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Archive for Monika Miles

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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Update To Texas Jumping On The Economic Nexus Bandwagon

Monika Miles - Texas Nexus

Earlier this year, the Supreme Court handed down its landmark decision in South Dakota v. Wayfair Inc., which made it easier for companies to create nexus in states. In turn, this made it easier for states to collect revenue from companies doing business in these states.

In a previous blog, we reported that Texas is making plans to join many other states by jumping on board the economic nexus bandwagon. The Texas comptroller recently unveiled plans to move this legislation forward.

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States’ Reactions To Online Sales Tax: What You Need To Know

Monika Miles - States Reactions To Onli

If you’ve been following the Wayfair case, you know the Supreme Court upheld South Dakota’s online sales tax legislation (related to economic nexus), creating precedent for other states to create and implement similar measures. But, as we explained in our last blog post, this doesn’t automatically mean all 50 states are charging taxes on internet purchases.

Which states are now collecting online sales tax, and how does this new ruling affect residents in states without sales tax? Keep reading to find out how some states are reacting to the Supreme Court’s ruling.

More States Begin Collecting Online Sales Tax

It’s not surprising that states are scrambling to create internet sales tax legislation to increase revenue as quickly as possible. As of October 1st, ten states joined the ranks of those requiring collection of sales tax if certain economic nexus thresholds are met:

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The Supreme Court Wayfair Case Continues To Make Headlines – California And Texas

Monika Miles - The Wayfair Case Continues To Make Headlines

It’s been over three months since the Supreme Court handed down its landmark decision in South Dakota v. Wayfair Inc., which made it easier for companies to create nexus in states. In turn, this made it easier for states to collect sales tax revenue from companies doing business in the state.

The Supreme Court’s ruling did not automatically make this 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, states have been jumping on the economic nexus bandwagon by enacting similar legislation. As we describe in a recent 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.

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What You Need To Know About The Taxability Of SAAS In North Dakota, South Dakota And Nebraska

Monika Miles- Taxability of SAAS In North dakota, South Dakota, Nebraska

In the wake of the Wayfair decision, there are a lot of questions surrounding sales taxes across the many U.S. states. While many queries we receive revolve around establishing physical presence and nexus for retail items, the next important question a company must always ask is, “If I have nexus, is my product taxable?” In that regard, there are a few areas many business often overlook: Software-as-a-Service (SaaS), cloud computing and electronically downloaded software. Are these items taxable? It depends.

A few months ago we explored the taxability of SaaS, cloud computing and electronically downloaded software in 15 states across the country; today we’re taking a look at the tax ramifications of three more states: North Dakota, South Dakota and Nebraska.

Nexus & Constitutional Issues for Middle America Companies

Following the Wayfair decision, do companies in North Dakota, South Dakota and Nebraska need to pay online sales tax to states in which they’ve established nexus? And if so, what is the tax threshold?

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What Are The Next Steps Regarding Internet Sales Tax?

Monika Miles - What Are The Next Steps Regarding Internet Sales Tax.

It’s been a few months since the Supreme Court’s Wayfair v. South Dakota decision made it possible for states to begin imposing an internet sales tax, but there are still a lot of questions swirling around – especially for small businesses owners.

U.S. House Judiciary Committee Hearing: Internet Sales Tax

Digital Commerce 360 reports that following the Court’s decision the U.S. House Judiciary Committee heard testimony, “Spanning the spectrum of opinion on the potential fallout of the U.S. Supreme Court’s decision regarding online sales tax.” Eight citizens from a range of backgrounds provided expert insight on how the Wayfair decision would impact states and businesses across the country.

Ultimately, the testimony encouraged Congress to develop internet sales tax legislation to provide clarity as retailers attempt to figure out how to comply with each states’ various tax laws.

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North Dakota Business And Tax Climate

Monika Miles - North Dakota Business And Tax Climate

This month we travel to the Great Plains state of North Dakota. It is the 19th largest in area, the 4th smallest by population, and also the 4th most sparely populated of the 50 states. North Dakota is situated near the middle of North America with a stone marker in Rugby, North Dakota marking the “Geographic Center of the North American Continent.”

The western half of the state consists of the hilly Great Plains as well as the northern part of the Badlands, which are to the west of the Missouri River. The region is abundant in fossil fuels including natural gas, crude oil and lignite coal. The Missouri River forms Lake Sakakawea, the third largest artificial lake in the U.S.

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

Monika Miles, Taxability Of SAAS in Southwestern States

In some ways, state statutes are crystal clear about which goods or services require the collection of sales and use tax. However, when it comes to Software-as-a-Service (SaaS), cloud computing and electronically downloaded software, the laws become a bit more confusing. When does your company need to collect sales tax on these types of transactions?

To further complicate the issue, the recent Wayfairdecision will affect traditional multi-state sellers (including those that generate revenue from SaaS and software) – not just online sellers. By making nexus easier to establish, companies will need to consider the taxability rules of SaaS in each state in which they have nexus even more closely.

Today is the second in a series that covers how various states across the country define SaaS, cloud computing and electronically downloaded software. Read our first post to find out how California, Utah and Washington handle them, and keep reading for three states in the Southwest: ColoradoNew Mexico and Texas!

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What You Need To Know About The Taxability Of Software As A Service (SAAS) In Western States

Monika Miles, SAAS And Cloud Computing And Taxes

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 recent Wayfair decision seems like it’s directed only at online sellers, traditional multi-state sellers (including those that generate revenue from SaaS and software) will also be affected, as nexus will be 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 doesn’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?

This series will take a look at how key states in various regions of the country interpret SaaS, cloud computing and electronically downloaded software within their different state tax statutes. First up, the “Western” states: CaliforniaUtah and Washington!

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