Monika Miles | TaxConnections

02 Feb 2023

A Simple Step-By-Step Guide To Stay Ahead Of Sales Tax Compliance

Sales tax compliance can be overwhelming, and it’s even more complicated if you, as the seller, have an economic presence in multiple states because of the number of things to keep track of. This step-by-step sales tax guide is a useful place to start to ensure you stay ahead of your filing requirements. We always try to remind clients that sales tax is a pass-thru fiduciary tax. If you collect it and remit it correctly, there should be no liability to the seller. Where it gets dicey is when the seller doesn’t correctly collect, remit and report in jurisdictions in which it is required to do so.

1.) Discover Which States You Meet The Physical Or Economic Nexus Threshold In

The first step is to determine where your business may be liable to collect sales tax. Before 2018, this was more straightforward. If you had a physical presence in a state, you were responsible to collect and remit sales tax. The 2018 U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc changed the sales tax landscape by allowing South Dakota to enact economic nexus legislation, meaning that sellers who had a certain amount of economic presence in the state (either by reaching a certain number of sales or amount of money from sales) were also liable to become compliant in that state, even without a physical presence. Other states quickly jumped on the bandwagon, and today every state has some level of economic nexus legislation. Economic nexus threshold requirements vary by state, so check out yours here. It’s important to note that the enactment dates for economic nexus measurement also differ from state to state, so there are several moving parts in correctly determining the nexus start date. Sellers now need to consider BOTH their physical presence and economic nexus in a state to determine the correct reporting date.

2.) Determine If Your Products And Services Are Subject To Sales Tax

Now that you know which states you have reached nexus in, it is time to figure out which products and services are subject to sales tax and the state sales tax rates. Heads up — this varies greatly by state, and in some states it can even vary by city or county. In general, the sale of Tangible Personal Property (TPP) is subject to sales tax collection in the United States, but there are plenty of exemptions. And it’s not always clear what TPP is. What about software? Software as a service (SaaS)? Other digital products?
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Written by Monika Miles | Posted in TaxConnections

30 Dec 2022

How To Ensure Sales Tax Compliance For Your Nonprofit Organization

While nonprofits are generally exempt from paying federal and state income tax, sales tax compliance can be a little more complex. It can be easy to overlook the importance of sales tax compliance in your operations but ignoring it could cause hefty fines and penalties which can put a serious strain on your budget. In this blog post, we share up-to-date sales tax information to ensure your nonprofit organization stays compliant now while avoiding potential issues later.

What Qualifies A Business As A Nonprofit?

As defined by the National Council of Nonprofits, a nonprofit is an organization that provides a way for people to work together for the common good, transforming hopes and beliefs into actions. If a nonprofit meets certain requirements and is officially granted nonprofit status by the IRS, it will be exempt from paying most taxes to federal and state governments.

Written by Monika Miles | Posted in TaxConnections

23 Nov 2022

Excited For Thanksgiving? Breaking Down The Sales Tax Implications Of Your Big Turkey Dinner

As the big day approaches, you may be finalizing your grocery list for your delicious Thanksgiving feast. While many items you purchase for Thanksgiving dinner will be sales tax free, there are a few key things to be aware of. In this blog post, we break down the sales tax implications of your big turkey dinner. Stay informed and have a happy Thanksgiving!

Turkey Dinner Sales Tax Obligations

First, we look at the most essential part of Thanksgiving — the food! Currently, you will only be taxed on groceries in 11 states, and many of these 11 have either reduced or paused that charge as inflation rates soar.

Maybe you decide to bypass the stress of cooking and choose to eat out at a restaurant or order takeout. If you do eat at a restaurant, you will be charged sales tax in most states. Check out this comprehensive guide to see what you may be charged on top of your base meal price. If you would rather eat from the comfort of your home and decide on takeout, this guide lists your state’s sales tax prices for prepared foods consumed at home.

Written by Monika Miles | Posted in Sales And Use Tax Manufacturing Exemption • TaxConnections

04 Nov 2022

Non-Fungible Tokens(NFTs) And Sales Tax: Why The Details Are Important To Pay Attention To

In this article, we share why understanding specific details related to NFTs is so important for ensuring sales tax compliance.

As NFTs, or non-fungible tokens, have gained popularity worldwide, we are beginning to see sales tax questions arise about these products. As with other digital products, the details are vital to understanding your sales tax obligations.

When Are NFTs Subject To State Sales Tax?

Very few states have issued specific guidance on whether the sale of an NFT is subject to sales tax. So how do NFT sellers know if they should collect and remit sales tax in each state they have NFT sales in? First, we can look at a state’s legislation regarding digital products. Traditionally, only tangible personal property was eligible for sales tax, but when digital products gained traction, some states began to implement taxes on them. The devil is in the details, however, because the definition of a ‘digital product’ varies by state. Some states say that if a digital product is taxable in its tangible form, then it is taxable in its intangible form. Some states actually treat intangible goods as tangible personal property (TPP) because they can be seen and experienced, and some don’t tax digital products at all because they are intangible.

Written by Monika Miles | Posted in Non-Fungible Tokens And Sales Tax

01 Nov 2022

Tax And Business Climate In Kentucky

This month we travel to the Bluegrass State of Kentucky. The nickname is based on the bluegrass found in many of its pastures due to its fertile soil.

The Red River Gorge is a canyon system on the Red River in east-central Kentucky. Geologically, it is part of the Pottsville Escarpment, a resistant sandstone belt of cliffs and steep sided, narrow crested valleys. The prevalence of sandstone allowed the Red River to cut a magnificent gorge through the mountains. It is a rock climber’s paradise and is some of the best natural areas around!

Kentucky is a land with diverse environments and abundant resources, including the world’s longest cave system, Mammoth Cave National Park and the longest of navigable waterways and streams in the contiguous United States. Lush forests, mighty rivers and quaint towns blanket the landscape of the state.

The Kentucky Derby is a renowned horse race held at Churchill Downs on the first Saturday in May in Louisville. It is preceded by a 2-week festival and is celebrated in the Kentucky Derby Museum year-round.

Business Climate

Written by Monika Miles | Posted in Kentucky Sales Tax Compliance • Tax Rates

21 Oct 2022

Are Out-Of-State FBA Sellers Exempt From Sales Tax Collection In Pennsylvania?

Out-of-state FBA sellers in Pennsylvania may not need to collect state sales tax on sales made with their inventory.

In the beginning of September, FBA sellers, with the help of the Online Merchants Guild, secured a victory against the Pennsylvania Department of Revenue (DOR) when the Commonwealth Court determined that FBA (Fulfillment by Amazon) inventory is not sufficient to establish a sales tax collection requirement for nonresident FBA sellers. In this blog article, we explain what FBA inventory is, the background that led to this decision and what it means moving forward.

What Is An FBA Seller?

FBA is a service that allows businesses to outsource order fulfillment to Amazon. Businesses send products to Amazon fulfillment centers and when someone makes a purchase, the FBA workers pack and ship the order, take care of customer service and process returns.

What Sales Tax Obligations Do Out-Of-State FBA Sellers Have?

Written by Monika Miles | Posted in Pennsylvania • Sales Tax Collections

12 Oct 2022

New Quarter, New Sales Tax Legislation: How To Stay Up To Date With Liabilities

The beginning of October comes with a lot of change and excitement: The change in seasons, in weather, getting ready for the winter holidays and last but not least — quarterly sales and use tax legislation changes. In today’s article, we share some of the most relevant sales tax changes that began on October 1.

Colorado Sales Tax Updates

Diapers and incontinence products are now exempt from Denver city and county sales and use tax. These products will be exempt from sales and use tax in the state beginning January 1 as part of House Bill 1055 to “redress the inequitable burden” taxing these products places on caregivers and women.

Another new sales tax law that began October 1 in Colorado is destination sourcing — meaning that sales tax is now calculated based on the buyer’s address when the taxable product or service is delivered to the consumer. If you have questions about these changes, this is a helpful place to start.

Virginia Lodging Tax Legislation

Written by Monika Miles | Posted in New Sales Tax Legislation

28 Sep 2022

Tax And Business Climate In Iowa

This month we travel to the Midwestern state of Iowa, the Hawkeye State. Sitting between the Missouri and Mississippi Rivers, the state is known for its rolling plains and cornfields.

Iowa has a humid continental climate throughout the state with extremes of both heat and cold. The average annual temperature at Des Moines is 50 degrees Fahrenheit. Winters are often harsh and snowfall is common. Iowa summers are known for heat and humidity, with daytime temperatures reaching 90 degrees.

Spring ushers in the beginning of severe weather season. Iowa averages about 50 days of thunderstorm activity per year. Iowa averages about 47 tornadoes per year. However, 2008 had the most tornadoes ever in a year: 105!

Most of the state consists of rolling hills. Iowa can be divided into eight landforms based on glaciation, soils, topography, and river drainage. The Loess hills lie along the western border of the state, some of which are several hundred feet thick. These hills are a clastic, predominantly silt-sized sediment that is formed by the accumulation of wind-blown dust. Northeast Iowa, along the Mississippi River is part of the Driftless Zone, consisting of steep hills and valleys which appear almost mountainous. The state’s northwest area has remnants of the once common wetlands, such as Barringer Slough.

Business Climate

Written by Monika Miles | Posted in Iowa Tax Climate

20 Sep 2022

Returning To The Office? Important Information To Understand Your State Tax Liabilities

When the pandemic first hit, many businesses were forced to transition to a remote working model for safety reasons. And many of those remote employees decided to move away from their “home state” for a variety of reasons. Now, businesses are starting to transition back to the office, with 50% of leaders saying their company already requires or is planning to require a return to in-person full time this year, according to a study from Microsoft.

Whether you decide to bring your employees back to the office full time or just part time, what are the tax implications you should consider? Please note that this blog post won’t get into the state tax withholding, worker’s compensation or other payroll tax matters related to the employee directly. We focus here on how employees may create nexus (and filing responsibilities) for both state sales tax and income tax.

Taxation Issues Created By Remote Workers

Written by Monika Miles | Posted in Nexus And Remote Employees • Remote Workers Tax Liabilities

06 Sep 2022

Sales Tax Confusion: What You Need To Know Now

Gray Areas In State Sales Tax: What You Need To Know Now

Tax legislation can be difficult to understand. It is not black and white; individuals sometimes interpret the same law in different ways. While most people can agree on the basics of sales tax laws , there are plenty of gray areas as the laws get more specific, especially if you are new to multistate sales tax compliance. In this blog article, we look at two areas of sales tax that often cause confusion: the taxation of digital products and services.

Digital Products & Sales Tax Confusion

SaaS and sales tax may at first seem like a straightforward area of taxation, but if you have kept up on our other blog articles linked here and here, you know it can get confusing quickly.

For example, we worked with a client who developed a product on a platform they charge a subscription for, so it sounds like it would fit into a SaaS category. But given the way their customers interact with the product, it also could be categorized as an information service.

Written by Monika Miles | Posted in State Sales Tax

01 Sep 2022

Non-Fungible Tokens (NFT) And Digital Product Sales Tax Clarification

As the 2021/2022 fiscal year ended on June 30, many states implemented sales tax legislation reforms. In this blog article, we share a few standout updates you should know about.

Washington State Department of Revenue & NFT Sales Tax

NFTs, or non-fungible tokens, have been around since 2014, but started gaining momentum in 2021 and have only risen in popularity since. As you can imagine, this has created some sales tax confusion.

Washington state is one of the few states to tackle the taxiblity of NFTs, and on July 1, 2022, the Washington State Department of Revenue published an interim statement on how sales tax applies to NFTs. The statement is “intended to provide general information related to the taxability of certain transactions involving NFTs and does not intend to address any exemptions, exclusions, deductions, credits or other incentives that may apply.” The interim statement functionally defines NFTs as a digital code.

Written by Monika Miles | Posted in Non-Fungible Tokens • Sales Tax

25 Aug 2022

Maryland Tax And Business Climate

This month we travel to the birthplace of religious freedom in America, the mid-Atlantic state of Maryland. Formed by George Calvert in the early 17^th Century, the state was intended as a refuge for persecuted Catholics from England. George Calvert was the first Lord of Baltimore and the first English proprietor of the then-Maryland colonial grant. Maryland was the seventh state to ratify the U.S. Constitution and played a pivotal role in the founding of Washington D.C., which was established on land donated by the state.

Maryland is defined by its abundant waterways and coastlines on the Chesapeake Bay and Atlantic Ocean. Its largest city, Baltimore, has a history as a major seaport, and is also home to such tourist attractions as the National Aquarium and the Maryland Science Center.

Written by Monika Miles | Posted in Maryland Business • Sales/Use Tax