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Archive for Monika Miles

California State Tax Rules For The Cannabis Industry

California Cannabis Tax Rules

The cannabis industry is the new hot evolving industry in CA. California became the first state to legalize medical marijuana in 1996. On November 8, 2016, the state’s voters chose to legalize recreational use of marijuana.

The California Tax and Fee Administration (CDTFA) has put together an online guide to help business owners better understand the tax obligations specific to their cannabis business. In the following article, we will summarize these nuances that business owners need to know about this industry. Also, stay tuned for future articles on this topic.

Taxes Involved

In addition to state sales and use tax, effective January 1, 2018, a 15% excise tax is imposed upon retail purchasers of cannabis and cannabis products.  Additionally, a tax on all harvested cannabis that enters the commercial market is imposed on cultivators at a rate of:

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What You Need To Know About State Sales Tax Holidays

State Sales Tax Holidays

Although not all states offer sales tax holidays to consumers, 17 states across the country (as well as Puerto Rico) currently offer specific dates where shoppers can buy certain items without paying the sales tax on them. While they’re designed as an incentive for consumers to support local businesses, and they’re an interesting approach some states take, it’s difficult to know if they’re really all that effective in driving the local economy – plus these holidays can cause quite a headache for retailers. Which States Offer Sales Tax Holidays?

Here is a quick summary:

  • Alabama: Severe weather preparedness, February 22-24 and back to school, July 19-21
  • Arkansas: Back to school, August 3-4
  • Connecticut: Clothing and footwear, August 18-24
  • Iowa: Clothing and footwear, August 2-3

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Focus On Washington State Tax Climate

Monika Miles On Washington State Tax Climate

Washington is a state in the Pacific Northwest. It is the 18thlargest state and the 13th most populous state. The state was admitted to the union as the 42nd state in 1889.

The Puget Sound in Washington is an inlet of the Pacific Ocean consisting of numerous islands, deep fjords, and bays carved out by glaciers. The remainder of the state consists of deep temperate rainforests in the west; mountain ranges in the west, central, northeast and far southeast; and a semi-arid basin region in the east, central and south, given over to the intensive agriculture. Washington is the second most populous state on the West Coast, after California. Mount Rainier, an active stratovolcano, is the state’s highest elevation, at almost 14,411 feet, and is the 2nd topographically prominent mountain in the continental United States, the first being Denali in Alaska.

Business Climate

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What You Need To Know About The Taxability Of SaaS In Nine Eastern States

Monika Miles

Are you curious if you need to be paying taxes on or charging your customers sales tax on your sales of these revenue streams: Software-as-a-Service (SaaS), cloud computing and electronically downloaded software? The answer is, maybe. Because these three areas are defined differently by each state, it’s important to understand how each state’s tax codes approaches them.

Being aware of the tax ramifications in any state your company has established nexus is incredibly important, especially considering last summer’s Wayfair decision. While the U.S. Supreme Court’s decision may seem like it was only directed at online sellers, the truth is that multi-state sellers (such as those generating revenue from SaaS and software) are also affected. Because of the ruling, it will be even easier to establish nexus in more states across the country; companies need to know which taxes they’re responsible for in regards to SaaS, cloud computing and electronically downloaded software.

Here’s a guide to the taxability of SaaS in these nine key eastern states:

  1. Florida
  2. Georgia
  3. Illinois
  4. Indiana
  5. Massachusetts
  6. New York
  7. Ohio
  8. Pennsylvania
  9. South Carolina Read more

California: Relief For Marketplace Sellers?

Monika Miles

The state of California is at it again! But this time offering some relief for out of state sellers. In a continuing quest to require out of state sellers who created nexus as a result of engaging in programs like Fulfillment by Amazon (FBA) to register and retroactively file in the state, CA has passed SB 92 and the California Department of Tax and Fee Administration (CDTFA) has issued guidance. On July 1, 2019, the CDTFA issued Special Notice L-681 pertaining to Senate Bill 92 that discusses a special tax relief program. This program is only available for “qualifying retailers.”

Who Qualifies?

A “qualifying retailer” is a marketplace seller that meets certain requirements. Please note that all of the following conditions must be met:

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What You Need To Know About The Taxability Of SAAS In Nine Western States

Monika Miles

When it comes to Software-as-a-Service (SaaS) companies, there’s often confusion regarding both nexus and the taxability of this revenue stream.

And while the Wayfair decision seems like it’s directed only at online sellers, traditional multi-state sellers (including those that generate revenue from SaaS and software) are also affected, as nexus is now easier to establish. Once it is established – either by traditional physical presence or by sales volume – then companies will need to consider the taxability rules of SaaS in each state in which they have nexus.

Is SaaS even taxable? Because SaaS and cloud computing don’t always clearly fall into existing tax definitions, different states interpret its taxability in different ways. Some regard it as similar to electronically downloaded software, while others consider it a service, which may be taxable or not. And what about electronically downloaded software? Is it treated differently from SaaS?

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Tax Climate In Ohio – Aggressive On Technology Products For Sales Tax Purposes

Monika Milkes

Ohio is a Midwestern state in the Great Lakes Region of the United States. It is the 34th largest state by area, the seventh most populous and the 10th most densely populated. Ohio is historically known as the “Buckeye State” after its Ohio Buckeye trees and Ohioans are also known as “Buckeyes.”

Much of Ohio features glaciated till plains, with an exceptionally flat area in the northwest being known as the Great Black Swamp. This glaciated region in the northwest and central part state is bordered to the east and southeast by a belt known as the glaciated Allegheny Plateau, and then the unglaciated Allegheny Plateau. Most of Ohio is of low relief, but the unglaciated Allegheny Plateau features rugged hills and forests.

Business Climate

Ohio’s geographic location has proven to be an asset for economic growth and expansion because Ohio links the Northeast to the Midwest, much cargo and business traffic passes through its borders along its well-developed highways. Its border with Lake Erie has numerous cargo ports.

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Sales Tax Issues Your Corporate Controller Needs To Know About

Sales And Use Tax

If your company is set up like most, the sales tax burden probably becomes yet another area piled onto the already busy plate of the corporate controller. This is especially true at small and middle market businesses. These organizations often don’t have a tax department that includes sales tax, so all accounting-related matters fall to the controller.

He or she is usually a financial accounting person and probably doesn’t enjoy dealing with tax anyway, but now they are stuck with trying to figure out the complications of sales tax. Unfortunately, due to the complicated nature of sales tax issues – especially now that the recent Wayfair case has complicated state-to-state commerce even more, the results could be costly for your business.

Can’t My CPA Firm Handle Sales Tax Too?

Although many businesses hire an outside CPA firm to assist with tax returns, these firms often don’t have the skill set to deal with sales tax matters beyond filing in-state returns. We find that many smaller CPA firms don’t specialize in sales tax consulting, which includes nexus (both physical presence and economic nexus), taxability of a company’s products (which may include digital goods), potential exposure analysis and more.

That said, the controller may think that the accounting firm has it taken care of (and vice versa). This is a dangerous position for the company, particularly as the states are also becoming more aggressive.

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Happy Anniversary – The South Dakota V. Wayfair Inc. Decision

Monika Miles On Wayfair Decision

It’s been just over a year since the U.S. Supreme Court handed down its landmark decision in South Dakota v. Wayfair Inc. on 6/21/18. This key ruling  paved the way for  states to enact economic nexus legislation and thereby more easily require companies to collect, remit and report sales tax.  This decision quickly changed the sales tax world in a big way, particularly for on-line retailers, but also for many other companies.

The Supreme Court’s ruling in June 2018 overturned the Quill decision of 1992 which established physical presence for nexus standards. The Wayfair decision established the concept of economic nexus, but did not automatically make economic nexus the law of the land for all 50 states. The High Court’s decision was that South Dakota’s economic nexus law was constitutional. Since this ruling, most states have  enacted some type of economic nexus legislation as it pertains to sales tax. As we describe in a previous blog, economic nexus is based upon the amount of sales or number of transactions in the state. If a certain threshold is met, nexus is deemed to be created. For instance, in South Dakota, economic nexus is created in if an out of state company makes sales of products or services into South Dakota in excess of $100,000 or has 200 or more transactions.

What have We Learned?

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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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