There’s always something changing in the world of tax, especially sales tax. Here’s a review of some of the recent changes and updates.
Final destination. Effective this year, Illinois retailers are responsible for destination-based sourcing for sales tax purposes.
The new law mandates that retailers who maintain a place of business in the state and who sell tangible personal property from a location (or locations) outside Illinois will be required to collect all state and local taxes at the location where the item is shipped or delivered or where the buyer takes possession.
Retailers who maintained a location in Illinois but shipped orders from outside of Illinois had previously been able to avoid destination-based sourcing.
Up, up and down. Louisiana has increased its sales tax, making its combined rate among the highest in the U.S. The new rate is 5%, up from 4.45%, creating a combined state and local sales tax rate of some 12%. The hike, designed to increase revenue, will be for five years before gradually reducing to 4.75%.
In Mississippi, have passed House Bill 1, which would eliminate the state income tax, trim the state’s high taxes on groceries and potentially raise municipalities’ sales taxes. The bill has advanced to the state senate.
Kansas sales tax on some groceries has now dropped to zero. According to the state, sales taxes have stopped on “food and food ingredients for human consumption and certain prepared foods,” such as eggs, breads and fruits. Non-food items, such as alcohol, still incur the 6.5% sales tax.
Say what you mean. A Midwest auto parts company has asked a state’s lawmakers to more clearly define “physical presence” for sales tax nexus.
The case began five years ago, when Arizona initiated economic nexus rules for out-of-state sellers in the wake of the Supreme Court’s Wayfair decision and RockAuto of Madison, Wisconsin, began collecting and remitting Arizona sales tax for customers. The company never had a store or employees in Arizona.
The Arizona Department of Revenue soon claimed that RockAuto had had a physical presence in the state as far back as 2013 since the company had purchased auto parts from Arizona manufacturers and wholesalers. The state reportedly sent RockAuto a bill for millions of dollars in accumulated and owed sales tax.
RockAuto not only won in the state tax court but garnered the help of thousands of Arizona customers in asking the revenue department to reconsider – especially considering that the department’s guidance did not stipulate that drop shipping created tax liability.
RockAuto is now asking the Arizona Legislature to clarify “physical presence.” “We don’t mind paying taxes when we know they exist,” the company has said.
Elsewhere
Colorado has enhanced improved its Sales and Use Tax System (SUTS) with features that the agency says will shorten the time needed to file sales and use tax and simplify filing for businesses. Users can now determine sales tax jurisdictions and rates for thousands of addresses at a time for all taxing entities associated with a Colorado address; enter data directly into SUTS and upload a simple spreadsheet; and add locations in SUTS.
Illinois saw its biggest city raise the Personal Property Lease Transaction Tax. Effective Jan. 1 in Chicago, the rate will be 11%, up from the previous 9%.
Louisiana is no longer printing and mail copies of the state sales tax return to businesses registered for sales tax. Starting this month, businesses will have three ways to submit state sales tax returns and payments: file and pay electronically through the Louisiana Taxpayer Access Point (LaTAP) portal; file and pay electronically through the online portal Parish E-File, which also permits the filing of multiple parish/city returns; or download a printable copy of the sales tax return.
Nevada has launched My Nevada Tax, billed as a user-friendly online portal to manage tax accounts, file returns, make payments and access other services.
Oklahoma has proposed legislation to include school supplies and athletic equipment among the items exempted from sales taxes during the state’s tax-free weekend in August. Items would include backpacks, binders, pens, pencils, markers and notebooks and such recreational equipment as cleats, gloves, mouthguards, shoulder pads and goggles.
Washington has redefined “contractor” in the application process and eligibility requirements for reseller permits to include plumbing contractor activities. Any person or business engaged in plumbing work as defined will now be able to apply for a reseller permit as a contractor.
If you think your business may be impacted by sales tax developments, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more.
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