Category Archives: Sales Tax

FOCUS ON KENTUCKY

Kentucky is known for its horse races, particularly the Kentucky Derby at Churchill Downs.

This month we travel to the Bluegrass State of Kentucky. The nickname is based on the bluegrass found in many of its pastures due to its fertile soil. The state’s largest city, Louisville, is home to the Kentucky Derby, the renowned horse race held at Churchill Downs on the first Saturday in May.

The Red River Gorge is a canyon system on the Red River in east-central Kentucky. Geologically, it is part of the Pottsville Escarpment, a resistant sandstone belt of cliffs and steep sided, narrow crested valleys. The prevalence of sandstone allowed the Red River to cut a magnificent gorge through the mountains. It is a rock climber’s paradise and is some of the best natural area around!

Kentucky is a land with diverse environments and abundant resources, including the world’s longest cave system, Mammoth Cave National Park, the longest of navigable waterways and streams in the contiguous United States, and the two largest man-made lakes east of the Mississippi River.

Continue reading

Reminder to CA Manufacturers: Sales Tax Exemption!

Does your manufacturing equipment qualify for the CA partial exemption? Read this article to find out more.

Remember when the California Manufacturing Sales Tax Exemption first came into fruition, on July 1, 2014? It seems like so long ago. But maybe it’s a good time to remind companies about this useful partial exemption available to manufacturing companies.

What exactly is this exemption?

It allows certain manufacturers and biotech companies to exempt a portion of California sales and use tax on purchases of qualified equipment used in manufacturing and R&D (research and development).

This exemption went into effect July 1, 2014 and applies to any sale, purchase, and lease of qualified tangible personal property on or after this date.  However, this exemption won’t be around forever- it sunsets on July 1, 2022.

Continue reading

Ongoing Amnesty Program: Act Soon!

An update on the new amnesty program.

Last month, we updated our readers on an ongoing amnesty program for state taxes that is currently taking effect. As this program could be helpful to sellers utilizing fulfillment marketplaces, we wanted to provide an update on this program so qualified companies can take advantage of the potential benefits of the amnesty.

 

 

What exactly is it?

Despite certain online sellers, like Amazon, volunteering to collect tax across the U.S., many online sellers are not collecting tax in states where they may have (intentionally or inadvertently) created nexus. Amnesty programs encourage companies to become compliant in a given state. This one is a grand-scale amnesty, covering many states.

The nexus committee of the Multistate Tax Commission (MTC) approved the MTC to participate in a multistate sales tax amnesty program for third-party sellers whose only nexus with a state is the use of fulfillment services offered by third-party marketplaces. The Multistate Voluntary Disclosure Program (MVDP) provides a way for a taxpayer with a potential tax liability in multiple states, to negotiate a settlement, using a uniform procedure.

Continue reading

How is Indiana Advocating for Online Sales Tax? With a Lawsuit

Indiana us state law, code, legal system and justice concept with a 3d rendering of a gavel on the Indiana state flag on background.

Have you heard the latest online sales tax news coming out of Indiana?

Every time we turn around, it seems there’s a new development in the online sales tax debate. As states continue to get involved and look for new ways to bolster their revenue, the issue continues to grow larger and more complex. Now Indiana is looking to the courts to settle the matter.

Indiana’s Online Sales Tax Lawsuit

On August 29, IndyStar reported that Indiana’s Attorney General filed a lawsuit asking Marion Superior Court (in Indianapolis) to find the state’s online sales tax law constitutional. ” The law, which went into effect July 1, requires out-of-state businesses to collect and remit the same sales taxes as Indiana-based businesses.”

This isn’t the first lawsuit Indiana’s online sales tax law, House Enrolled Act 1129, has been involved in. American Catalog Mailers Association and NetChoice argued the legislation was unconstitutional back in June. Continue reading

FOCUS ON MAINE

A lighthouse in Portland, Maine.

This month we travel all the way to the northeast corner of the country to the state with the rocky coastline and maritime history of Maine, the Pine Tree State.

Maine is the northeasternmost state in the contiguous United States. It is known for its jagged rocky coastline, low, rolling mountains, heavily forested interior, picturesque waterways, and its seafood cuisine, especially clams and lobster.

During the last ice age, the receding glacier left artifacts that we find interesting today- millennia later. Much of Maine’s geomorphology was created by extended glacial activity at the end of the last ice age. Prominent glacial features include Somes sound and Bubble Rock, both part of Acadia National Park on Mount Desert Island. Carved by glaciers, Somes sound is considered to be the only fjord on the eastern seaboard and reaches depths of 175 feet. The extreme depth and deep drop-off allow large ships to navigate almost the entire length of the sound. These features also have made it attractive for boat builders, such as the prestigious Hinkley Yachts.

Continue reading

AMNESTY PROGRAM DIRECTED AT FBA SELLERS

Could an Amnesty Program erase your tax burden?

There is a new scheduled amnesty program that may help businesses correct overlooked tax obligations if they have been selling products and services in other states. Many companies engage in multi-state sales through an intermediary, like Amazon, eBay and similar organizations called “fulfillment services.” The fulfillment centers place a seller’s inventory in warehouses in multiple states to expedite shipping, but in the process, create nexus for the seller in those states. As such, the sellers have an obligation to collect sales tax and pay income tax. Unfortunately, unpaid taxes may incur penalties and interest. Now there may be a short time window to correct these errors and avoid interest and penalties.

On Monday, July 31, the nexus committee of the Multistate Tax Commission (MTC) approved the MTC to participate in a multistate sales tax amnesty program for third-party sellers whose only nexus with a state is the use of fulfillment services offered by third-party marketplaces.  The MTC is an intergovernmental state tax agency working on behalf of states and taxpayers to facilitate the equitable and efficient administration of state tax laws that apply to multistate and multinational enterprises.

Continue reading

FOCUS ON SOUTH DAKOTA

Mt. Rushmore in beautiful South Dakota

This month takes us to the Mount Rushmore state of South Dakota. South Dakota is the 5th least populous state in the U.S., with a population of 865,454 people in 2016. It is also the 5th least densely populated state in the country. South Dakota is in the north-central United States, and is considered part of the Midwest by the U.S. Census Bureau. It is also part of the Great Plains region, which covers most of the western two-thirds of the state. West of the Missouri River the landscape becomes more and more rugged, consisting of rolling hills, plains, ravines, and steep flat-topped hills called buttes. In the south part of the state, east of the Black Hills, lies the Badlands of South Dakota. Erosion from the Black Hills, marine skeletons that fell to the bottom of a large shallow sea that once covered the area, and volcanic material, all contribute to the geology of this area.

Continue reading

The Nexus Discussion – Some Practical Examples

Almost every conversation in and around state tax consulting begins with nexus.  Why?  Because it’s still of utmost importance to companies to know whether they have nexus, or taxable presence, in a state such that the state can require them to register to collect and remit sales tax and/or to pay income based or franchise taxes.  If a company doesn’t have taxable presence, then they are not obligated to file in a particular state.  I’ve been practicing in state tax for longer than I care to admit, and I still have this conversation daily with existing clients and new clients as we talk about their potential exposure to taxes in multiple states.  It doesn’t help that states are getting more aggressive and creative (maybe a little too aggressive and creative) in defining what constitutes nexus.

Since the infamous 1992 Supreme Court case, Quill Corp. v. North Dakota, 504 U.S. 298 (1992), we’ve been talking about nexus as it relates to substantial physical presence in a state.  What sorts of things create that physical presence?  I often tell clients that it is like having “boots on the ground”.  While “substantial” is also a subjective term, it includes the following activities engaged in within a state. Most of them seem fairly straightforward, so I’ve included some examples of specific items we often encounter with clients.

Employees located in a state 

Generally, when companies think of creating nexus by virtue of employees located in a state, they’re thinking of employees physically residing in the state, or coming to work in a company office in the state.  However, other employee activities in the state can also create nexus.  Consider the following scenarios:

  • A company salesman works from his home in Texas. But his territory, which he travels into regularly to generate sales, includes the neighboring states of New Mexico, Arizona, Oklahoma and Louisiana.  Depending on the number of days spent in each state, he likely has created nexus for the company, not just in Texas, but in the other states as well.
  • A different company employee engaged in operations, travels to every jobsite of the company and assists with the installation of the company product, confirmation that it functions correctly and other initial troubleshooting. This employee has likely also created nexus for the company in most states he visits.

Continue reading

FOCUS ON OKLAHOMA

A cowboy at the reins of an old pioneer wagon.

This month brings us to the Sooner State of Oklahoma. The state lies between the Great Plains to the West and the Ozark Plateau to the East and is in the Gulf of Mexico watershed, generally sloping from the high plains of its western boundary to the low wetlands of its southeastern boundary. With small mountain ranges, prairies, mesas and eastern forests, most of the state lies in the Great Plains, Cross Timbers, and the U.S. Interior Highlands, a region prone to severe weather.

Oklahoma is on a confluence of three major American cultural regions and historically served as a route for cattle drives, a destination for southern settlers, and a government-sanctioned territory for Native Americans.

Continue reading

IT’S ALL GREEK TO ME!- US MULTISTATE TAX & FOREIGN COMPANIES

Santorini, Greece

I just returned from an amazing vacation – a cruise of the Mediterranean.  We started in Athens, Greece; spent just a couple days there enjoying the history, and then boarded our ship.  The cruise took us to the Greek isles of Santorini and Crete, and then we sailed to Italy, the beautiful St. Tropez, France, and finally Barcelona, Spain.  We finished our vacation by sampling many, many tapas and wines in Barcelona.  About midway through our vacation, I found myself wondering – how could I do US multistate tax consulting somewhere in Europe?  I’m still working on that angle, and will certainly keep you posted.

But meanwhile, on the flip side of that equation, we’ve been engaging with several foreign companies who have US operations and find our state tax laws to be, well, challenging!  As I tell all my foreign clients – trust me, they are challenging for US companies too!  Here are some of the main things for foreign companies to think about as they begin doing business in the US.

Continue reading