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U.S. States Sales Tax Updates: Connecticut, Washington, New Mexico, Maryland

U.S. States Sales Tax Updates

An Apple a Day Keeps the Sales Tax Away – Connecticut Online Learning Rendered Nontaxable

The true object test comes into play when determining the taxability of online learning plans and courses. Online learning plans are generally not subject to sales and use tax as digital goods because the true object being sold is the nontaxable service of education or training. However, these courses may be taxable when connected to job-related software or computer training at rate of 6.35% and non-job-related computer or software training at a rate of 1%. While audio-visual works are included in many online learning programs, the true object of the course is the education or training and not the sale of the digital good. Therefore, the service is nontaxable. On the other hand, if a company enacts an online job-related training plan it is a taxable service since it qualifies as a business management consulting service. However, general education seminars, refresher courses, courses on current developments in a particular field, and courses for continuing education credits are not subject to tax.

Sales Tax Gain from Your Window Pain – WA Taxpayer Audit Assessment

The Washington Court of Appeals has upheld the decision of the trial court that approved the DOR’s motion for judgement after concluding that a taxpayer’s visual display work was subject to retailing business and occupations (B&O) tax. A New York based company that performed “roll-out work” for it’s client’s marketing campaigns including the hiring of resident independent contracts to perform installation and repair work of window displays on its behalf. The taxpayer argued that these services did not meet the definition of a “retail sale” and therefore was not subject to retail tax.

The court noted that these transactions were in fact considered retail sales of installation services. Therefore, the taxpayer is being assessed for unpaid B&O tax, retail sales tax, penalties, and interest.

Ignorance is No Defense – Washington Business & Occupation Tax Penalty Upheld

Tax Referee Andrea Vingo ruled that a prepaid wireless company was properly penalized by the Washington Department of Revenue. The taxpayer filed monthly Business and Occupation taxes, but did not report any income and therefore did not file an annual reconciliation in Washington. During an audit, the Department assessed the fees associated with the reconciliation and applied a penalty. The taxpayer asked the Board of Tax Appeals to reinterpret conflicting tax codes, arguing that the taxpayer could not have been expected to file a reconciliation and therefore cannot be penalized. The Board was not convinced by this argument, ruling in favor of the Department.

New Mexico Warns Taxpayers to Update Forms

New Mexico DOR is warning taxpayers to use the proper, updated forms to file business tax returns. Starting May 1, 2022, taxpayers using the outdated CRS-1 paper forms will face penalty and interest charges. The state DOR encourages taxpayers to use the online TAP portal. However, taxpayers who wish to continue paper filing must use the updated forms that are available on the DOR website. The CRS-1 form will only be accepted for filing periods prior to July 2021.

Stumped on Sales Tax? Maryland Taxable Property and Service List Released

The Maryland Comptroller’s Office has issued a list of tangible personal property and services that are subject to sales and use tax. This is not a complete list, and many factors play into if a good or service should accrue sales and use tax. Applicable law, regulation, and the comptroller’s tax publications can be further examined to find details on how these conclusions arose.

Have a question? Contact Jordan Perri, Allyn International.

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