Tag Archives: Sales tax

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.

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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.

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Ohio’s New Online Sales Tax: Now Cookies Can Create Nexus?

Flag of Ohio sticking in a variety of American banknotes.

Is Ohio’s new approach to online sales tax justified?

What do cookies, nexus and online sales tax have to do with each other? States are continuing to look for ways to justify charging sales tax to internet retailers; Ohio just took a page out of Massachusetts’ book.

Massachusetts’ Online Sales Tax Directive 17-1

A couple of weeks ago we shared that Massachusetts created a directive that redefined nexus to include internet cookies, which meant that the state was recognizing these bits of computer code as a way to establish a physical presence, therefore making internet retailers responsible for collecting and remitting sales tax from online shoppers. Continue reading

What’s New in Massachusetts? An Online Sales Tax Update

Have you been following the latest online sales tax directives from Massachusetts?

A couple of weeks ago we summarized Massachusetts’ Directive 17-1, a new piece of online sales tax legislation that redefined physical presence to include downloaded apps and internet ‘cookies’ – the data websites store on users’ computers and phones to track visits. While Directive 17-2, which repealed the prior directive, was announced at the end of June, the original law redefining physical presence (or nexus) was so distinctive that we wanted to take a closer look at the rule.

Massachusetts’ Online Sales Tax Directive 17-1

What made this state’s approach to online sales tax so uncommon? Sylvia Dion, our colleague and a principal at PrietoDion Consulting Partners, provides a nice summary in a recent blog post for SalesTaxSupport.com. I’ve included a few of her key points below, but the reason so many opposed it (including trade groups) is that it redefines nexus, twisting established precedent to justify collecting sales tax from internet vendors.

It’s worth noting that, unlike other states that have enacted online sales tax legislation, Directive 17-1 was established as an administrative policy from the Massachusetts Department of Revenue rather than the state legislature. Also, because the directive clearly targets “internet vendors,” there is a strong argument that it could be discriminatory.

The most interesting part of this directive, however, is the detailed discussion and justification accompanying it, contorting previous precedent and state law to increase the number of online retailers responsible for charging customers for state sales tax. 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.

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What You Need to Know about New York’s Online Sales Tax

Side view of a piggy bank with the flag design of New York.

How does New York approach online sales tax? This blog post explains.

Overall, the topic of collecting online sales tax is not as cut and dry as some would first assume, with ambiguous meanings and regulations, often confusing business owners. And hopefully, that’s where we come in to help!

In our series we have talked about multiple states, including Nevada, Washington and Colorado, and how each one handles the issue surrounding online sales tax for their state; up next in the lineup is New York.

A Summary of New York’s Online Sales Tax Law

New York was the first state in the country to enact a law for larger internet retailers (back in 2008). This law is referred to as the “Amazon Law,” based on the large internet retailer that used to have physical presence in very few states and therefore wasn’t required to collect sales tax. Amazon has now changed its business model and has worked with many states to collect sales tax. However, over the past several years, many states enacted “Amazon Laws” or “click through” statutes to get ahead of the company and internet retailers. New York was simply the first! Continue reading

FOCUS ON MISSISSIPPI

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.

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An Interesting Look at Nevada and Online Sales Tax

Side view of a piggy bank with the flag design of Nevada.

Check out this post for a look at how Nevada is approaching online sales tax!

If you’ve been following along with our series about various states’ approach to online sales tax, you can see how multi-state tax issues can get confusing for business owners quickly.

At this point we’ve taken a look at the how Colorado, Alabama, Washington, Texas and Arizona establish nexus, which determines eligibility for state sales tax; today we review Nevada.

A Summary of Nevada’s Online Sales Tax Legislation

Nevada is one of the states that enacted the “Amazon Law” back in 2015. As Nolo.com explains, this means that a couple of years ago the state extended nexus to include:

  • Retailers that have an agreement with a business or seller located in Nevada to pay for customer referrals obtained via a link on the Nevada seller’s website (a click-through arrangement)
  • The out-of-state retailer’s gross receipts from these directed sales to Nevada customers exceeds $10,000 during the preceding four calendar quarters

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The Inside Scoop: Arizona’s Approach to Online Sales Tax

Side view of a piggy bank with the flag design of Arizona

How does Arizona approach online sales tax? This blog post explains!

Have you been following our series on how states are approaching the online sales tax debate? So far we’ve taken a look at Colorado, Alabama, Washington and Texas; today we look at Arizona! Keep reading to see how the Grand Canyon State is approaching the issue.

A Summary of Arizona’s Online Sales Tax Legislation

Unlike the other states we’ve covered so far, Arizona interprets the 1992 court case, Quill Corp. v. North Dakota, a little bit more directly. The precedent set forth established that companies need to have a physical presence in the state (or nexus) in order for the state to collect sales tax on a purchase.

While many states establish economic nexus through a variety of provisions, Arizona’s 2015 Tax Handbook clearly states that physical presence as defined by Quill is key. And, as Nolo.com points out, “According to the same section, a company with no physical presence in the state, but whose products are both available in independently-owned Arizona stores and directly from the company via the internet, is not responsible for collecting sales tax.” Continue reading

Online Sales Tax in Texas: What Do You Need to Know?

Side view of a piggy bank with the flag design of Texas.

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