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Archive for Sales And Use Tax

Minnesota, Michigan And Mississippi Sales And Use Tax

Sales And Use Tax - Mississippi, Minnesota, Michigan

Michigan State Sales And Use Tax

The state of Michigan levies a 6% state sales tax on the retail sale, lease or rental of most goods and some services. There are no local sales taxes in the state of Michigan.

Use tax is also collected on the consumption, use or storage of goods in Michigan if sales tax was not paid on the purchase of the goods. The use tax rate is the same as the sales tax rate. Returns are to be filed on or before the 20th day of the month following the month in which the purchases were made. For example, purchases made in the month of January should be reported to the state of Michigan on or before February 20th.

Michigan Department of Treasury
Michigan Sales Tax Legislation
Michigan Sales tax Legislation

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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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Determination Of Property’s Taxability For Michigan Sales And Use Tax

In Michigan sales and use tax law determining whether an item of tangible personal property remains tangible personal property or becomes a fixture affixed to real estate can significantly affect the taxability of the item in question. This determination may impact whether the taxpayer is considered a retailer or a contractor.

There are also several exemptions in Michigan sales and use tax law for purchases of tangible personal property that do not apply if the item is instead a fixture. The Michigan sales and use tax exemptions for both the agricultural industry and the industrial processing or manufacturing industry include such language.

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More States Impose Sales Tax On E-Commerce Sales

Over the last few decades, states have had the opportunity to broaden their income and franchise tax base by ensnaring a larger proportion of out-of-state taxpayers in their taxing regime through adoption of broad economic or factor-based economic nexus standards.

However, states have traditionally struggled to do the same with respect to their sales and use tax base because of the long-standing United States Supreme Court nexus decision in Quill Corp. v. North Dakota (1992).” 1 For nearly three decades, the dicta contained in Quill have prevented states from adopting economic-based nexus
standards with respect to sales and use taxes, requiring instead a more stringent physical presence standard (or “substantial nexus”).
The Supreme Court has repeatedly declined to hear challenges or cases related to Quill, until recently. Read more

High Court Reconsiders Physical Presence Requirement For Sales Tax

South Dakota is taking the physical presence rule back to our nation’s highest court in its dispute with Wayfair, Inc., to determine whether it may continue to require out-of-state sellers such as online retailers to register with the state and collect and pay over sales tax.[1]

In the seminal case from 1992, Quill Corp. v. North Dakota, the U.S. Supreme Court ruled that retailers did not have to collect sales tax in any state where they have no physical presence. However, the exponential growth of eCommerce and internet sales has significantly changed the retail landscape since that time. Read more

South Carolina to Amazon: Collect Sales Tax Now

States are continuing to come up with ways to collect sales tax from online sellers (specifically Amazon’s third-party sellers). South Carolina recently filed a motion in court to force Amazon to collect these taxes and fees on behalf of its third-party sellers.

As it is now, Amazon collects sales tax on items purchased directly from them, but the retail giant does not collect it on sales made on the site by a third party. South Carolina is claiming it could lose more than $500 million in sales tax if Amazon doesn’t begin collecting them now, and is asking the court to require the retailer to charge sales tax and put it into a trust or escrow-type account until the case is settled. Read more

Seven Benefits of Sales Tax Compliance Outsourcing

There are a variety of reasons it makes sense for companies to look for assistance with sales tax compliance outsourcing. Fast growth which makes keeping up with ongoing compliance requirements a challenge, turnover in key positions or an unfavorable audit experience resulting in significant liabilities are a few of the possible reasons we have heard from our clients. Regardless of the reason, many companies are making the decision to look for outside assistance with their sales tax compliance. Below are the seven benefits cited most frequently by our sales tax compliance outsourcing clients when asked about their experience:

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12 Important Details: Sales Tax & Washington’s New Marketplace Facilitators

We recently shared an overview of Washington’s New Marketplace Fairness solution. While we’re skeptical it will help rather than hinder, it’s important you know additional details about marketplace facilitators and sellers. Read on to get an overview of the marketplace, how sales tax comes in, as well as the collection and reporting of it.

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Sales Tax Exemption For Prescription-Required Single-Use Medical Devices in Louisiana

One Louisiana sales tax exemption for medical purchases made by hospitals and health care facilities provides an opportunity for both Louisiana sales and use tax savings at the state tax rate of 5%. This Louisiana sales tax exemption applies to medical devices that are required to be issued under a physician’s prescription and are used personally and exclusively by a single patient.

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What Is Washington’s Marketplace Fairness? An Overview & New Online Sales Tax Solution

For years, Washington State has been one of the states passing online sales tax legislation. From statutes expanding nexus (making more businesses responsible for the state’s taxes and fees) to its five-point internet sales tax solution, the Evergreen State is quick to come up with more solutions to make the marketplace “fair.”

The latest attempt to level the playing field makes some fairly aggressive changes in the state’s sales tax collection policy for marketplace facilitators.

While the state says it will make the marketplace more fair to brick and mortar retailers, we’d actually argue it’s a compliance burden and onerous on the seller. Why? The “solution” designates three additional definitions businesses will need to examine in order to determine how they apply if the definitions do apply, the business needs to pay close attention to another piece of legislation that may change again in the future.

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New In The Online Sales Tax Realm: States & 3rd Party Sellers

Monika Miles, Tax Advisor

If you’ve purchased from Amazon lately, you may have noticed they’ve started charging sales tax. However, many third-party merchants that sell through the website haven’t been collecting it.

In fact, research shows that despite half of online sales happening through marketplaces (a number which is expected to grow to two-thirds within five years), these sellers don’t collect sales tax – even if the retailer they work through does (such as Amazon).

States’ Efforts: Collecting Sales Tax From Third Party Sellers

Come December 1, it’s expected the states involved in the amnesty program we’ve recently discussed will begin collecting sales tax from online merchants – including those that sell through a website like Amazon.

As the Seattle Times points out, this presents an important question: “Who will be responsible for collecting and remitting the taxes when someone buys something from a third-party seller on Amazon.com? Is that Amazon’s job or the merchant’s job, or some combination?”

The answer isn’t clear to experts or even to states themselves, as each has a different solution and approach. For example:

  • Minnesota: In June the state passed legislation that requires major retailers (such as Amazon and eBay) to collect sales tax on all items sold – including those sold by third-party sellers. The law goes into effect in 2019, however it could be even sooner if the courts overturn the precedent set forth by Quill Corp v. North Dakota.
  • Washington: The state passed a similar law to Minnesota, although this one goes in to effect in January 2018.
  • Massachusetts: The state is forcing Amazon to turn over their marketplace sellers’ identities. They have a court order behind them, which former Amazon Senior Manager James Thomson foresees setting off, “A scramble among states bent on collecting back taxes.” He also says that if the state succeeds, “It’s going to be a bloodbath” as other states will likely follow suit.

It will be interesting to see how states continue in their efforts to collect sales tax from online sellers.

Have a question? Contact Monika Miles 

Your comments are welcome!

New Online Sales Tax Legislation: Why Is It Interesting?

As you know, we’ve been following the online sales tax debate for years. From the Marketplace Fairness Act to states taking matters into their own hands, it’s been interesting to follow as lawmakers debate how to handle imposing state sales tax on internet retailers. It’s especially difficult given the wide variety of taxes and fees that would need to be imposed at a state, county and city level. Read more