Halloween may be over but "The Arizona Department of Revenue urged taxpayers to exercise caution against "ghost tax preparers" — someone who is paid to prepare a tax return but does not sign it or include necessary information; anyone who assists in preparing a federal or state tax return for compensation must possess a valid, current preparer tax identification number, and must include that PTIN on any return they prepare." When it comes to working with anyone who is helping you with any kind of tax we know it is important to take care you are working with an expert. We see this all the time in the sales tax world! Make sure your sales tax expert is what they say!
2020 unsurprisingly has been a year full of tax breaks and tax holidays. Just recently "Louisiana H.B. 26, signed into law as Act 16, establishes a sales tax holiday November 20-21, 2020, during which the state sales and use tax will not apply to the first $2,500 of the sales price or cost price of consumer purchases of tangible personal property, excluding vehicles and prepared meals; the holiday is designed to provide relief from COVID-19 and recent hurricanes."
We've talked a lot about the pandemics impact on state revenue. Thankfully that impact was smaller than expected but we are still facing large shortfalls likely to exceed 500 billion over the next two years. You can read what the Center on Budget and Policy Priorities (CBPP) put out about it here (link to paper on our website). This does not only mean budget cuts and lay offs. It means that like we've been saying that states will not allow uncollected revenue to slide! Read our blog post about it at....
Tid Bit Tuesday! While reading this story the movie Up in Smoke came to mind! Kane County, Illinois, lost out on $1 million in cannibas tax revenue because they failed to file the ordinance that would have allowed the IL DOR to collect the tax on their behalf. The blame is being thrown office to office but at the end of the day it's a loss for the people of Kane County. I guess it's nice to know that it's not just taxpayers missing deadlines!
Taxpayers my not being feeling so high after this news! In Vermont, a whopping 14% cannabis excise tax is imposed on the sale of adult use cannabis. The cannabis excise tax is in addition to the general sales tax of 6%. Adult use cannabis should not be confused with medical cannabis which is tax exempt in VT
For businesses, it's stressful enough having to file for multiple states. Some states also require businesses to send in a breakdown of their sales to each locality, creating a lot more work. Connecticut is now requiring retailers to "separate the sales by town and provide information regarding these sales to the Commissioner." All the more reason to outsource sales tax returns if you have a multistate business! If you'd like to talk to someone about our sales tax returns outsourcing services contact us at https://www.salestaxandmore.com/speaktoateammember
Taxability time and time again proves to be complex. Just last week the Kansas DOR provided guidance on transactions relating to digital currency! "Transaction fees for digital currency exchanges are not considered a sale of tangible personal property and therefore such fees are not taxable." Sales tax is determined by measuring the fair retail market value of the property or service received in payment for the property sold, and is calculated using the list price in US dollars. not the calculated of the digital currency. You can see more about their guidelines here. However, many states are now accepting digital currency as payment.
For most people in the US right now the weather is starting to get chilly! As you pull on your mittens and attach them to your mitten clips consider yet another complicated taxability conundrum. Just this summer the New York State Department of Taxation and Finance explained that mitten clips are subject to sales and use tax because the clips qualify under the states tax law as taxable accessories and not tax exempt physical component parts of the clothing to which the clip are attached. Read more at https://docs.google.com/document/d/11J8ShKGl_rB2gS6Lo0DmJGan8MLrtLQ2LjbfZkos9l0/edit?usp=sharing
This week I can't get enough of taxability! This summer "The New York State Department of Taxation and Finance issued an opinion explaining to an online retailer of snack products, which are marked as healthy alternatives to traditional snacks, that nine of the products qualify as candy and under the states tax law are subject to sales tax. A tenth product that is similar to a granola bar is exempt from the tax." This has to do with the included ingredients and how they are used! For instance the mere presence of sugar or honey in a product does not make it taxable. However if a fruit or nut is covered in honey, caramel, chocolate or other similar products it is considered candy or confectionary and therefore taxable.
Knowingly accepting resale/exemption certificates under false pretenses is big NO. New York's Attorney General Letitia James, is filing a lawsuit against Sotheby's for knowingly accepting resale certificates for $27 million worth of artwork. The purchaser claimed to be reselling the artwork but kept it for their personal use.
Tid Bit Tuesday! After the South Dakota v. Wayfair case in 2018, many states started to increase revenue through remote sellers sales tax collection. Recently Arizona shared that it made $467 million in remote seller sales tax revenue. AZ used a graduated model when implementing the Wayfair decision. In 2018 AZ's economic nexus threshold was $200,000, in 2019 it was $150,000 and in 2021 the threshold will be $100,000. It looks like smaller business will be required to register and collect sales tax. AZ will hopefully be seeing a lot more tax revenue in 2021.
Whether or not to have a gourmet kitchen has been an ongoing battle between my mom and I! Maybe we'll let the taxability of appliance installation be the deciding factor. The Tennessee the Department of Revenue sent out a ruling that explains when household appliance installation fees are subject to sales tax and when they are not. Simply put, if the appliance remains free standing, the installation fee is taxable because the appliance remains as tangible personal property. If the appliance is built into the wall, the installation fee is not taxable because it becomes affixed to real property. In situations like this the seller needs to be aware of when their services are and are not taxable and charge accordingly. Now I need to check into Florida’s tax rules!
"The New York state comptroller has reported that local sales tax collections for October decreased 5.2 percent from October 2019 to $1.4 billion, noting that while the drop is not as drastic as previous declines resulting from COVID-19, financial assistance from the federal government is still needed to help localities financially survive the pandemic." We talk a lot about states dealing with their revenue losses and expect to find that this is an issue that we will continue to see for the next couple of years. States are dealing with this loss in many different ways and we talk about it at...
We get asked a lot of questions about physical presence and if it matters! In fact, we have an entire webinar dedicated to this. This year, "the Illinois Department of Revenue released a general information letter explaining use tax collection and remittance requirements for out-of-state retailers making sales to Illinois customers, regardless of whether such a retailer has a physical presence in Illinois, including threshold sales amounts and registration requirements." Read more about it at https://www.taxnotes.com/tax-notes-today-state/sales-and-use-taxation/illinois-dor-explains-use-tax-remote-retailers/2020/11/17/2d6kn Be sure to join our webinar 'Does A Presence Even Matter Anymore' on December 1st at https://us02web.zoom.us/webinar/register/5715979480767/WN_Hexdl3DLSpidm0i57ZUQQw
Tid Bit Tuesday! It sounds oh so simple but inadequate record keeping is a big problem for taxpayers. A California coffee shop owner was recently audited and petitioned an adjustment to taxes, penalties and interest due his "understatement of reported taxable sales". The petition was denied because the taxpayer could not show any documentation to support his claim. The takeaway here is that good record keeping is often overlooked but can be very helpful for an audit!
Contracting can get very confusing when it comes to taxability. Sometimes the type of the project or even how a contract is written can impact taxability. In Texas non-residential repair and remodel services are actually taxable. In this case, a Texas contractor was subject to sales and use that because his repair and remodeling services were taxable. Always remember to check whether or not taxability fluctuates based on how you're offering your service or product.
Just because a seller doesn't collect tax on a sale, doesn't mean the sale is tax exempt. Generally when you don't pay tax on a taxable item, you have to pay consumer use tax to the state directly. If you're a business shopping for office supplies and you purchase a taxable item from a seller that doesn't charge you tax, you will owe use tax on that item. You can report it as "taxable purchase" on your return for that period. If you buy and pay tax on an item from a different state to use in Texas, you may take a credit toward the use tax owed in Texas. Check out the link above to for more details on TX guidance and protect yourself this shopping season!
Education materials and supplies come in so many different types of mediums and formats, it's hard to keep up with what is and isn't taxable! It's good to keep in mind that not all education materials and supplies are tax-exempt merely because they serve a higher purpose. In Wisconsin, the sales of live in-person educational services are not taxable but if that educational service is pre-recorded as a webinar, the sale becomes taxable. This is because in WI digital goods are taxable since the tangible version of a digital good (DVD) is taxable. Check out WI's guidance in depth at the link above!
"The Louisiana Board of Tax Appeals has ruled in five opinions that because there is an excise tax exemption for aviation fuel, airlines were not entitled to the sales tax exemption for fuel subject to the excise tax." Both sides made their arguments and unsurprisingly the complexity of tax exemption remained a constant!
The taxability of services and materials used in services is a slippery slope! Most of the time there is confusion in what types of services are taxable or how purchased materials are used within the service. In a recent case, The New York Division of Tax Appeals ruled that businesses performing snow and ice removal are liable for sales tax on its purchases of rock salt. The division stated that rock salt does not become apart of the property thus it cannot be tax exempt when it is initially purchased by the business. When determining taxability within your business, it's good practice to run through your whole process from the beginning to end and note down how your materials will be used within the service.
The movie theater is one of my favorite places to spend a couple of hours eating junk food and watching something action packed! What is and isn't taxable in a movie theater, not to mention every other venue, is very much dependent on the interpretation of the language set forth in legal definitions and statutes. In a recent case The Michigan Tax Tribunal argued that the plain language of the statute MCL 205.54g(1)(a) invalidated Rule 86(5) set forth by The Department of Treasury. The rule stated that because "more than 75 percent of the company’s sales were devoted to prepared food and the company made eating utensils like napkins available to customers", prepackaged food would be taxable. In this the plain language of the statute made it clear that the prepackaged candy was tax exempt.