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.
A Mississippi Riverboat sailing down the Mississippi River.
This month we travel to the land of Dixie, the southern state of Mississippi. The state is heavily forested with over half of the state’s area covered by wild trees including mostly pine, as well as cottonwood, elm, hickory, oak, pecan, sweetgum and tupelo.
The Mississippi River delta region is considered home of the blues music, where this type of music is honored at the Delta Blues Museum in Clarksdale. This region is also one of the top casino destinations between Las Vegas and Atlantic City. Many well-known and diverse singers came out of Mississippi including Elvis Presley, alternative rock band 3-Doors Down, Jimmy Buffet and Opera Singer Leontyne Price.
How is Indiana changing the way it views nexus?
Multistate tax can be a cumbersome issue. 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 are pushing the boundaries of defining the physical presence in order to generate more revenue. Welcome to the concept of “economic nexus.”
Nexus and Physical Presence
As we discuss in a previous post, “nexus” is the term used to describe the minimum connection that a company (taxpayer) must have with the state in order for the state to be able to subject the company to its state taxing schemes (including sales tax, income tax, gross receipts tax and others). Nexus is normally established by companies having a physical presence in the state, by virtue of having employees, or third party contractors acting on their behalf in a state, or the presence of a warehouse or storefront in the state. Inventory in a state can also create nexus. Continue reading
How is Texas handling the online sales tax debate? This blog post explains!
Have you been following the online sales tax debate? Congress hasn’t been able to come up with a solution at this point, so states are taking matters into their own hands. This series showcases how various legislatures across the country are approaching the issue. So far we’ve covered Colorado, Alabama and Washington. This week we take a look at Texas.
A Summary of Texas’ Online Sales Tax Legislation
Although the 1992 court case, Quill Corp. v. North Dakota, set precedent that companies need to collect sales tax from customers in states where the business has a physical presence (or nexus), many states – including Texas – interpret that to mean that they can collect sales tax if your enterprise has established nexus in their state by other than just physical presence. This is often referred to as economic nexus. Continue reading
White Sands National Monument full of white sand dunes and gypsum crystals.
Welcome to the Land of Enchantment! This month we travel to the southwestern state of New Mexico. The states of New Mexico, Colorado, Arizona and Utah come together at the Four Corners in the northwestern corner of the state, the only such occurrence in the U.S. Although a large state, New Mexico has very little water, with a surface area of only about 250 square miles.
Inhabited by Native Americans for thousands of years before European Exploration, New Mexico was colonized in 1598 by the Imperial Spanish viceroyalty of New Spain. Later, it was part of independent Mexico before becoming a U.S. territory and eventually a U.S. state, as a result of the Mexican-American War. Among the U.S. states, New Mexico has the highest percentage of Hispanics, including descendants of the original Spanish colonists who have lived in the area for more than 400 years beginning in 1598. The demography and culture are shaped by these strong Hispanic and Native American Influences and is also expressed in the state flag. Its scarlet and gold colors are taken from the royal standards of Spain, along with the ancient symbol of the Zia, a Pueblo-related tribe.
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
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
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.