The Arizona House and Senate approved HB 2204 and sent it to the governor on June 29. This bill adds new reductions to Arizona gross income for the value of virtual currency and non-fungible tokens (NFTs) received from an airdrop. Apparently though any future appreciation would not be subtracted from gross income. While not clear, I assume these tax-free airdrops will have zero basis for Arizona and a gain when disposed of.
In addition, gas fees not already added to the taxpayer’s basis in virtual currency or NFT is also a subtraction from gross income. I’m not clear what this means for basis.
HB 2204 includes definitions for gas fee, NFT and virtual currency. The virtual currency one matches the IRS definition in Rev. Rul. 2019-24 on hard forks – “s a digital representation of value that functions as a medium of exchange, a unit of account, and a store of value other than a representation of the United States dollar or a foreign currency.”
Although commonly referred to as a sales tax, the Arizona transaction privilege tax (TPT) is actually a tax on a vendor for the privilege of doing business in the state. It is measured by the value of tangible personal property (TPP) sold by the vendor in Arizona. The vendor is liable for the tax, even though the vendor may pass on the tax to the consumer.
Use tax, which is a tax on any TPP bought from an out-of-state vendor that is stored, used or consumed in Arizona, and no tax was paid to the state of sale. The consumer is liable for use tax if TPP was purchased with no tax paid to the state of sale. If there is no nexus with the state, a vendor may collect use tax for the convenience of the customer.
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
(Bloomberg) “You must pay your taxes immediately, or else,” an ominous voice on the other line says before demanding a credit-card number. Most Americans roll their eyes and hang up on these scam calls, but thousands have fallen victim, and millennials are more susceptible than older generations, a new study finds.
Millennials are less likely than Gen Xers or Baby Boomers to receive tax scam phone calls, according to a recent survey, but they were six times more likely than older generations to give the scammer their credit-card numbers, and twice as likely to give their Social Security numbers. Read More
The Tax Cuts and Jobs Act, a $1.5 trillion tax cut package, was signed into law on December 22, 2017. The centerpiece of the legislation is a permanent reduction of the corporate income tax rate. The corporate rate change and some of the other major provisions that affect businesses and business income are summarized below. Provisions take effect in tax year 2018 unless otherwise stated.
Corporate Tax Rates
- Instead of the previous graduated corporate tax structure with four rate brackets (15%, 25%, 34%, and 35%), the new legislation establishes a single flat corporate rate of 21%.
- The Act reduces the dividends-received deduction (corporations are allowed a deduction for dividends received from other domestic corporations) from 70% to 50%. If the corporation owns 20% or more of the company paying the dividend, the percentage is now 65%, down from 80%.
- The Act permanently repeals the corporate alternative minimum tax (AMT).
Have you been following our series on how states are approaching the online sales tax debate? So far we’ve taken a look at Colorado, Alabama, Washington and Texas; today we look at Arizona! Keep reading to see how the Grand Canyon State is approaching the issue.
A couple of weeks ago we introduced the general guidelines surrounding taxability of services. Because taxability varies by state, we wanted to share a few examples of how selected states determine if a company is responsible for sales and use tax on their services.
2017 is finally upon us. There are a lot of changes that we should expect to happen to taxes over the course of the next few years. But as of the first, many states have already begun changing their tax codes. Corporate income taxes are one of the areas in which we will be seeing multiyear reductions and reforms. We will look at the five states (four states and capital) that reduced or will reduce their corporate tax rates in 2017: Arizona, The District of Columbia, Indiana, New Mexico, and North Carolina.