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Tag Archive for Monika Miles

Internet Sales – The Wayfair Case

Monika Miles And Internet Sales Tax
South Dakota v. Wayfair, Inc.  – THE Case

On June 21, 2018, the U.S. Supreme Court ruled 5-4 in favor of overturning its 1992 decision in Quill, which set a standard requiring substantial physical presence before a state could enforce the sales tax collection responsibilities on a seller. In the current case, South Dakota v. Wayfair, Inc., 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 decision 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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What Companies Need To Know About Voluntary Disclosure Agreements

Monika Miles Sales Tax

The phrase of the day is “V-D-A”!  In the state tax world, that refers to Voluntary Disclosure Agreements, and we are working on many of these for our clients lately.  What are they, exactly, and why should your company perhaps be considering them as well?

What is a Voluntary Disclosure Agreement?

Simply put, entering into voluntary disclosure agreements with states is about companies identifying their potential state tax exposure (sales tax, income tax, or both) and coming forward voluntarily to pay any outstanding liabilities before the state identifies the company as part of an audit or other outreach effort.  As states are becoming more aggressive in their pursuit of out-of-state taxpayers, it’s becoming a bit of a game of “Beat the Clock!”

What are the advantages?

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What You Need To Know About Resale Certificates And Online Sales Tax

Monika Miles - Resale Certificates

Resale certificates provide a sales tax exception for registered retailers. They’re a way for the wholesaler to verify the company they’re selling to is planning to resell the items and collect sales tax during that future purchase. Note that resale certificates are not a new concept. They’ve been around since long before the Wayfair ruling, but as with everything sales tax – that ruling created some new confusion about an older concept! See below.

As Fundera explains:

When you purchase goods with a resale tax certificate, you’ll also need to be sure to collect the exempted tax when you sell the products. Resale certificates usually state your name and address as the buyer, the reseller’s permit number, a description of the purchased item, and a statement that the item in question is being purchased for resale.

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Minnesota Business And Tax Climate

Monika Miles - Minnesota

Minnesota is a state in the Upper Midwest and northern regions of the United States. Minnesota is the 12th largest state in area and the 22nd most populous state, where 60% of its residents live in the Minneapolis-Saint Paul metropolitan area (known as the “Twin Cities”). This area is the center of transportation, business, industry, education, and government, while being home to an internationally known arts community. The remainder of the state consists of western prairies now given over to intensive agriculture; deciduous forests in the southeast, now partially cleared, farmed, and settled; and the less populated North Woods, used for mining, forestry and recreation.

Minnesota’s first state park, Itasca State Park, was established in 1891, and is the source of the Mississippi River. Today, Minnesota has 72 state parks and recreation areas, 58 state forests covering 4 million acres and numerous state wildlife preserves. The Mississippi National River and Recreation area is a 72-mile-long corridor along the Mississippi River through the Minneapolis-St. Paul Metropolitan Area connecting a variety of historic, cultural, and geologic interest.

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The Truth About SaaS And Economic Nexus: 5 Myths Exposed

Monika Miles SaaS And Nexus Myths

There are a lot of misconceptions when it comes to SaaS and economic nexus, especially following last year’s Wayfair decision. Although these technology companies generally aren’t selling a tangible product across state lines, many state online sales tax laws are written in a way that make these businesses liable for collecting and remitting state sales tax.

Are you unknowingly exposing your SaaS company to sales tax risk by creating economic nexus? Keep reading for the truth about five common myths!

Myth #1: Because Wayfair online sales tax statutes provide for a clear date to begin filing, we don’t need to worry about retroactive exposure.

While it’s true that most states are not requiring companies to go back and file retroactively based upon the new economic nexus provisions (certain dollar or transactional thresholds of sales into a state during a year), there is still some retroactivity that companies may be forgetting.

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It’s Still All Greek – U.S. Multistate Tax For Foreign Companies Since Wayfair

Monika Miles And Nexus In The United States

Almost two years ago (my how time flies), my husband and I took an amazing vacation on a cruise of the Mediterranean.  When I returned from that trip, I wrote a blog about the nuances for foreign companies doing business in the United States as it relates to state tax issues.  Income tax and sales tax in the US are challenging concepts not only for foreign companies, but also domestic companies.  And as the state tax landscape has changed recently as a result of the recent South Dakota v. Wayfair (2018) decision, it may also be impacting foreign companies doing business here as well.

So, to recap from that prior blog article, and to elaborate a bit further, here are some of the major areas for foreign companies to consider as they begin doing business in the US.

The Concept of Nexus – “Nexus” is the minimum contact a company must have with a state in order for the state to be able to impose its tax laws on the company.  Historically (until the Wayfair case in June 2018), companies looked to whether they had substantial physical presence in a state.  As I often tell clients, consider where you have “boots on the ground”, in terms of employees, contractors, offices, and inventory (see more below) – to name the more common nexus creators.   Once nexus is established, the company may be subject to the filing of income tax returns, the collection and remittance of sales tax and filing of returns, employer payroll taxes and employee withholding, and myriad other taxes which may be imposed by the state or local entities.   A challenge that some foreign companies face is that they don’t realize how many different state and local agencies there are (in addition to the US federal government).

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In The Cloud: Sales Tax And Software-As-A-Service

Monika Miles - In The Cloud Software As A Service

A very important and often misunderstood area in the sales tax arena is the taxability of cloud-computing, cloud-based services, etc., collectively often referred to as Software-as-a-Service (or “SaaS”). The very moniker alone is enough to start the state tax conversation down an interesting path.

The Basics

When we work with clients to determine how something should be taxed, we start with a few basic premises and then work from there.

Premise #1 (Nexus has been created): The taxpayer must have taxable presence (or “nexus”) with a state before the state can require the company to collect and remit sales/use taxes. Nexus is created in a variety of ways. Traditionally, we talked about having a physical presence, including such things as having employees in the state, third party contractors acting on the company’s behalf in the state, owning property (such as inventory) in the state, and owning or leasing office space in the state. Now, with the US Supreme Court’s ruling in South Dakota v. Wayfair in June 2018, many states are enacting economic nexus statutes which require sellers to collect and remit in those states based on sales or transactional thresholds. (For instance in the South Dakota case, which many states have mimicked, sales of $100,000 OR 200 transactions in the state during the year will give rise to economic nexus, and a collection and reporting requirement for sellers.)

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New York State Boards The Wayfair Train

Monika Miles - New York State Boards The Wayfair Train

In the United States, the sales tax landscape has changed dramatically due to the recent U.S. Supreme Court Case of South Dakota v. Wayfair (June 2018). Following this landmark decision which made it easier for companies to create nexus in states, many states have enacted legislation which create guidelines/thresholds for economic nexus. In a previous blog, we talked about this epic decision. Through December, over 30 states had enacted economic nexus legislation. But we had not heard from New York.

What Is Economic Nexus?

Prior to the Wayfair decision, companies needed to have physical presence, or “boots on the ground,” in a state in order to have nexus (or taxable presence) in a state. This meant that a company had to have offices, inventory, employees, or contractors in a state for a certain amount of time. Companies now don’t necessarily need to have physical presence in a state for them to create nexus; they now can have nexus in a state by virtue of economic nexus. Economic nexus means that if companies have sales of a certain dollar amount or have a certain number of transactions with a state, the state can require the company to register, collect and remit sales tax.

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Florida’s State Economy And Favorable Tax Rates

Monika Miles- Florida And Tax

Florida is the southeasternmost U.S. State, with the Atlantic Ocean on one side and the Gulf of Mexico on the other. It has hundreds of miles of beaches. The city of Miami is known for its Latin-American cultural influences and notable arts scene, as well as its nightlife, especially in upscale South Beach. Orlando is famed for its theme parks including Walt Disney World.

Florida is the flattest state in the United States. Lake Okeechobee is the largest freshwater lake in the state.

Central Florida is known as the lightning capital of the United States, as it experiences more lightning strikes than anywhere else in the country. Florida leads the United States in tornadoes per area (when including waterspouts), but they typically do not reach the intensity of those in the Midwest and Great Plains. Hail often accompanies the most severe thunderstorms. Hurricanes pose a severe threat each year during June 1 to November 30, hurricane season, particularly from August to October.

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Online Sales Tax And SAAS: What You Need To Know

Monika Miles-Online Sales Tax And SAAS

Last year was a big one in the online sales tax debate; everything changed following the Wayfair v. South Dakota Supreme Court decision. Once the ruling was announced in June, states began creating and implementing online sales tax provisions for internet retailers selling to state residents. In addition to adding uncertainty for small business trying to sort out tax code for dozens of states across the country, the ruling complicated another already-confusing situation: the taxability of SaaS (Software as a Service).

Online Sales Tax & SaaS In States Across the Country

How does the taxability of SaaS tie in with the Wayfair ruling? The Wayfair ruling doesn’t relate specifically to SaaS – it’s about nexus – but because states are enacting laws which now make it easier to create nexus (for instance, the South Dakota standards that started this all – sales of over $100,000 in a year OR 200 transactions), companies now need to be more diligent in determining whether their products and services are subject to tax in various states. That’s where the analysis of the SaaS revenue stream fits in. Many of our clients that were, perhaps, based in one state and may have had physical presence nexus in one or two other states didn’t have that much to worry about. But now, we need to know where their revenue streams (SaaS and others) are taxable because they are often reaching the minimum thresholds for registration, collection and filing of sales tax.

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Three Fascinating Examples Of State Tax Law Intersecting Technology

Monika Miles - Three Ways State Taxes And Technology Intersect

As we welcome the New Year, I thought it would be fun to look at a few areas where state tax laws and technology are coming together. Keep reading for three different updates that share ways modern tech is affecting states’ revenue.

1. Ohio Accepts Cryptocurrency for State Tax Payments

Cryptocurrency like Bitcoin has been around for a while now, yet Ohio is setting an interesting state tax precedent by allowing businesses to pay their fees with the digital currency.

This is especially interesting as these types of currency are known for volatility. However, the state’s taken this into consideration. OhioCrypto explains:

Payments made on OhioCrypto.com, through our third party cryptocurrency payment processor partner BitPay, are immediately converted to USD before being deposited into a state account. BitPay sets the exchange rate for a 15 minute allotted time window for each transaction once a business taxpayer begins to make their payment at OhioCrypto.com. BitPay assumes the risk of any market fluctuations during the allotted time window.

While the taxpayer will need to pay transaction, network and mining fees, the cost to the business seems to be less than if they paid their state tax fees through Ohio’s credit card service provider.

It will be interesting to see if other states decide to begin accepting cryptocurrency for state tax payments in the future.

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A Helpful Overview Of The 2019 State Sales Tax Ranking

Monika Miles- Overview of 2019 State Sales Tax

Over the past few years we’ve seen how companies have determined where to base operations based on considerations like sales taxcredits and incentives, and overall business climate. When it comes to running a business, which states are friendliest and which are most unfavorable?

The Tax Foundation’s 2019 State Business Tax Climate Index compiles various state details to offer a fascinating comparison for corporate leaders. Keep reading for an overview of how the various states stack up next to each other, especially in regards to sales tax.

2019 State Sales Tax Ranking

The Tax Foundation’s review of this year’s sales tax ranking includes a map with a helpful visual of each state’s placement on the list.

On it you can see the top 10 states are:

  1. New Hampshire
  2. Delaware
  3. Montana
  4. Oregon
  5. Arkansas
  6. Wyoming
  7. Maine
  8. Wisconsin
  9. Nebraska
  10. Virginia

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