If you’re a frequent reader of our blogs, you know that we regularly report on the taxability of Software-as-a service (SaaS). Today, we report that Vermont has joined the ranks of states that do require sales tax collection on revenue from SaaS. In a recently updated previous blog (What To Know About The Taxability Of SaaS In 18 Key States – Multi State Tax Solutions | Miles Consulting Group), we discuss where SaaS is taxable in 20 states (and also certain local jurisdictions). As of July 1, 2024, we can now add Vermont to that list of taxable states.

Effective July 1, 2024, a new law in Vermont repeals its sales and use tax exemption on prewritten computer software accessed remotely (i.e., cloud software), thus subjecting items like software as a service to Vermont’s sales and use tax rate of 6%.

The amendment reads that “Tangible Personal Property” means personal property that may be seen, weighed, measured, felt, touched, or in any other manner perceived by the senses. “Tangible personal property” includes electricity, water, gas, steam, and prewritten computer software regardless of the method in which the prewritten computer software is paid for, delivered, or accessed.

If your company is doing business in Vermont and is selling the SaaS product in Vermont too, Miles Consulting Group can assist with any questions that you may have.

Book a consultation, drop us a line, or send us an email at info@milesconsultinggroup.com.

Virginia has introduced a new policy allowing a one-time safe harbor for contractors who have omitted or inaccurately remitted retail sales and use taxes. Starting from July 1, 2024, the Department of Taxation can use a contractor’s erroneously collected retail sales tax payments to offset a use tax assessment related to the transaction.

How To Qualify

To qualify for this safe harbor, the contractor must demonstrate that the property for which sales tax was incorrectly collected and remitted is the same property used in realty and is subject to a use tax assessment.

Next Steps

After receiving this relief, the contractor must either pay sales tax to its vendors or remit the use tax directly to the Department for its purchases of tangible personal property used in its real property contracts. This relief is a one-time opportunity designed to help contractors in response to industry confusion. This new policy is aimed at providing a temporary reprieve for contractors who may have inadvertently erred in their tax remittances, offering them a chance to rectify the situation and ensure compliance with tax regulations moving forward.

For more information, reach out to Thompson Tax today. We are your Trusted Tax Advisors.

“The liberal justices of the California Supreme Court sided with California’s corrupt politicians to strip citizens of the initiative rights that they have had for over 112 years.” – Carl DeMaio
The California Supreme Court sided with Gavin Newsom and California Democrat politicians in removing the California Taxpayer Protection Initiative from the November ballot.

The California Taxpayer Protection Initiative (CTPI) is a citizens initiative that collected the required amount of valid signatures — over 1.4 million — from Californians to be placed on the ballot. The measure would make it harder for state and local politicians to impose costly and unfair tax hikes — the reason that politicians sued to block it from the ballot.

Specificialy, the California Taxpayer Protection Initiative would:

-Restore a two-thirds vote for any tax hike – thus ending the way they imposed the car and gas takes hikes recently
-Impose a stricter definition on what is a “tax” so politicians can’t call them “fees”
-Require the words “tax increase” be included on the official title of any measure that appears on the ballot that contains a tax hike inside of it, and
-Repeal dozens of tax hikes imposed after Jan 1, 2022 – immediately saving taxpayers money Carl DeMaio, a candidate for State Assembly and chairman of the tax-fighting group Reform California — which helped collect signatures to place the initiative on the ballot, says that the decision stripped citizens initiative rights.

“The liberal justices of the California Supreme Court sided with California’s corrupt politicians to strip citizens of the initiative rights that they have had for over 112 years,” said Demaio. “By removing the California Taxpayer Protection Initiative from the November ballot, the Sacramento Swamp has shown how far they will go in their abuse of power to silence their opposition and prevent reform from happening.”
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SECURE Act 2,0 with over 60 provisions mostly all related to retirement plans, was enacted December 29, 2022 as part of the Consolidated Appropriations Act, 2023 (P.L. 117-238). I maintain a table of the provisions, summary from the Senate Finance Committee of each provision, effective date, and any guidance from the IRS.

SEC. 115 of the SECURE Act is called “Withdrawals for Certain Emergency Expenses.” It is well-intended to allow individuals to withdraw up to $1,000 from their eligible retirement account every three years without the 10% additional tax of IRC §72(t), if the funds are for distributions used for certain emergency expenses, to meet “unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses.” SEC. 115 is on pages 838-839 of P.L. 117-238.

IRC §72(t)(2)(I) covering this additional tax exception is 504 words long and in addition to defining emergency expenses, also provides:

The individual may only make one distribution per year, and it may not exceed the lesser of $1,000 or “an amount equal to the excess of “(I) the individual’s total nonforfeitable accrued benefit under the plan (the individual’s total interest in the plan in the case of an individual retirement plan), determined as of the date of each such distribution, over ‘‘(II) $1,000.”
The plan administrator may rely on employee’s written certification that the exception is met.
The IRS can issue regulations where the employee statement doesn’t apply if the administrator “has actual knowledge” contrary to the certification, and procedures to address cases of employee misrepresentation.
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Join us Thursday July 18th at 10 AM CST for a CPE Webinar on § 174 Updates.

Participants will gain an understanding of the current landscape, legislative updates, and best practices for advising clients on navigating the amortization of § 174 expenses. This course introduces participants to the amortization of specified research and experimental expenditures (SREs) for federal income tax purposes. The relationship of SREs to the research tax credit will be developed. Other TCJA changes to research-related provisions of the Code will also be discussed.

After this course, the practitioner will:
• Identify taxpayers who are required to amortize under § 174
• Identify the types of expenditures that need to be amortized
• Quantify the impact of that amortization as well as identify mitigating factors

We look forward to your participation in this informative session.
Register for CPE Course!

Prerequisites: At least two years preparing intermediately complex business income tax returns. No advance preparation is required.
Recommended Credit: 1.0 hour CPE in the field of Taxes delivered by Group Internet

Attendance Policy: To receive credit, attendees must sign in and be present for the presentation and respond to at least three instances of the attendance monitoring mechanisms per hour of instruction
Refund Policy: Refunds are not issued as this course is complimentary
Eric Larson
(800) 806-7626

eric.larson@sourceadvisors.com

The Supreme Court issued its long-awaited opinion in Connelly v. United States (No. 23-146) on whether a corporation’s obligation to apply the amount of proceeds from corporate-owned life insurance to fund a mandatory redemption of stock on the death of a shareholder reduces the value of the corporate assets (i.e., offsets the insurance proceeds received by the corporation) when valuing the stock in the estate of the deceased shareholder. In a resounding taxpayer defeat by unanimous opinion, the Supreme Court said “no” and resolved a split between the Eighth Circuit in Connelly v. United States, 70 F.4d 412 (2023), and the Eleventh Circuit in Estate of Blount v. Commissioner, 87 TCM 1303 (2004), aff’d in part and rev’d in part, 428 F.3d 1338 (2005).

This fall’s Tax Planning Forum programs will discuss Connelly and a workaround that easily can be implemented in many closely held business situations by using a partnership to own the insurance, rather than the corporation, and thereby not increase the value of a decedent’s stock for estate tax valuation purposes by the corporation’s receipt of insurance proceeds. We will discuss how the partnership should be structured to meet the goals of the shareholders, which mirrors what would have occurred from an economic perspective had the policy been owned by the corporation. We also will delve into how to transfer insurance policies out of a corporation and avoid the impact of the §101(a)(2) transfer-for-value rules that can cause taxation of the life insurance proceeds, if those rules are not carefully navigated. Read More