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Archive for Sales Tax

States Sales Tax Reliance

Monika Miles: States Sales Tax Reliance

Have you ever gone to the store, bought something, looked at your receipt and said to yourself, “This item only cost $25, why did I pay $28 for it?” Well $3 was due to sales tax, which many people STILL fail to mentally figure in before going to the register. You may gasp and think to yourself, “Gosh, this amount is really high.” Well you were probably in a state that relies heavily on sales tax for revenue.

According to a study by the Tax Foundation in 2017, sales tax is the second largest source of state and local tax revenue behind property taxes .

Most states have a layered system of sales tax, which includes a state portion, a county portion, and then local sales taxes. Eight states administer a sales tax only at the state level, but not the local level: Connecticut, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan and Rhode Island. And of the 50 United States, there are 5 which do not levy a state sales tax at all: the “NOMAD” states of New Hampshire, Oregon, Montana, Alaska and Delaware. Note that Alaska does allow local sales tax to be levied.

In this article, we explore various states and how their sales tax rates compare. We also take a look at which states are most dependent on sales tax revenue. As many states are beginning to take stock of the toll the Covid-19 pandemic is taking in terms of sheer dollar cost at the state and local levels, it’s an interesting time to consider where funding is going to come from.
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Taxing (Or Not Taxing) Services Is Wrong Focus – How To Improve Sales Tax

Professor Annette Nellen

The sales tax, used by almost all states, is a consumption tax. Generally, consumption is what the final consumer does. For example, a company manufactures paper, a greeting card company purchases some of that paper to make greeting cards and sells them to the final consumer or to a distributor who sells them to the final consumer. As the paper or cards move through this supply chain, a sales tax exemption for items purchased for resale prevents sales tax from being charged. The final consumer is the only one who pays sales tax when the card is purchased (reaches the end of the supply chain).

Supply chains and tax systems are not always this “simple” though because not everything a business buys is directly for resale. A recent case in Kansas found that electricity purchased by Southwestern Bell Telephone, Co. LLC (No. 120,167 (2020)) to help in the delivery of telecommunications services was exempt from sales tax because it was used in this production. A lot of time and effort though went into the determination of whether Southwestern Bell owed sales tax.
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3 Important Sales Tax Predictions To Watch For In 2020

3 Important Sales Tax Decisions
3 Sales Tax Predictions For 2020

The world of sales tax has changed a lot in the past year. Following the Supreme Court’s Wayfair decision, 2019 was the year most states began requiring businesses to collect and remit sales tax, and then began making marketplace facilitators (such as Amazon or eBay) responsible for collecting and remitting the taxes on sales that came through their marketplaces.

What changes can we expect to see this year? Keep reading for three predictions we believe are just around the corner.

1. Smaller Retailers Will Depend On Marketplaces

As Greg Chapman, SVP of business development at Avalara explains, “We should expect traditional ecommerce providers to start working closely with marketplaces or offering more ‘Amazon-like’ experiences to stay relevant.”

The increase in online shopping coupled with confusing economic nexus laws make it even more appealing for very small businesses up to mid-sized companies to work with online marketplaces. In addition to facilitating sales in a process that’s more streamlined for customers, a lot of states have placed the burden of sales tax collection on the marketplace rather than the seller. This can greatly reduce the cost and risk of doing business online for companies struggling to navigate tricky taxability questions.

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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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New State Tax Laws Effective October 1, 2019: What You Need To Know

Monika Miles

Are you curious what state tax updates are on the horizon? October 1, 2019 is a big date coming up; numerous states have new online sales tax provisions, amnesty programs and other legislative changes going into effect in just a few weeks. Keep reading for a quick summary of new laws and programs to keep an eye out for beginning next month.

Alabama’s Simplified Sellers Use Tax

As of October 1, Alabama requires remote retailers selling more than $250,000 in total sales (taxable and nontaxable) to begin collecting and remitting sales tax. Although sellers need to file their Alabama state tax returns monthly, these sales and use taxes fall into the “simplified” category because they’re a flat 8 percent on all purchases, regardless of the shopper’s locality in the state.

Arizona Eases Into Online Sales Tax

Arizona’s transaction privilege tax (TPT) is designed to ease the smaller out-of-state retailers into online sales tax compliance. As the Arizona Department of Revenue explains, the threshold for remote alleges to pay TPT is:

  • $200,000 in 2019 (beginning October 1)
  • $150,000 in 2020
  • $100,000 in 2021 and thereafter

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Congress’ New Online Sales Tax Bill: What You Need To Know

Monika Miles, Online Sales Tax, Congress, Online Sales Simplicity and Small Business Relief Act

As we wrote a couple of weeks ago, the online sales tax debate is far from over. Although the Supreme Court ruled that states can impose an internet sales tax, Congress can still legislate on the issue. And it looks like it will. Representatives introduced a bill designed to guide sales tax collection requirements for businesses selling across state lines.

About the Online Sales Tax Bill

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The Crazy Tax Laws Regarding Food!

Monika Miles, Food Tax, Multistate Tax, Online Tax

We write a lot of blogs! We’ve been writing a lot of blogs about the recent U.S. Supreme Court decision in South Dakota v. Wayfair and how companies selling goods online will be subject to much more compliance in upcoming months and years. But today, we decided to change it up and talk about something near and dear to everyone- food!

In most states throughout the country, consumers shopping at a supermarket don’t pay state sales tax on their bread and butter, but would pay sales taxes on a hot prepared turkey dinner. If they pick up a Hershey’s bar in the checkout line, is likely to be taxed, but if they pick up a Twix bar instead, it might be be exempt. Read more

Tax Professionals – Sales & Use Tax Question

Tax Question - Best Sales & Use Tax Software
What states have made changes this summer due to the Wayfair decision? I believe many changes have occurred recently in states on sales and use reporting and would appreciate any updates.

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U.S. Supreme Court Transcript And Decision – South Dakota V. WayFair

U.S. Supreme Court, South Dakota V Wayfair

As States become more aggressive in the collection of sales tax, cases are making their way to the United States Supreme Court. In the 1960s the U.S. Supreme Court limited states sales tax collection power to individuals and businesses with a physical presence, either themselves or property, in the state. This was reaffirmed in the 1992 Quill decision in Quill Corporation V. North Dakota.

Since the Quill decision, the “physical presence rule” has been challenged in the area of sales tax (31 states now have laws collecting sales tax from internet firms with no physical presence in the state). Horror stories abound including states like Massachusetts and Ohio claiming they can tax any company if their website puts a cookie on an in-state browser.

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What You Need To Know About California’s SB 993

Sales tax is a major revenue source for many states, including California, which is why its legislature has been looking for additional ways to collect fees under the ‘sales tax’ umbrella.

For years, State Senator Bob Hertzberg has been trying to extend the state’s reach by imposing sales tax on services. Although 2015’s Senate Bill 8 didn’t pass, there’s another bill recently heard in the Senate Governance and Finance Committee: Senate Bill 993 (SB 993).

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Sales Tax Consultant Having Success Recovering Georgia Sales Tax Refunds For Hospitals And Healthcare Industry

Georgia sales tax exemptions for healthcare providers, including hospital, clinics, and medical practice groups include several categories of purchases. One Georgia sales tax exemption for healthcare providers that a sales tax consultant from Agile Consulting Group has been recovering a significant amount of refunds for relates to prosthetic devices. Georgia Code Ann. § 48-8-3(54) states that prosthetic devices that are sold or used pursuant to a prescription are exempt from Georgia sales and use tax. Our sales tax consultant has learned that the prosthetic device may be purchased exempt from Georgia sales and use tax by a hospital, clinic, or medical practice group if it is sold or used pursuant to a prescription under federal or state law and title and possession is permanently transferred to a natural person to whom a prescription for the device is issued, per Georgia Comp. Rules & Regulations § 560-12-2-.30(5)(a). Read more