How does Washington state approach online sales tax? This post explains.
The online sales tax debate continues, with states taking matters into their own hands instead of waiting for Congress to decide how to settle the matter. However, not all states are approaching the issue the same way. We’ve already looked at current and potential legislation in Colorado and Alabama; next we venture to Washington state!
A Summary of Washington’s Online Sales Tax Legislation
As we’ve previously explained, Washington prompted online sales tax collection by expanding its definition of nexus. Back in 2015, they rolled out the five-point internet sales tax solution, followed by establishing nexus through click-through retail solutions. Continue reading
Featured Guest Blogger- Harry-Todd Astrov
At Miles Consulting Group, we often assist clients in audits, or other disputes with state agencies, such as departments of revenue, usually related to sales or income tax. In this month’s guest blog, Harry-Todd Astrov looks at disputes from the federal standpoint and things to consider before engaging in fancy tax planning.
On March 23, 2017, the IRS Large Business and International (LB&I) division announced the initial identification and selection of 13 “campaigns” to combat perceived tax compliance issues, with more campaigns to be identified and launched in coming months.
Several of these campaigns either explicitly or implicitly will target mid-market businesses. These include a campaign to examine transactions with non-U.S. related parties, a separate campaign to specifically examine the transfer pricing used by inbound distributors, whether S corporation are claiming losses in excess of basis, the repatriation structure being used for tax-free repatriation of funds into the U.S., and whether foreign companies doing business in the U.S. are filing a Form 1120-F with the IRS.
How is Alabama approaching online sales tax? This post explains.
A couple of weeks ago we started a series that looks at the ramifications of various online sales tax legislation states across the country are proposing and signing into law. We started with Colorado as they’ve been at the forefront of the debate since 2010. Today we take a look at Alabama!
Alabama has been making waves in the state tax world because it passed legislation in 2015 that requires an out-of-state seller making retail sales within the state to register, and collect and remit sales tax on these sales by virtue of “economic nexus” if the seller has sales of more than $250,000 within Alabama, and engages in certain limited activities in the state. However, it does not require substantial physical presence as required in the 1992 Supreme Court decision (Quill). With the passage of these laws, Alabama drafted legislation that is unconstitutional and effectively challenging taxpayers to take the issue to court (or is challenging the federal government to finally enact some of the bills which have been circulating in Congress but have not passed). Whether that’s “simplified” or not is a question, but read on for a summary of the latest activities in the state. Continue reading
Annapolis, Maryland: Naval Academy Chapel Dome and Harbor Queen tour vessel at City Dock.
This month we travel to the birthplace of religious freedom in America, the state of Maryland. Formed by George Calvert in the early 17th Century, the state was intended as a refuge for persecuted Catholics from England. George Calvert was the first Lord of Baltimore and the first English proprietor of the then-Maryland colonial grant. Maryland was the seventh state to ratify the U.S. Constitution, and played a pivotal role in the founding of Washington D.C., which was established on land donated by the state.
Mid-Atlantic Maryland is defined by its abundant waterways and coastlines on the Chesapeake Bay and Atlantic Ocean. Its largest city, Baltimore, has a history as a major seaport, and is also home to such tourist attractions as the National Aquarium and the Maryland Science Center.
What are the ramifications of online sales tax in Colorado? This post explains.
As we’ve been following the online sales tax debate in previous posts, we’ve mostly approached the issue as it affects the country as a whole. While Congress has continued to debate how to handle taxing internet shoppers, however, states have been taking matters into their own hands. This upcoming series will look at new legislation coming out in different state legislatures across the country, beginning with Colorado.
A Summary of Colorado’s Online Sales Tax Legislation
Colorado has been at the forefront of the internet sales tax debate since 2010, when it passed a law that required companies with more than $100,000 in sales that did not have nexus in the state to do two things:
- Alert Colorado customers that Colorado sales or use tax is due
- File annual reports to the state, listing all the names, purchases and shipping addresses of Colorado customers
Although this legislation seemed egregious to most of us in the business, it went to court and, after many rounds in various courts, the law will now be effective as of July 1, 2017 because the U. S. Supreme Court denied certiorari – meaning they won’t hear the case. There have been some recent modifications that stipulate retroactive reporting won’t be necessary, but businesses will need to report on all sales after July 1 of this year. Continue reading
We all buy digital products and music online, but how does Pennsylvania tax them?
Businesses obviously grow by selling their products outside of their local boundaries and across state lines. Pennsylvania (PA) has experienced, like most states, a relatively large amount of sales from companies outside PA, and, with that, the loss in sales tax revenue from those sales, as out of state companies do not often collect sales tax. Pennsylvania has a growing economy, and like most states, it is continually modifying its tax laws to be current with changing conditions and technologies.
Last summer, we wrote an article about a new Pennsylvania law going into effect related to taxing software that is digitally downloaded. This law went into effect on August 1, 2016.
Do you understand how to determine the taxability of services?
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.
Arizona’s Take on Taxability of Services
In Arizona, transactions that include both tangible personal property and services may be subject to sales and use tax collection (note that AZ has what is called the Transaction Privilege Tax, which is similar to a sales tax for purposes of this example). So, for example, a company that sells a physical widget and then operates it for you would need to charge taxes on the entire transaction. Continue reading
The St. Louis, Missouri Gateway Arch and skyline
This month we travel to the “Show Me” state of Missouri. The people of Missouri have earned their motto as the “Show Me” state for their very practical skepticism of the fads that sweep other parts of the country. This attitude manifests itself in the state government’s approach to business encouragement and regulation. So, let’s look at the state and see how their approach could help your business.
The state is the 21st most extensive by area and is geographically diverse. North of the Missouri River, the state is primarily composed of rolling hills of the Great Plains and south of the Missouri River, the state is dominated by forests. The Mississippi River forms the Eastern Border of the State, eventually flowing into the swampy Missouri Bootheel.
How do you know if a service is subject to sales and use tax? This blog post explains.
If you followed our recent series about multi-state tax facts for various types of technology companies, you likely noticed a common theme: it’s important to determine which states a business has created in so that they know which sales and use tax laws to follow. Although it can be tricky, the good news is there are some generalities that can help get a company started with the process.
Sales and Use Tax in Regards to Services
In general, the sale of tangible property starts out as subject to sales tax, but then may ultimately be non-taxable as a result of statutory exemptions. On the other hand, services are generally non-taxable unless specifically delineated by a state’s statutes as taxable. Bloomberg BNA* does a good job of describing the general rules around taxation of services. Continue reading
What multi-state tax issues do BioTech and Pharmaceutical companies need to know about? This article explains!
If you’ve been following our series about multi-state tax facts for various facets of the technology industry, you may be aware of one more niche we haven’t discussed yet: BioTech and Pharmaceutical companies. While both these categories fall under scientific research and medicine, they’re integral to technology as well.
- BioTech organizations research living cells, studying and discovering ways to duplicate or modify them so they’re more predictable. This research has a lot of potential for curing or improving the lives of those with all sorts of diseases and conditions, and is at the forefront of scientific discovery, which is reliant on top-of-the-line, innovative tools and technology.
- Pharmaceutical companies specialize in everything surrounding drugs, specifically in-house research and licensing from academia and other businesses (including BioTech companies).
7 Multi-State Tax Facts BioTech and Pharmaceutical Companies Need to Know About
Fact 1: BioTech companies need to be aware of where they’re creating nexus beyond where the company is physically located. Many BioTech firms keep the research in their primary location, which limits instances of nexus being established in other states; however, some companies outsource some aspects of the research, which means nexus could be established beyond their home state.
Fact 2: Pharmaceutical companies may establish nexus in states in which sales representatives visit, even if they don’t complete a sale. In many states common sales activities may trigger nexus. Continue reading