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Tag Archive for sales tax

Taxing (Or Not Taxing) Services Is Wrong Focus – How To Improve Sales Tax

Professor Annette Nellen

The sales tax, used by almost all states, is a consumption tax. Generally, consumption is what the final consumer does. For example, a company manufactures paper, a greeting card company purchases some of that paper to make greeting cards and sells them to the final consumer or to a distributor who sells them to the final consumer. As the paper or cards move through this supply chain, a sales tax exemption for items purchased for resale prevents sales tax from being charged. The final consumer is the only one who pays sales tax when the card is purchased (reaches the end of the supply chain).

Supply chains and tax systems are not always this “simple” though because not everything a business buys is directly for resale. A recent case in Kansas found that electricity purchased by Southwestern Bell Telephone, Co. LLC (No. 120,167 (2020)) to help in the delivery of telecommunications services was exempt from sales tax because it was used in this production. A lot of time and effort though went into the determination of whether Southwestern Bell owed sales tax.
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3 Important Sales Tax Predictions To Watch For In 2020

3 Important Sales Tax Decisions
3 Sales Tax Predictions For 2020

The world of sales tax has changed a lot in the past year. Following the Supreme Court’s Wayfair decision, 2019 was the year most states began requiring businesses to collect and remit sales tax, and then began making marketplace facilitators (such as Amazon or eBay) responsible for collecting and remitting the taxes on sales that came through their marketplaces.

What changes can we expect to see this year? Keep reading for three predictions we believe are just around the corner.

1. Smaller Retailers Will Depend On Marketplaces

As Greg Chapman, SVP of business development at Avalara explains, “We should expect traditional ecommerce providers to start working closely with marketplaces or offering more ‘Amazon-like’ experiences to stay relevant.”

The increase in online shopping coupled with confusing economic nexus laws make it even more appealing for very small businesses up to mid-sized companies to work with online marketplaces. In addition to facilitating sales in a process that’s more streamlined for customers, a lot of states have placed the burden of sales tax collection on the marketplace rather than the seller. This can greatly reduce the cost and risk of doing business online for companies struggling to navigate tricky taxability questions.

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What You Need To Know About The Wayfair Decision And How It Affected Sales Tax

MONIKA MILES

Here we are, about 18 months after one of the biggest jolts to the sales tax landscape. On June 21, 2018, state sales tax completely changed when the U.S. Supreme Court established precedent for economic nexus through South Dakota v. Wayfair, Inc.

In the highly anticipated ruling, the Court ruled 5-4 in favor of overturning its 1992 Quill decision, which required sellers to have substantial physical presence before a state could enforce the sales tax collection responsibilities.

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 decisions 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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U.S. Supreme Court Transcript And Decision – South Dakota V. WayFair

U.S. Supreme Court, South Dakota V Wayfair

As States become more aggressive in the collection of sales tax, cases are making their way to the United States Supreme Court. In the 1960s the U.S. Supreme Court limited states sales tax collection power to individuals and businesses with a physical presence, either themselves or property, in the state. This was reaffirmed in the 1992 Quill decision in Quill Corporation V. North Dakota.

Since the Quill decision, the “physical presence rule” has been challenged in the area of sales tax (31 states now have laws collecting sales tax from internet firms with no physical presence in the state). Horror stories abound including states like Massachusetts and Ohio claiming they can tax any company if their website puts a cookie on an in-state browser.

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What You Need To Know About California’s SB 993

Sales tax is a major revenue source for many states, including California, which is why its legislature has been looking for additional ways to collect fees under the ‘sales tax’ umbrella.

For years, State Senator Bob Hertzberg has been trying to extend the state’s reach by imposing sales tax on services. Although 2015’s Senate Bill 8 didn’t pass, there’s another bill recently heard in the Senate Governance and Finance Committee: Senate Bill 993 (SB 993).

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Georgia: New Sales Tax Compliance Requirements For Online Retailers

Georgia will require online retailers to file sales tax compliance returns beginning January 1, 2019, if their annual Georgia revenues exceed $250,000 or if they have more than 200 separate retail transactions within the state per calendar year.

As an alternative to collecting Georgia sales tax from its customers and filing sales tax compliance returns, the retailer may instead send “tax due” notices to all Georgia customers who purchased more than $500 of taxable goods during the year. The law, which originated as House Bill 61 and became Act 365, was signed by Governor Nathan Deal on May 8, 2018.

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Sales Tax Consultant Having Success Recovering Georgia Sales Tax Refunds For Hospitals And Healthcare Industry

Georgia sales tax exemptions for healthcare providers, including hospital, clinics, and medical practice groups include several categories of purchases. One Georgia sales tax exemption for healthcare providers that a sales tax consultant from Agile Consulting Group has been recovering a significant amount of refunds for relates to prosthetic devices. Georgia Code Ann. § 48-8-3(54) states that prosthetic devices that are sold or used pursuant to a prescription are exempt from Georgia sales and use tax. Our sales tax consultant has learned that the prosthetic device may be purchased exempt from Georgia sales and use tax by a hospital, clinic, or medical practice group if it is sold or used pursuant to a prescription under federal or state law and title and possession is permanently transferred to a natural person to whom a prescription for the device is issued, per Georgia Comp. Rules & Regulations § 560-12-2-.30(5)(a). Read more

More States Impose Sales Tax On E-Commerce Sales

Over the last few decades, states have had the opportunity to broaden their income and franchise tax base by ensnaring a larger proportion of out-of-state taxpayers in their taxing regime through adoption of broad economic or factor-based economic nexus standards.

However, states have traditionally struggled to do the same with respect to their sales and use tax base because of the long-standing United States Supreme Court nexus decision in Quill Corp. v. North Dakota (1992).” 1 For nearly three decades, the dicta contained in Quill have prevented states from adopting economic-based nexus
standards with respect to sales and use taxes, requiring instead a more stringent physical presence standard (or “substantial nexus”).
The Supreme Court has repeatedly declined to hear challenges or cases related to Quill, until recently. Read more

Pennsylvania And The Economic Nexus Bandwagon- No April Fools!

As you know from reading our blogs, multi-state tax can be difficult to navigate! When businesses sell their products across state lines, they need to think about whether they have taxable presence, or nexus, in the state and if their products are taxable.

Generally companies establish nexus by having a physical presence in the state. However, several states have recently been pushing the boundaries of defining the physical presence notion in order to generate more revenue. The concept of “economic nexus” is gaining greater momentum. Read more

New Jersey Sales And Use Tax Exemptions For Manufacturers

The New Jersey sales and use tax exemption for manufacturers enables machinery, apparatuses, or equipment to be purchased without paying New Jersey sales and use tax.  New Jersey Revenue Statute 54:32B-8.13(a) further clarifies the sales and use tax exemption by stating that the machinery, apparatuses or equipment must be for use or consumption directly and primarily in the production of tangible personal property by manufacturers, processors, assemblers or refineries. This New Jersey sales and use tax exemption for manufacturers applies to any such machinery, apparatus, or equipment regardless of whether the item is purchased, rented or leased. Read more

Rhode Island Online Sales Tax: What Should You Know?

As you know, the online sales tax debate continues across the country as states look for ways to collect fees from internet shoppers to increase their revenue. Rhode Island’s reporting law similar to Colorado’s, which makes customers responsible for paying the taxes, is now in effect.

About Rhode Island’s Online Sales Tax Law

Non-collecting retailers making in excess of $100,000 in sales or more than 200 sales (number of transactions) within the immediately preceding calendar year, are responsible for registering, collecting and remitting sales tax, or must do all of the following: Read more

High Court Reconsiders Physical Presence Requirement For Sales Tax

South Dakota is taking the physical presence rule back to our nation’s highest court in its dispute with Wayfair, Inc., to determine whether it may continue to require out-of-state sellers such as online retailers to register with the state and collect and pay over sales tax.[1]

In the seminal case from 1992, Quill Corp. v. North Dakota, the U.S. Supreme Court ruled that retailers did not have to collect sales tax in any state where they have no physical presence. However, the exponential growth of eCommerce and internet sales has significantly changed the retail landscape since that time. Read more