provisions based on the Wayfair Supreme Court case. In addition, states that had adopted marketplace facilitators as part of their tax code are beginning to clarify their new role. What does this mean? Keep reading for the details!

Marketplace Facilitators-Their Role In State Sales Tax

As this blog post explains, marketplace facilitators are companies that facilitate:

  1. A seller’s product and payment
  2. The transaction between a buyer and seller by bringing them together
  3. The transaction by processing payment, storing inventory, listing products, setting prices, etc.

Amazon and eBay are two prominent companies that are often designated as marketplace facilitators.

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It’s Still All Greek – U.S. Multistate Tax For Foreign Companies Since Wayfair

Monika Miles And Nexus In The United States

Almost two years ago (my how time flies), my husband and I took an amazing vacation on a cruise of the Mediterranean.  When I returned from that trip, I wrote a blog about the nuances for foreign companies doing business in the United States as it relates to state tax issues.  Income tax and sales tax in the US are challenging concepts not only for foreign companies, but also domestic companies.  And as the state tax landscape has changed recently as a result of the recent South Dakota v. Wayfair (2018) decision, it may also be impacting foreign companies doing business here as well.

So, to recap from that prior blog article, and to elaborate a bit further, here are some of the major areas for foreign companies to consider as they begin doing business in the US.

The Concept of Nexus – “Nexus” is the minimum contact a company must have with a state in order for the state to be able to impose its tax laws on the company.  Historically (until the Wayfair case in June 2018), companies looked to whether they had substantial physical presence in a state.  As I often tell clients, consider where you have “boots on the ground”, in terms of employees, contractors, offices, and inventory (see more below) – to name the more common nexus creators.   Once nexus is established, the company may be subject to the filing of income tax returns, the collection and remittance of sales tax and filing of returns, employer payroll taxes and employee withholding, and myriad other taxes which may be imposed by the state or local entities.   A challenge that some foreign companies face is that they don’t realize how many different state and local agencies there are (in addition to the US federal government).

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The Truth About SaaS And Economic Nexus: 5 Myths Exposed

Monika Miles - Saas And Economic Nexus

There are a lot of misconceptions when it comes to SaaS and economic nexus, especially following last year’s Wayfairdecision. Although these technology companies generally aren’t selling a tangible product across state lines, many state online sales tax laws are written in a way that make these businesses liable for collecting and remitting state sales tax.

Are you unknowingly exposing your SaaS company to sales tax risk by creating economic nexus? Keep reading for the truth about five common myths!

Myth #1: Because Wayfair online sales tax statutes provide for a clear date to begin filing, we don’t need to worry about retroactive exposure.

While it’s true that most states are not requiring companies to go back and file retroactively based upon the new economic nexus provisions (certain dollar or transactional thresholds of sales into a state during a year), there is still some retroactivity that companies may be forgetting.

Read more

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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