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Archive for Monika Miles

8 New State Laws You Should Know For 2020

8 New State Laws You Should Know For 2020

In the state tax world, the beginning of the year means new legislation goes into effect. Are you curious about which laws changed at the beginning of the month? Keep reading for eight states with new and updated sales tax laws you won’t want to miss.

Georgia: 529 Plan State Tax Update

For Georgia residents using a 529 Plan to save for college expenses, state tax deductions will double to be:

  • $4,000 per child for single taxpayers
  • $8,000 per year for those filing jointly with a spouse

This deduction will be available beginning with the 2020 tax year.

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Business And Tax Climate In Alabama

Alabama And Taxes

Last month, we were in the cold climate of Alaska. This month we travel to the humid subtropical climate of Alabama, located in the southeastern region of the united states. It is the 30th largest by area and the 24th most populous of the 50 states. With a total of 1,500 miles of inland waterways, Alabama has the most of any state.

About 3/5 of the land area is a gentle plain with a general descent towards the Mississippi River and Gulf of Mexico. The north Alabama region is mostly mountainous, with the Tennessee River cutting a large valley and creating numerous creeks, streams, rivers, and lakes. The state ranges from sea level at Mobile Bay to over 1,800 feet in the Appalachian Mountains in the northeast. The highest point is Mount Cheaha, at 2,423 feet.

Business Climate

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How To Navigate The California Manufacturing Partial Sales And Use Tax Exemption

MONIKA MILES

The California Manufacturing Partial Sales and Use Tax Exemption, which went into effect July 1, 2014, allows certain manufacturers and biotech companies to exempt a portion of sales and use tax on purchases of qualified equipment used in manufacturing and R&D (research and development). While it’s been around for a few years, it’s still a viable benefit for companies purchasing equipment.

How To Take Advantage Of The California Manufacturing Partial Sales And Use Tax Exemption
Qualifications

To qualify, you need to meet the following criteria:

  • Be engaged in certain types of business primarily engaged (50 percent or more of the time) in those lines of business described in the NAICS Codes for:
    • Manufacturing (311100-339999)
    • R&D in biotechnology (541711)
    • R&D in the physical, engineering and life sciences (541712)
    • Generation and production, or storage and distribution of electric power (22111-221118, 221122)

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What You Need To Know About The Wayfair Decision And How It Affected Sales Tax

MONIKA MILES

Here we are, about 18 months after one of the biggest jolts to the sales tax landscape. On June 21, 2018, state sales tax completely changed when the U.S. Supreme Court established precedent for economic nexus through South Dakota v. Wayfair, Inc.

In the highly anticipated ruling, the Court ruled 5-4 in favor of overturning its 1992 Quill decision, which required sellers to have substantial physical presence before a state could enforce the sales tax collection responsibilities.

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 decisions 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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A Review Of Marketplace Facilitation

MONIKA MILES- Marketplace Facilitation

With the rapid growth of online sales and companies like Amazon and Ebay, marketplace facilitation has become increasingly popular, but is also very complicated. As explained by avalara, states continue to be very aggressive in finding new ways to bring revenue into their state. Many have enacted marketplace facilitator laws, which are laws that regulate marketplace facilitation and vary by state and municipality. As with all things multistate, uniformity is not always the case and different pieces of legislation can get very confusing.

In this post, we review what the idea of marketplace facilitation is, what the marketplace facilitator laws are and how marketplace facilitator laws are impacting retailers.

What is a Marketplace Facilitator?

In an article by accuratetax.com, a marketplace facilitator is defined as a company that operates a marketplace or “selling space” on a large platform (i.e., Amazon or eBay). Companies are then able to sell their products through that platform via the marketplace facilitator. The benefit to these companies is that they are able to reach a much larger audience by selling via the marketplace than if they sold their products on their own. Note though, that many sellers also continue to sell direct to customers through their own website, in addition to the marketplace.

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Nexus: What Do You Need To Know And How Does It Relate To State Tax?

MONIKA MILES - NEXUS

In the state tax world, one of the most important concepts is “nexus.” Also known as “taxable presence, “nexus” is the term that describes the minimum connection a company needs to have with a state in order to be subject to the state’s taxing scheme. This includes sales tax, income tax, gross receipts tax and more.

There’s a lot that goes into the discussion around nexus, and with the recent state tax law changes, there are frequent updates. This post is a helpful start to understanding what nexus is and how it affects your business.

How Does Physical Presence Nexus Establish State Tax Exposure?

One primary way companies establish nexus is through having a physical presence in that state. For example, if a business has “boots on the ground” in terms of employees or third-party contractors working in the state, or has inventory, other personal property or real property in the state, the company likely has nexus and needs to collect and remit state tax.

When it comes to physical presence nexus, there are a few specific areas we look at:

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Tax Business Climate In U.S. State Of Alaska

MONIKA MILES - Alaska Tax And Business Climate

On March 30, 1867, the United States purchased Alaska from the Russian Empire for $7.2 million, or approximately two cents per acre. The area went through several administrative changes before becoming recognized as a territory on May 11, 1912. It was admitted to the union as the 49th state on January 3,1959.

It is the largest U.S. state by area and the 3rd least populous state in the U.S. It is the northernmost and westernmost state and has the most easterly longitude in the U.S. because the Aleutian Islands extend into the Eastern Hemisphere. With its myriad islands, Alaska has nearly 34,000 miles of tidal shoreline.

Business Climate

Alaska’s economy is dominated by the fishing, natural gas, and oil industries, resources which it has in abundance. United Sates armed forces bases and tourism are also a significant part of the economy.

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Economic Nexus In Wake Of The Wayfair Decision

Monika Miles On Economic Nexus

In the United States, the sales tax landscape has drastically changed following the June 2018 U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc. In this landmark decision, the high court ruled that it was constitutional for South Dakota to enact an economic nexus law. While this may seem like old news, we are still receiving queries every single day about economic nexus and how it impacts our clients.

As a result of the Supreme Court’s decision, over the last year, most of the states which impose a state-level sales tax have jumped on the economic nexus bandwagon and have enacted “Wayfair” types of laws. States are eager to collect sales tax (as well as other types of taxes) and, in theory, want to make it easier for companies to pay their taxes. In addition to physical presence, if companies create economic nexus in a state, that requires them to collect and remit sales tax and also file sales tax returns, provided the state has enacted an economic nexus statute, which again, most of them have at this point!

What Is Economic Nexus?

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Business And Tax Climate In Massachusetts

Monika Miles

Massachusetts is named after the Massachusett tribe, which once inhabited the eastern part of the state, and is one of the original 13 colonies. It is the 7th smallest state in the United States. Despite its small size, Massachusetts features numerous topographically distinctive regions. The large coastal plain of the Atlantic Ocean in the eastern section of the state contains Greater Boston, along with most of the state’s population, as well as the distinctive Cape Cod peninsula. To the west lies the hilly, rural region of Central Massachusetts, and beyond that, the Connecticut River Valley. Along the western border of Massachusetts lies the highest elevated part of the state, the Berkshires.

The entire Commonwealth of Massachusetts has played a powerful commercial and cultural role in the history of the United States. Before the American Civil War, Massachusetts was a center for the abolitionist, temperance, and transcendentalist movements. Massachusetts is home to numerous museums and historical sites. Historically themes museums and sites such as the Springfield armory National Historic Site in Springfield, Boston’s Freedom Trail and nearby Minute Man National Historical Park, both which preserve a number of sites important during the American Revolution, the Lowell National Historical Park, which focuses on some of the earliest mills and canals of the industrial revolution in the U.S., the Black Heritage Trail in Boston, which includes important African-American and abolitionist sites in Boston, and the New Bedford Whaling National Historical Park, all showcase various periods of Massachusetts’ history.

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Trick Or Treat! State Tax And Its Effect On Popular Treats

Monika Miles

Halloween is right around the corner. As you prepare to greet trick-or-treaters or dress in costumes for a party with friends, I thought it would be fun to look at how states are benefiting from the holidays, specifically through sales tax.

Obviously, certain Halloween items fall under standard taxes (e.g. Halloween costumes). But what about those treats? From candy for the kids to soda and adult beverages for the grown-ups, keep reading to learn how these sweets and drinks fall under state tax provisions.

Trick Or Treat! Candy Meets Sales Tax Laws

It’s estimated Americans will spend $2.6 billion dollars on Halloween candy this year. Although candy itself is small and fairly inexpensive, when you add up how many consumers are buying it, you can see why it becomes a state tax issue.

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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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