The Swift River running through the White Mountains of New Hampshire.
This month, we travel to the New England region of United States to New Hampshire. Known as the Granite State, it is defined by its quaint towns and large expanses of wilderness.
New Hampshire is a state with some mighty history. In January 1776, it became the first of the British North American Colonies to establish a government independent of the Kingdom of Great Britain’s authority, and it was the first to establish its own constitution. Six months later, it became one of the original 13 states that founded the United States of America, and in June 1788 it was the ninth state to ratify the Constitution, bringing that document into effect.
What’s on the horizon for state and sales tax news this year?
Happy New Year from everyone at Miles Consulting Group! We hope you had a wonderful holiday season and are looking forward to 2018. We certainly are!
What’s on the horizon for the coming year? We’re looking forward to seeing how the following state tax news unfolds during this year:
- States’ conformity to the new federal tax act just passed. Many states may de-couple from some of the changes in the federal law. Planning for this could prove challenging!
- Supreme Court cases: It will be interesting to see if some of the state legislation we’re watching makes it to the U.S. Supreme Court, such as South Dakota’s Senate Bill 106, Ohio’s “cookie directive” or Indiana’s economic nexus. Could this finally be the year that the Supreme Court (or Congress) weighs in on the online sales tax debate?
- Increased compliance for those that decide not to collect sales taxes (because they don’t have nexus in a state), but require sharing customer data in states such as Washington and Colorado. We expect more states to jump on this bandwagon in 2018.
How is South Carolina going after online sales tax? This article explains its latest approach.
States are continuing to come up with ways to collect sales tax from online sellers (specifically Amazon’s third-party sellers). South Carolina recently filed a motion in court to force Amazon to collect these taxes and fees on behalf of its third-party sellers.
As it is now, Amazon collects sales tax on items purchased directly from them, but the retail giant does not collect it on sales made on the site by a third party. South Carolina is claiming it could lose more than $500 million in sales tax if Amazon doesn’t begin collecting them now, and is asking the court to require the retailer to charge sales tax and put it into a trust or escrow-type account until the case is settled.
South Carolina’s Argument for Amazon Collecting Sales Tax
The state is most concerned with receiving the sales tax they’re owed. Someone owes it to them, and they’ve chosen to pursue Amazon for it (rather than numerous third-party sellers or the ultimate consumers). Continue reading
What states are coming up with amnesty programs of their own?
Across the U.S., amnesty seems to be a popular topic these days. The Multistate Tax Commission’s (MTC) special amnesty program for marketplace retailers recently ended. And a few other states have recently announced their own amnesty programs so that they can benefit from potential increased compliance as well. Connecticut (CT), Ohio (OH) and Rhode Island (RI) are the latest states to roll out amnesty programs of their own. And we expect others to follow. The states administer amnesty programs because they want to induce companies to become compliant by waiving, or limiting penalties and interest for prior unpaid taxes.
Recent MTC amnesty program
Many states just took part in a special amnesty program. The MTC had negotiated this special program for online sellers using marketplace fulfillment services (such as Fulfillment by Amazon) that created nexus and thereby had sales tax and income tax obligations. Twenty five states participated, including CT and RI. To find out more about this amnesty program, click here.
This special amnesty program waived taxes in addition to interest and penalties. We’ve cautioned our clients not to expect amnesties to be that generous in the future. Most state amnesties allow taxpayers to waive penalties and some interest, but rarely the tax itself.
Tahquamenon Falls in Michigan’s eastern Upper Peninsula.
This month takes us to the Wolverine State of Michigan. The origins of this name are obscure, but may be derived from a busy trade in Wolverine furs during the 18th Century.
Its largest city, Detroit, is famed as the seat of the U.S. auto industry, which inspired Diego Riviera’s murals at the Detroit institute of Arts. Also in Detroit is Hitsville U.S.A., the original headquarters of the Motown Record Company. Michigan is home to many great musicians including The Supremes, The Temptations, Stevie Wonder, Smokey Robinson, Bob Seger, Kid Rock and Alice Cooper.
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.
South Dakota’s online sales tax legislation could end up before the U.S. Supreme Court. Here are the details.
If you’ve been following the online sales tax debate on our blog, you know South Dakota recently passed, “Senate Bill 106, allowing the state to collect taxes from sales made from online retailers – even if they don’t have nexus within South Dakota itself.”
The 2016 law mandated a sales tax collection responsibility from sellers grossing over $100,000 in sales to South Dakota customers, or transactions numbering more than 200 in a year – even if the seller has no physical presence or other connection with the state. Then NetChoice and the American Catalog Mailers Association sued the state, claiming the law violates Quill Corp. v. North Dakota, a ruling which established businesses need a physical presence in the state to be responsible for sales tax and fees.
Online Sales Tax Bill Ruled Unconstitutional
Unsurprisingly, South Dakota’s Supreme Court ruled Senate Bill 106 to be unconstitutional. Supreme Court Justice Glenn Severson stated, “We see no distinction between the collection obligations invalidated in Quill and those imposed by Senate Bill 106…and hold that the circuit court correctly applied the law when it granted sellers’ motion for summary judgment.” Continue reading
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.
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.
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.