CPA Practice Advisor

JUN 2016

Today's Technology for Tomorrow's Firm.

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26 June 2016 • www.CPAPracticeAdvisor.com A YEAR IN THE LIFE: SALT ACCOUNTANT Done deals With ongoing inaction at the federal level, states have continued the trend started in 2015 w ith vows to fght for online sales ta x revenue. Te National Council of State Legislatures (NCSL) stands behind them. It reports that, as of April 2016, lawmakers in 16 states had introduced 24 bills that would "require out-of-state companies to collect taxes on internet sales and remit them to the states." Louisiana was the frst to act in 2016. Its internet sales tax law took efect on April 1, the same date the state sales ta x rate increased and numerous exemptions were temporarily suspended. Te law establishes click-through nex us and afliate nexus and notes that any federal legislation authorizing states to require a remote seller to collect sales tax on taxable transac- tions would preempt the provisions of the bill. Next up: South Dakota. Begin- ning May 1, remote sellers earning an excess of $100,000 from South Dakota customers or mak ing at least 200 sales of tangible personal property or services to South Dakota customers are required to collect sales or use tax under the new law. Te law is unusual in that it declares the state's inability to efectively collect sales or use tax from remote sellers "is seriously eroding the sales tax base of this state" and that sales and use ta x revenue is essential because there is no income tax. Te state is suing several businesses for refusing to comply with the law, and is in turn being sued by trade associations. In May, Oklahoma enacted the Retail Protection Act, which expands the defnition of "vendor" and "main- taining a place of business in this state" and gives out-of-state retailers a choice to either voluntarily collect and remit Oklahoma use tax or notify customers of their obligation to remit use tax and provide an annual report of their online purchases. It takes efect November 1, 2016. Other news of note: new require- ments for remote sellers took efect in South Carolina on Januar y 1, when A mazon's grace period in the state came to a close and it started collecting tax. In addition, the Tenth Circuit Court of Appeals upheld Colorado's use ta x notif ication requirements. Under discussion Calls to tax more out-of-state sell- ers are being heard throughout the nation this year. Minnesota enacted remote sales tax legislation in 2013 but lawmakers are currently considering several bills that would expand nexus to companies with storage facilities in the state, workers in home ofces in Minnesota, and sellers with market- place providers or other third parties that facilitate sales in Minnesota. Te Vermont House and Senate have approved a measure that would create use tax notifcation require- ments for certain non-collecting out-of-state vendors. It is on the governor's desk. Not this session R hode Island lawmakers have been considering a remote sales tax col- lection bill loosely inspired by South Dakota's new law. House Bill 7375 explains that it is no longer reason- able to base sales tax on a physical presence in a state and insists that remote sales ta x collection is no longer an undue burden due to technological advances. It has been held in commitee for further study. Internet sales tax legislation was shelved in Utah last March due to opposition from "mommy bloggers," women who supplement their house- hold income with revenue generated from click-through advertisements on their blogs. Teir concerns that A mazon would terminate their contracts in response to a remote sales tax law persuaded Rep. Mike McKell to withdraw his bill, SB 182, from consideration. Remote sales tax legislation has also been under consideration in Connecticut, Kansas, Massachusets, Mississippi, Nebraska and Ohio. Meanwhile, in the capitol Federal lawmakers have been in a deadlock over remote sales tax for years. Two remote sales tax bills and one in working draf form have been gathering dust in the House since they were penned near the start of 2015. Bob Goodlate (VA-R), Chair of the House Judiciary Commitee, is clear in his opposition to the Mar- ketplace Fairness Act of 2015 and its cousin, the Remote Transactions Parity Act. Te Chairman supports the Online Sales Simplifcation Act (OSSA), which would source sales to the origin state rather than the destination state. Mr. Goodlate remains commited to OSSA and recently circulated a four-page summary of his proposal. Earlier this year, a vote on the Marketplace Fairness Act (MFA) was promised with a handshake. Longtime remote sales ta x pro- ponent Sen. La mar A lexander (R-Tenn) has said there's a good chance MFA will be considered this year. Time will tell. Prudence advised Retailers currently mak ing sales to multiple states or planning to expand in that direction should be closely track ing the remote sales tax situation. A growing number of states are directly challenging the policy upheld in the 1992 Supreme Court decision, Quill Corp. v North Dakota, that a business must have a physical presence in a state before the state can impose a sales or use tax collection obligation. Tey want more sales ta x revenue, and they want it now. As R hode Island lawmakers have noted, it no longer has to be an undue burden to collect sales and use tax in multiple states. Sales tax sofware (SaaS) simplifes compliance. Learn how it works. States Redefne Nexus to Tackle Online Sales Taxes By Gail Cole A s the middle of the year approaches, it's worth taking stock of remote sales tax. Numerous states have enacted or are considering legislation enabling them to collect sales and use tax revenue from remote retailers lacking a physical presence in the state. Lawsuits have been fled. Online sellers are poised to respond as needed. Gail Cole is a sales tax expert with Avalara who has a penchant for dig- ging through the depths of BOE sites and discovering and reporting rate changes across the country.

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