Archive for Monika Miles

Important Sales Tax Issues Your CFO May Be Missing

Monika Miles And CFOs on Sales And Use tax

In our multi-state tax consulting practice in Silicon Valley, we often see that sales tax is an afterthought in companies’ finance departments. Many companies have net operating losses (NOLs) for income tax purposes, and they often don’t consider the ramifications of sales tax.

Further, many of our clients sell intangible products – like software, SaaS platforms or digitally downloaded information – and those items don’t SEEM to be taxable. Plus, in California most of those items do qualify for sales tax exemptions; but that’s not the case in all states.

As such, with an already long “to do” list, CFOs and corporate controllers may not put sales tax concerns on the front burner. In another blog post, we explained why it’s not a good idea for a company’s corporate controller to take on the burden of sales tax. In some organizations, however, these responsibilities fall to the CFO. This post explains why this likely isn’t the best option, either.

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Internet Sales – The Wayfair Case

Monika Miles And Internet Sales Tax
South Dakota v. Wayfair, Inc.  – THE Case

On June 21, 2018, the U.S. Supreme Court ruled 5-4 in favor of overturning its 1992 decision in Quill, which set a standard requiring substantial physical presence before a state could enforce the sales tax collection responsibilities on a seller. In the current case, South Dakota v. Wayfair, Inc., writing for the Court’s majority, Justice Anthony Kennedy indicated “…the Court concludes that the physical presence rule of Quill is unsound and incorrect. The Court’s decision in Quill Corp v. North Dakota, 504 U.S. 298 (1992), and National Bellas Hess, Inc. v. Department of Revenue of Ill., 386 U.S. 753 (1967), should be, and now are, overruled.”

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Nevada Tax Climate And Sales Tax Structure

Monika Miles - Nevada

Nevada is a western U.S. state defined by its great expanses of desert, and by the 24-hour casinos and entertainment for which its largest city, Las Vegas, is famed. Las Vegas is home to elaborate themed hotels and luxury resorts that line its main thoroughfare, the Las Vegas Strip. The city is also home to museums such as the Mob Museum, extravagant live shows and upscale shopping malls and restaurants.

Nevada is largely desert and semi-arid, much of it lies within the Great Basin. Areas south of the Great Basin are within the Mojave Desert, while Lake Tahoe and the Sierra Nevada lie on the western edge. About 86% of the state’s land is managed by various jurisdictions of the U.S. federal government, both civilian and military.

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What You Need To Know About State Tax Issues Before M&A Negotiations

Monika Miles - M&A

Is your company facing a merger or acquisition? Is state tax part of the negotiations? It needs to be! Whether you’re the company buying or selling, state tax issues often arise during the process – even more so now that so many states have enacted economic nexus laws. How should you plan ahead? It begins with due diligence!

Discovering State Tax Issues During Due Diligence

It’s not uncommon for state tax issues to be uncovered during the due diligence phase of an M&A deal as both companies look at ramifications of additional states coming into play.

Often, when a major buyer is looking into a target company, its CPA firm has already addressed it, whereas the seller company (which is usually smaller) generally hasn’t dealt with the ramifications of selling their products across state lines because they often have little or no representation. We work with many companies on the selling side of M&A deals, and help dispute or reduce the estimates the acquiring company’s CPA firm provides.

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What Companies Need To Know About Voluntary Disclosure Agreements

Monika Miles Sales Tax

The phrase of the day is “V-D-A”!  In the state tax world, that refers to Voluntary Disclosure Agreements, and we are working on many of these for our clients lately.  What are they, exactly, and why should your company perhaps be considering them as well?

What is a Voluntary Disclosure Agreement?

Simply put, entering into voluntary disclosure agreements with states is about companies identifying their potential state tax exposure (sales tax, income tax, or both) and coming forward voluntarily to pay any outstanding liabilities before the state identifies the company as part of an audit or other outreach effort.  As states are becoming more aggressive in their pursuit of out-of-state taxpayers, it’s becoming a bit of a game of “Beat the Clock!”

What are the advantages?

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What You Need To Know About Resale Certificates And Online Sales Tax

Monika Miles - Resale Certificates

Resale certificates provide a sales tax exception for registered retailers. They’re a way for the wholesaler to verify the company they’re selling to is planning to resell the items and collect sales tax during that future purchase. Note that resale certificates are not a new concept. They’ve been around since long before the Wayfair ruling, but as with everything sales tax – that ruling created some new confusion about an older concept! See below.

As Fundera explains:

When you purchase goods with a resale tax certificate, you’ll also need to be sure to collect the exempted tax when you sell the products. Resale certificates usually state your name and address as the buyer, the reseller’s permit number, a description of the purchased item, and a statement that the item in question is being purchased for resale.

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Pennsylvania Business And Tax Climate

Monika Miles - Pennsylvania

Pennsylvania, a northeastern state and one of the 13 original colonies, has a diverse terrain, which includes wide stretches of farmland, national forests and mountains. Philadelphia, the Keystone State’s largest city, displays its rich history in Independence Hall (where the Declaration of Independence and Constitution were signed) and the Liberty Bell, an enduring symbol of American Freedom. It was the second state to ratify U.S. Constitution, on December 12, 1787.

Business Climate

The first nationally chartered bank in the United States, the Bank of North America, was founded in 1781 in Philadelphia. After a series of Mergers, the Bank of North America is now part of Wells Fargo.

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Minnesota Business And Tax Climate

Monika Miles - Minnesota

Minnesota is a state in the Upper Midwest and northern regions of the United States. Minnesota is the 12th largest state in area and the 22nd most populous state, where 60% of its residents live in the Minneapolis-Saint Paul metropolitan area (known as the “Twin Cities”). This area is the center of transportation, business, industry, education, and government, while being home to an internationally known arts community. The remainder of the state consists of western prairies now given over to intensive agriculture; deciduous forests in the southeast, now partially cleared, farmed, and settled; and the less populated North Woods, used for mining, forestry and recreation.

Minnesota’s first state park, Itasca State Park, was established in 1891, and is the source of the Mississippi River. Today, Minnesota has 72 state parks and recreation areas, 58 state forests covering 4 million acres and numerous state wildlife preserves. The Mississippi National River and Recreation area is a 72-mile-long corridor along the Mississippi River through the Minneapolis-St. Paul Metropolitan Area connecting a variety of historic, cultural, and geologic interest.

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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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