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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

California Holds Marketplace Facilitators Responsible

Although California is no stranger to online sales tax, the Golden State has been adjusting its requirements as it goes. Back in May, the California legislature finally clarified its position on economic nexus, raised the threshold for out-of-state-sellers and imposed a sales and use tax collection responsibility on marketplace facilitators.

While the other provisions are already in effect, the marketplace facilitator section will go into effect on October 1, 2019. You can read more details about the state tax requirements in this blog post.

Colorado’s New Marketplace Sales Tax

Although Colorado has been collecting and remitting sales tax from out-of-state sellers since June 1 (as explained in HB19-1240), the marketplace sellers and facilitators provision goes into effect as of October 1, 2019.

Under this provision, the Colorado General Assembly explicitly assigns sales tax responsibilities to the marketplace facilitator. The threshold for the economic nexus legislation is $100,000 in retail sales, so any marketplace facilitator with transactions more than $100,000 is responsible for collecting sales tax for the state as well as any applicable cities, counties and special districts.

Illinois’ Tax Amnesty Programs

Although Illinois’ online sales tax provisions have been in effect since 2018, the Illinois Department of Revenue is offering two tax amnesty programs, which go into effect October 1. They’re only available until November 15 though, so if you qualify for either, you’ll want to act quickly!

  • General Tax Amnesty: The state will waive interest, penalties and civil or criminal prosecution for taxpayers that pay state tax currently owed from the period of June 30, 2011 to July 1, 2018. There are exclusions, which you can read about here.
  • Franchise Tax Amnesty: The Secretary of State will waive applicable interest and penalties to those that pay all franchise taxes and license fees due between March 15, 2008 and July 30, 2019.
Kansas’ Online Sales Tax Provisions Begin

As of October 1, remote sellers need to register with the Kansas Department of Revenue and begin collecting and remitting sales tax. Although the state legislature created bills that would establish a threshold for smaller out-of-state retailers, the governor vetoed the two that passed because she didn’t agree with other provisions in the bills, meaning there is no exception for small sellers.

North Carolina Clarifies Digital Sales Tax

When it comes to taxability in the digital landscape, sales tax gets confusing quickly. As we’ve explained in the past, the way a digital good is defined (either as a product or service) varies from state to state.

As more consumers turn to the internet for goods and services, legislatures need to revise outdated law to try to keep up. Effective October 1, 2019, the North Carolina Senate updated the language so it’s clear the digital property does not need to be sold in a tangible medium to be taxable.

Tennessee Enforces Online Sales Tax Provisions

Although Tennessee was early to the economic nexus game (pre-Wayfair!), it’s just starting to enforce online sales tax provisions. As Avalara explains, “Tennessee was one of the first states in the country to adopt economic nexus, which it did well before the Supreme Court overruled the physical presence rule. A deeply divided state, the Tennessee Legislature then prohibited the Tennessee Department of Revenue from enforcing economic nexus.”

Once Wayfair passed, it took almost a year for the legislature to enact an economic nexus law. It was supposed to go into effect July 1, but then was pushed back to this coming October 1.

Texas’ Online Sales Tax Law Goes Into Effect

As of October 1, 2019, Texas will provide remote sellers with the option to collect and remit one sales tax, rather than needing to figure out the correct amount of tax to charge in each of the state’s 1,500+ jurisdictions.

Thanks to this new bill, HB 2153, sellers can collect single local use tax of 1.75 percent. When combined with the state tax, it turns into a flat 8 percent sales and use tax. As Avalara explains, “They won’t have to collect 6.25 percent in Apple Springs, 7.25 percent in El Paso, and 8.25 percent in Houston. Like most things in Texas, this is big.”

Have a tax question? Contact Monika Miles

 

Monika Miles

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.

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