Archive for State And Local Tax (SALT)

Online Sales And Physical Presence Nexus

All of the energy and focus on the Marketplace Fairness Act (MFA) has lulled many online sellers into a false belief that they do not need to collect retail sales tax on their online sales until Congress takes action on the MFA. What many online sellers forget is that states can still require online sellers to collect retail sales tax if the online sellers have physical presence nexus in a state. Further, this physical presence nexus need not be necessarily connected with their online sales.

Recently, I have worked with a number of companies facing significant tax exposure for uncollected retail sales tax on their online sales. Although these sales are generated exclusively from customers developed over the Internet, these companies failed to recognize that physical presence of their employees or representatives pursuing wholesale sales Read More

Written by | Posted in Sales/Use Tax • State And Local Tax (SALT)

Franchise Tax Board – First-Time Abatement Proposed

The Franchise Tax Board has proposed a bill which would provide penalty relief for taxpayers who fail to timely file a tax return or fail to timely pay an income tax liability. This relief would be available for individuals and corporations and would mirror the federal program offered by the IRS. If enacted in 2014, the program would be available for requests made on or after January 1, 2015.

To read the full proposal, click here.

In accordance with Circular 230 Disclosure

 

Read More

Written by | Posted in Corporate • Individual • State And Local Tax (SALT)

Employment Tax Petitions And Hearings Before The California Unemployment Insurance Appeals Board

1. The CUIAB

If you have received a tax assessment from the California Employment Development Department (EDD), you might be considering filing a petition to contest that assessment with the California Unemployment Insurance Appeals Board (CUIAB). The CUIAB is a quasi-judicial independent governmental agency. Like the EDD, the Board is subject to the California Unemployment Insurance Code and other relevant California law, but it is not a part of the EDD.

2. The Appeals Process

The CUIAB states the following on its own website: Read More

Written by | Posted in Audit • Individual • State And Local Tax (SALT)

Marketplace Fairness Act And State Revenue Cuts?

If Congress enacts the Marketplace Fairness Act (such as S. 743) to allow states to require some remote (non-present) vendors to collect sales tax from customers in their state, states should see a revenue increase. The revenue is not a new tax because their residents should have been paying use tax on these purchases from remote vendors, but because individuals and businesses are not 100% use tax compliant, the sales tax from remote vendors would likely be greater than use tax collections. At least one state has given consideration to what to do with the revenue.

By The Way – the House Judiciary Committee held a hearing today (March 12) on alternatives to the MFA – I’ll have more on that later. Read More

Written by | Posted in State And Local Tax (SALT)

Miami “Hookah” Takes On Florida

Most Florida tobacco distributors are familiar with Micjo which was decided on February 1, 2012. Micjo would change the alcohol and beverage tax world in Florida forever. At issue was whether the taxpayer had to pay Florida tobacco tax on all of the invoice components, including shipping charges and federal excise tax or if the tax should only apply to the tobacco product itself, not the federal excise tax and transportation charges. For example, Micjo (or any tobacco distributor) gets an invoice from its supplier that says tobacco $100, federal excise tax $60, transportation charges $40, total invoice $200. Should the tobacco tax apply to the $200 or the $100? Of course, Florida’s Division of Alcoholic Beverages and Tobacco of the Florida Department of Business and Professional Regulation (“AB&T”) believed it was the $200 and Micjo believed it was the $100. Read More

Written by | Posted in North America • State And Local Tax (SALT) • Tax Provision/Tax Reporting

North Carolina Benefits from Amazon Sales Tax Collection

As many people know, Amazon has been clashing with many states whether it should be required to charge, collect, and remit sales tax. Many states have taken the position that Amazon’s affiliates and distribution centers created the dreaded “nexus.” If an online retailer (or any company) has so-called “nexus” it is required to charge, collect, and remit tax in that state. With millions of dollars at stake, Amazon threatened to pull its affiliate programs in those states which, in turn, would cut tens of thousands of jobs. Fearful of huge job cuts in a struggling economy, many states allowed Amazon a grace period, permitting the company to continue its program and not collect sales tax for x number of years in the future. Once the grace period expired, then Amazon would have to charge, collect, and remit tax. In return, the state would keep its jobs as well as get more tax Read More

Written by | Posted in Sales/Use Tax • State And Local Tax (SALT)

FTB Issues Letters to Over 1 Million California Tax Payers Seeking Tax Returns

More than one million people who did not file a 2012 state income tax return are receiving letters seeking those returns or to verify that they do not have a tax filing requirement, according to the Franchise Tax Board (FTB).

Since the 1950s, FTB has contacted people who have California income, but did not file a tax return. Last year, FTB collected more than $727 million through these efforts.

Each year FTB receives more than 400 million income records from third parties such as banks, employers, state departments, the IRS, and other sources. FTB matches these income records against its records of tax returns filed. While this program mainly identifies wage earners and self-employed individuals who have not filed, it also detects Read More

Written by | Posted in Federal • Individual • IRS • State And Local Tax (SALT)

Delivery to Washington Customers in Company Owned Trucks Creates Nexus

Creating a not so Happy New Year for out-of-state taxpayers, the Court of Appeals for Division II found that Space Age Fuels, Inc. (Space Age) had nexus for Washington B&O tax based on the delivery of fuels to Washington customers in company owned trucks. Space Age Fuels, Inc. v. Washington, Docket No. 44195-1, Court of Appeals Division II (12/31/2013).

Space Age, a corporation maintaining its principal place of business in Oregon, operates a wholesale and retail fuel business. While all of its fuel stations are located in Oregon, Space Age had about 40 wholesale customers in Washington. The Washington customers would place an order via telephone, fax or email. Space Age quoted a price for fuel and a separate price for delivery of the fuel, which varied according to distance. Read More

Written by | Posted in Sales/Use Tax • State And Local Tax (SALT)

New Jersey Division of Taxation Closes Restaurant – Leaves Employees And Customers Stuck

New Jersey Division of Taxation Seizes Melange Cafe

As the holidays approach, we renew our quest for a delicious meal that awakens the palate served in a relaxing atmosphere far removed from the hustle and bustle of garish chain restaurants serving mediocre food slapped on a plate. As the town of Haddonfield, New Jersey brings to life its Christmas shopping season filled with candlelit streets, we are left without its shining star, Melange @ Haddonfield café. Why? Because Chef Joe Brown did not have an attorney that understood his need to be a chef – and his struggles as a restaurateur. After owning Melange Café in Cherry Hill, NJ and achieving much success, Chef Joe Brown opened his Melange @ Haddonfield in 2008, eventually focusing full time on Read More

Written by | Posted in Small Business • State And Local Tax (SALT)

Colorado Enacts Pot Tax

Colorado clearly does not stick to the trends. Whether it is legalizing marijuana or attempting to get Northern Colorado to become the 51st state, Colorado has been all over the news during the past year. Recently, the state had on its ballot an interesting tax that stayed in line with Colorado’s unusual politics. Specifically, on November 5, 2013, Colorado voters passed the pot tax.

On its face, the tax appears to operate similar to somewhat steep excise tax. It appears that recreational marijuana sales will be subject to a 25% tax which goes into effect on January 1, 2014. Of the 25%, 15% will be allocated to public school construction projects and 10% will go to funding enforcement regulation on the retail pot sales. This excise tax, which is similar to tobacco and cigarette taxes, is in addition to 2.9% sales tax at the retail level. Read More

Written by | Posted in Individual • IRS • Marijuana Taxes • State And Local Tax (SALT)

CPAs: Review California Clients Today for Enterprise Zone Credits (Up to $50,000 Per Qualified Employee)

TaxConnections Blogger PostsOn June 27, 2013, the California State Assembly passed AB 93, which eliminates the current Enterprise Zone (EZ) program, replacing it with a new set of incentives, which will be statewide in application. This change requires businesses to take action now to get the most out of existing credits while also preparing to take advantage of the new credits that will be effective January 1, 2014.

The EZ program was first established in 1986 and has been used to attract business to depressed areas in California and to support new and existing businesses located in depressed areas of the state. The program has allowed qualified businesses to claim hiring credits on qualified employees and sales tax credits on qualified purchases.

Do your clients need help understanding the immediate steps they must take? If your clients (CPAs: review your California clients) are in one of California’s 42 EZs, pay California income tax, and have employees, they are a prime candidate to review the various credits that remain available. These credits and refunds can be reviewed for the last four (4) open tax years. The time to act is now. After December 31, 2013 — your clients will have forfeited up to $50,000 per qualified employee. Read More

Written by | Posted in Corporate • Individual • North America • Sales/Use Tax • Specialty Tax Incentives • State And Local Tax (SALT) • Tax Controversy • Tax Policy • Tax Provision/Tax Reporting

Snowbird States

TaxConnections Picture - Beach UmbrellasHere in Minnesota it is common for people to avoid the winters by having a second home in a friendlier climate.  Usually that means California, Arizona, and Florida.  There are a lot of rules about residency and I have blogged about that before, but let’s dive a little deeper into the tax situations of those snowbird states.

In Florida everyone seems to know there is no state income tax.  What people don’t always realize is that there is a 6% sales tax, plus property taxes to go with a 5.5% corporate income tax which make up for the lack of income tax.  For snowbirds, there is no estate tax in Florida.

In Arizona the tax situation is much simpler than in Minnesota.  The tax rate is lower  –  much lower.  The top rate in MN is now 9.85%, but the top individual tax rate in Arizona is only 4.5%.  As always there are a few state-specific, quirky things.  The strangest thing I have run across is a personal property rental tax which is applied to gross rents on a rental property.  The tax rates vary depending on location, but it can be around 1 or 2%.  Another big difference between MN and AZ is the gift and estate taxes.  Both are non-existent in Arizona.

In California the tax situation is brutal; yes that is the technical term for it.  The top individual rate is 13.3%.  The property taxes are quite high with the value of property being quite high.  Sales taxes are around 7.5% and with the tough budget Read More

Written by | Posted in Federal • Individual • State And Local Tax (SALT)
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