Category Archives: Uncategorized

Upcoming Texas Amnesty Program

Erase your tax obligations with the current and upcoming amnesty programs.

There always seems to be an amnesty program going on somewhere, particularly if you know where to look.

States are aggressively pursuing delinquent taxpayers, while still making it relatively easy for them to come forward themselves. Last year, we wrote an article about some interesting amnesty programs in Connecticut (CT), Ohio (OH), and Rhode Island (RI).

Most amnesty programs allow for a waiver of penalties and a limitation on interest if businesses come forward under the terms of the program as specified by the state legislature. Most of the programs are limited in time (often only a two to three month window) and only cover certain taxes.  Yet, with the right fact pattern, a company might benefit from engaging in such a program. But not always.  As with most things related to multi-state tax issues, the answer may require a little more research and analysis.

Continue reading

BREAKING NEWS CONCERNING ONLINE SALES TAX

United States Supreme Court.

The United States Supreme Court announced on January 12, that it has granted certiorari and will hear a case related to state taxes – something that does not happen often!  The High Court could finally settle an ongoing battle between e-retailers and states about how online purchases are taxed, and in the process may overturn a 1992 ruling which currently prevents states from collecting sales taxes on online purchases unless the seller has a physical presence in the state. An overhaul of this nature would change the state tax landscape significantly and require more online sellers to collect sales tax.

 

What’s happening?

Based on a long standing Supreme Court ruling from 1992 (Quill Corp. v. North Dakota), online retailers are not required to collect sales tax unless they have a physical presence (such as an office, inventory, or people) in a state. Over the past several years as online purchases have become prolific and states are losing sales tax revenue, the states have fought back by passing creative legislation to allow for collection of sales tax on online purchases. Several state legislatures have recently enacted laws referred to as “economic nexus” provisions, where a company creates nexus in a state by virtue of a minimum amount of sales revenue or instances of sales into a state, instead of looking to the physical presence threshold. Some states, like Colorado, have passed onerous reporting mechanisms to, in effect, report on their customers who may not be self-assessing use tax.

Continue reading

State Tax Deduction Limit? California Fights Back.

What’s good for the goose….

By now many of us in California have contemplated our fate regarding how the tax reform act passed by Congress last month will likely hurt Californians as a result of the federal limit on the state and local tax deduction for individual taxpayers.

In an effort to mitigate the limit of this deduction for Californians, state lawmakers have quickly looked to alternatives.

New Tax Plan – limited deduction

For residents of California and other high tax states, a major item of concern in the tax act is the cutback of deductions for state and local taxes (SALT). Taxpayers will now be able to deduct only up to $10,000 in SALT, including property taxes.   According to this recent LA Times article, limiting the SALT deduction could affect as many as 6 million Californians. California taxpayers accounts for almost 20% of all SALT deductions, which is the highest state in the nation.  Other states with large amounts of SALT deductions include New York, New Jersey and Connecticut, perhaps not coincidentally – all “blue” states.

How to mitigate the problem?

One option proposed last week by Senate President pro Tempore Kevin de Leon (D – Los Angeles), would be to recast state and local taxes as charitable contributions, which remain fully deductible under the GOP tax act.   SB227 (known as the “Protect California Taxpayers Act”) would allow California taxpayers to make a charitable donation to a government entity, the California Excellence Fund, in the amount of their state taxes.  They would then receive a dollar for dollar tax credit on their CA tax return in the amount of the donation.  (For example, a taxpayer owing $15,000 in property taxes, might pay this amount to the Excellence Fund. The taxpayer then gets a tax credit for the entire $15,000 on their CA return. On the federal tax return, the taxpayer correctly classifies this amount as a charitable contribution, which is not limited to the $10,000 SALT rule.  So, by essentially reclassifying the property tax as a contribution, the taxpayer still gets the full deduction for the entire $15,000, rather than just $10,000 on their federal return.)

Playing Devil’s Advocate?

So, that all sounds good. But will the IRS allow it?  Will Congress?

What constitutes a charity? The Internal Revenue Service (IRS) and federal courts have ruled that government entities can qualify as charities for the purpose of the charitable deduction, even when the donor receives a full state or local tax credit in return.  California and other states already have similar programs in place. For example, CA has a College Access Fund, which grants a 50% tax credit for contributions to the Cal Grants Program, which aids low-income college students.  17 additional states use a similar model to fund private education.

While the proposal is certainly creative, and has some defendable history behind it, we recommend to be cautiously optimistic about its ultimate passage in the state and then whether Congress will find a way to shut it down by passing further clarifying legislation.

For more information regarding this act published by the San Joe Mercury News, click here.

Stay tuned for further updates!

If you have any questions, please don’t hesitate to contact us at info@milesconsultinggroup.com. We are happy to help with all of your tax needs.

 

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

MORE ART, LESS SCIENCE: MANAGING A TAX DISPUTE

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.

Continue reading

PENNSYLVANIA- CLARIFICATION ISSUED ON LEGISLATION?

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.

Continue reading

FOCUS ON CALIFORNIA

Golden Gate Bridge in San Francisco, California

This month, we travel back to the mainland (and the home state of Miles Consulting Group) to the 3rd largest state in the country and the 6th largest economy in the world- the Golden State of California! With its sunny and dry coastal climate year round (except for January 2017!) and easy access to the ocean and mountains, California has always been seen as an ideal resort destination. In the 1960s, popular music groups such as The Beach Boys promoted the image of Californians as laid-back, tanned beach-goers – which, of course we all are!

California is home to the second most populous city in the United States- Los Angeles, which is home to the Hollywood entertainment industry. San Francisco, 400 miles to the north, is where you will find the Golden Gate Bridge, Alcatraz Island and cable cars.

Continue reading

Multistate Tax: The Top 3 State Tax Issues for 2017

Happy New Year from Miles Consulting Group!

Happy New Year!

I always like the fresh feeling of a New Year – a clean desk, a new calendar, and a relaxed and grateful frame of mind from coming off of the holidays.  I’m particularly excited about 2017 because it’s a year of special milestones and anniversaries for me – both personally and professionally, and I’m a big believer in celebrating those special occasions.  I’m not sure exactly what the year will bring, but I have big expectations for it.

Continue reading

Online Sales Tax Debate- Still Going On?

A machine used in places of business for regulating money transactions with customers

Cash register used to compute sales tax 

For several years, the online sales tax debate has been tossed around Capitol Hill, but has gained little traction in Congress. However, two new bills introduced recently add some new fodder for discussion.  One bill makes it harder to impose sales tax, while the other makes it much easier. Will either pass?

 

No Regulation Without Representation

Representative Jim Sensenbrenner, a republican from Wisconsin, introduced a new bill to Congress in July that would prevent states from taxing any seller lacking a physical presence. This bill is called the No Regulation Without Representation Act of 2016 (H.R. 5893).

Under this bill, unless the person is physically present in a given state during the relevant tax period, a state may not obligate a person to:

  • Collect a sales, use or similar tax
  • Report the sale
  • Assess a tax on a person
  • Treat the person as doing business in a state for purposes of such tax

Continue reading

Nevada Tax Law Changes

Las Vegas, NV, USA - August 12, 2015: View of Las Vegas from Stratosphere Tower at night on August 12, 2015. Las Vegas is one of the top tourist destinations in the world.

Las Vegas, NV

In 2015, Nevada’s legislature was busy enacting controversial legislation aimed at raising revenue in the state. These laws are yet another challenge for businesses.

Last year, Senate Bill (SB) 483 was signed into law by Governor Sandoval and became known as the “Commerce Tax.” This new law went into effect on July 1, 2015 and applies to businesses whose Nevada gross revenue in a taxable year exceeds $4,000,000. Under the law, a “business entity” is defined as a corporation (both S and C), partnership, LLC and sole-proprietorship (i.e., those who file schedule C), just to name a few. For a complete list of the business entities subject to the Commerce Tax, click here. Note that out of state companies are also subject to the Commerce Tax to the extent that they have nexus in Nevada.

This law was enacted a year ago, but the effects of it are now being seen by companies whose first Commerce Tax return is due for the year ended June 30, 2016. This tax must be remitted to the state within 45 days after the end of the taxable year (August 15, 2016). Companies may file an extension for 30 days, to allow them more time to comply with the new law. All Nevada business entities are required to file the return, even if total revenue is less than the $4,000,000 minimum.

  Continue reading