I am the US Tax Research Manager for Sabrix within Thomson Reuters and lead a group of tax experts responsible for maintaining all US rates and calculation logic as well as product taxability rules. Working with our customers to achieve and maintain sales and use tax compliance is another one of my key roles. I earned my BS in Accounting from California Lutheran University and have been working for Sabrix for over 4 years, prior to which I worked preparing and reviewing income tax returns for a national CPA firm.
My position requires that I constantly stay abreast of all US sales and use tax changes. I’m happy to have the opportunity to share with you some of the many sales and use tax updates and changes that go on throughout the year.
It’s that time of the month again to take a look at the sales and use tax changes happening in September. This month there are only a few states with rate changes but we do have some Sales Tax Holidays to report. In August we had many states participate in Back To School Sales Tax Holidays. In September there are a few Sales Tax Holidays giving shoppers the ability to make certain purchases tax free.
Alabama
Pinson City – 2.0% sales and use (New Levy)
Creola City – 4.0% sales and use; Creola police jurisdiction – 2.0% sales and use
Douglas City – 3.0% sales tax only (effective 8/1/2010)
Elba City – 4.0% sales and use, 2.0% rental sales and use; Elba police jurisdiction – 2.0% sales and use;
Arizona
Florence City – 3.0% use tax and rental use tax only
Oklahoma
Haskell County – 1.5% sales and use
Sales Tax Holidays
Kenai Borough, Alaska
There will be an exemption for the Borough of Kenai, Alaska from sales tax on non-prepared food from 1 September 2010 to 31 May 2011. The city of Homer is participating in this holiday exemption. This Sales Tax Holiday does not apply to all food items sold by restaurants and restaurant type sellers and all prepared foods.
Wrangell, Alaska
On 11 September 2010, the city of Wrangell, Alaska will grant sellers the opportunity to participate in a Sales Tax Holiday. The Sales Tax Holiday will exempt purchases of all tangible personal property and services, excluding rentals.
West Virginia
West Virginia is having a Sales Tax Holiday from 1 September 2010 to 30 November 2010 on non-business purchases of Qualified Energy Star Products costing $5000 or less per item. The Sales Tax Holiday does not apply to business transactions in West Virginia. For business transactions, the full respective tax rates are applicable.
Stay tuned for the upcoming October sales and use tax changes next month. There are sure to be a lot more rate changes in October because we tend to see a high volume on the quarter months.
Guest Writer: Nicole Huberty
The following question was recently posted in response to the April 13th blog posting titled
Idaho Nexus Requirements for Sales and Use Tax.
"Just wondering if we have a sales person located in Boise, do we need to pay sales tax? We're located in WA State and our product isn't taxable here"
Answer:
If your company is headquartered in Washington and you send a salesperson to Idaho to solicit sales on behalf of your company, it is likely that you have established nexus in Idaho for sales and use tax purposes. I’m sure you’re wondering: what are my company’s responsibilities if we have sales/use tax nexus in Idaho? The first step will be to register in Idaho and to collect sales tax there; the second step will be to file returns in the state. Of course, before you begin collecting sales tax, you’ll need to determine if the product that your company sells is taxable in Idaho. Take a look at the laws/regulations available on Idaho’s State Tax Commission website or give the Tax Commission a call to aid you in this determination. If you find that the product that your company sells is taxable in Idaho, you will need to register, collect sales tax and file returns to remit the sales tax to the appropriate tax authorities. If you find that the product that your company sells is not taxable in Idaho, it is likely that you will still need to register in the state and file zero dollar tax returns there.
In response to a
past blog posting we had this question asked about Nexus status in Pennsylvania.
"Does having an employee work from home establish a nexus in PA. Example. Company A (Seller of goods-NYS co.) drop ships an order to Buyer B (in PA). Company A charges Company C (order placer w/ops in VT) PA sales tax cause Com A has employees who work from home in PA. Is this correct?"
Answer provided by guest writer: Nicole Huberty
States vary in their treatment of whether the presence of a home office creates sales/use tax nexus for an out-of-state company barring other physical presence in the state. Some states are definitive that any type of home office creates nexus for an out-of-state company while other states note that the answer depends on the type of work that is being performed in the home office (sales, computer programming, administrative, etc.). Still other states proclaim that a home office – any type of home office – does not establish sales/use tax nexus for an out-of-state company. After speaking with a representative at the PA Department of Revenue, Pennsylvania falls in the middle; that is, the presence of a home office in PA does not establish sales/use tax nexus for an out-of-state company unless company inventory is held in the home office or the employee working from the home office is a salesperson who solicits sales in PA through visits to businesses in the state. Solicitation of sales via phone from a home office, however, does not establish sales/use tax nexus in Pennsylvania according to the representative with whom I spoke. To receive a more formal ruling on the topic, I would suggest that you write to the Office of Chief Counsel in PA.
The Florida 2010 amnesty program gets underway July 1st and runs through September 30th. During this time sales tax, fuel tax, corporate income tax, communications services tax, gross receipts tax, and the Florida intangible tax qualify. The only Taxpayers barred from participating are those who entered into settlement agreements prior to July 1, 2010. In order to participate, taxpayers must waive the right to claim a refund, protest, or initiate any administrative proceeding that challenges any assessment paid under the initiative. Pre-existing protests or proceedings must also be dismissed. Amnesty can be rescinded in the event that fraud, misrepresentation or mutual mistake of fact is found. You can read more on the
Florida Amnesty program on the FL DOR Website.
There are quite a few July sales and use tax rate changes that include monthly, quarterly, and semi-annual periods. I will list as many changes as possible but due to the sheer volume will not be able to post everything.
Many jurisdictions have enacted new sales and use tax rates including the following.
Illinois
Enacted 15 new sales tax rates including a 0.5% sales tax rate in the counties of Lawrence and Stark
Kansas
Enacted 3 new district sales and use tax rates
Mississippi
Enacted 35 new meals tax rates
Missouri
Enacted 13 new district sales tax rates
North Dakota
2.0% Granville City; 1.0% Westhope City
Oklahoma
3.0% Macomb City; 2.0% Central High City
South Dakota
1.0% Wallace City
Vermont
1.0% Winhall City (Sales Tax and Meals Tax)
Virginia
1.0% Bath County (Meals Sales Tax); 4.0% Southampton County (Meals Sales Tax)
Many other jurisdictions have increased or decreased their existing sales and use tax rate. A couple of state rates have changed effective July 1st. There is a 1.0% state rate increase for Kansas going from 5.3% to 6.3% and a 0.125% increase for New Mexico going from 5.0% to 5.125% (this NM increase does not apply to the compensating tax on services). This is the second month we are seeing a state rate changes in 2010 with Arizona being the first state increasing their state rate as we saw effective June 1st.
Arizona
2.0% Tempe City (Privilege Tax and Rental)
Arkansas
Both Ashley County and Boonville City have decreased their sales and use tax rate to 1.5% and 1.0%, respectively
California
Motor Fuel is now subject to a reduced 1.25% sales and use tax rate.
Colorado
2.5% Buena Vista; 3.0% Garden City; 2.5% Haxtun City; 0.0% Montezuma County
Black Hawk will now be a self-administered city
Illinois
14 Jurisdictions have changed their sales and use tax rates including Cook County (previously 1.75%) and Union County (previously 0.25%) going to 1.25% and the Danville Food and Beverage Tax is now 1%.
Kansas
9 Jurisdictions have changed their sales and use tax rates including the State rate as previously mentioned as well as Chautauqua and Logan counties at 2.0% and 1.5%, respectively.
Louisiana
2.0% Lockport City; 2.5% West Feliciana Parish
Missouri
2.0% Clark County; 1.0% Meadows Transportation Development District; 1.0% Ripley County; 4.266% St. Louis City; 2.7% St. Louis County
New Mexico
13 Jurisdictions have changed their gross receipts and compensating tax rates (all increases) including the State rate as previously mentioned.
North Carolina
2.25% for the counties of Hertford, Lee, Randolph, and Rowan
North Dakota
2.0% McVille City
Ohio
1.25% Ottawa County; 3.0% for the cities of Canton, Covington, and Pawhuska;
4.0% Wynnewood City
South Dakota
2.0% Wakonda City
Texas
1.5% Mount Enterprise
Virginia
7.0% Roanoke and Marion Meals Sales Tax; 6.0% Shenandoah Meals Sales Tax
5.0% Chincoteague Meals Sales Tax
Washington
2.1% - College, Walla Walla and Walla Walla County Unincorporated PTBA
Wisconsin
0.5% Milwaukee County Exposition Food and Beverage Tax
Wyoming
1.0% Albany County
Back to School Sales Tax Holidays
Although summer is just approaching some states are already offering Back to School Sales Tax Holidays.
- Mississippi will be having a sales tax holiday on July 30 and 31st for clothing and footwear costing less than $100 per item in all participating jurisdictions. Please visit the Department of Revenue website for a listing of cities that will not be participating.
- Puerto Rico will be having a sales tax holiday from July 15th through July 17th. $75 or less per item on clothing; $750 or less on computers; $50 or less on school supplies; $200 or less on computer accessories.
I encourage you to visit the jurisdiction websites for more information regarding sales and use tax changes in areas applicable to your business. Next month we will see approximately 16 states offering back to school sales tax holidays. Stay tuned for more sales and use tax updates next month.
The end of the 2nd quarter had very few changes effective in June but one big change was that of the Arizona state sales and use tax and rental rates increasing by 1% bringing these rates to 6.6%. This is the first State standard sales and use tax rate change in 2010. The Arizona Department of Revenue’s website indicates that Proposition 100 has passed by all appearances, with approximately 64 percent of voters in favor. Proposition 100 will temporarily increase the State Transaction Privilege and Use Tax by one percent effective June 1st.
Alabama had some rate changes as usual, all were increases to the sales and use tax rates. Below are the Alabama changes effective June 1st.
Irondale Police Jurisdiction – 2.0% sales and use tax
Ashville – 3.0% sales and use tax
Ashville Police Jurisdiction – 1.5% sales and use tax
Baldwin County – 3.0% sales and use tax
Mobile – 5.0% rental and sales and use tax
Mobile Police Jurisdiction – 2.5%
Along with the Arizona state rates changing was the Dewey-Humboldt rate increasing for Rental and Food for Home Consumption to 2.0%.
The city of White Plains, NY increased their sales and use tax rate to 2.5% effective June 1st.
On June 12th, the city of Wrangell, Alaska will grant sellers the opportunity to participate in a Sales Tax Holiday. The Sales Tax Holiday will exempt purchases of all tangible personal property and services, excluding rentals.
The trend we see is that jurisdictions are increasing their rates rather than decreasing their rates and we’ll most likely see that trend continue as we near the beginning of a new quarter with many rate changes expected in July. Stay tuned for our July rate changes update.
Written by guest writer: Nicole Huberty, Legal Research Analyst at Sabrix.
When an out-of-state company finds that it has a “substantial physical presence” in a state, sales/use tax nexus is established for that company. Once nexus is created, a company is required to register, collect and remit sales and use tax on all taxable sales within the taxing jurisdiction. Department of Revenue (DOR) websites have an abundance of information regarding the registration process. In fact, most states have online registration forms that can be completed in the time it takes to say, “Quill Corporation v. North Dakota, by and through its Tax Commissioner .” But what is the process for DE-registering in a state? That is, what does one do when one no longer has a “substantial physical presence” in a state that requires them to be registered in the state and collect sales and use tax?
Well, unlike the registration process, there is no flashy link on state websites that says, “De-register by clicking here!” Especially given the current budget shortfalls that states are experiencing, they aren’t thrilled to see businesses undeclare – they’ve enjoyed the revenue and don’t want to see it go away. But, de-registration can be accomplished.
Most states require affirmative proof that a company is no longer operating in their jurisdiction. If you are a company wanting to de-register with a state, start by documenting that you’re no longer conducting business in that state: you no longer own property in the state, you no longer have employees in the state – basically, you are no longer engaging in activities to maintain a market in the state. And, as you probably guessed, there’s usually a form to be filled out.
In investigating the process of de-registration by visiting state websites, I found it difficult to find the correct form for de-registering and had to call several states for help. Typically, the forms are called “Notice of Change” or something similar. One thing: don’t expect to send in your de-registration form and walk away. Although it’s possible to do with some states, many states continue to require filing for a year or more after the process of de-registration has been initiated. If you have questions on the de-registration process, give the state DOR a call – although you may not be able to navigate de-registration through state websites, DOR representatives should be able to direct you to the proper course of action.
The month following a busy quarter is usually a little slower when it comes to sales and use tax rate changes. Alabama, once again, is the front of the line to have the most changes in a slower month. But if you are buying groceries in Colorado you’ll have to spend a little more on your purchases in a few cities who are raising their sales and use tax rates on groceries.
The following rate changes are effective May 1, 2010.
Rate Changes:
Alabama
Pell City – 5.0% sales and use tax rate; 2.0% automotive and manufacturing rates
Warrior Police Jurisdiction – 1.5% sales and use tax rates; 0.375% automotive rate; 0.5% manufacturing rate
Colorado
Fort Collins – 2.25% grocery rate
Northglenn – 3.5% grocery rate
Timnath – 2.25% grocery rate
Louisiana, Texas, and Virginia are having a Sales Tax Holiday in May. Louisiana and Virginia have exemptions from sales and use taxes for Hurricane Preparedness Supplies while Texas has exemptions for Energy Star Products. Each state is offering the exemptions with different exemption amounts and on different dates so you may want to check their Department of Revenue websites for more information and when these holidays are offered.
Stay tuned for our June sales and use tax changes update.
It all began last November with Colorado Attorney General John Suthers citing that medical marijuana is “tangible personal property that is generally subject to sales tax.” He further noted that medical marijuana is not subject to the sales tax exemption on prescription drugs, as it is only “authorized” by doctors. As a result, a small agricultural town of approximately 11,000 was asked if a city sales tax should be levied on the sale of medical marijuana. This month, roughly 60 percent of those voters responded that indeed, it should.
Beginning on 1 May 2010, a 5 percent city sales tax will be levied on the sale of medical marijuana in Fruita, Colorado. City Manager Clint Kinney estimates the tax will raise approximately $100,000 in revenue in its first year. This is despite the fact that Fruita doesn’t have any medical marijuana dispensaries yet. They do have one dispensary application pending, which will be subject to a background check and zoning approval. Although the sales tax is proactive in nature, the city wants to make sure it will be able to generate funds for the additional costs that marijuana dispensaries can create, such as increased police patrols. Notably, the first city in the United States to levy a sales tax on medical marijuana was Oakland, CA.
Sources:
http://www.huffingtonpost.com/2010/04/06/fruita-colorado-may-becom_n_527405.html
http://www.denverpost.com/ci_13804046
http://www.nbc11news.com/home/headlines/90065382.html
http://www.bizjournals.com/denver/stories/2010/04/05/daily35.html
http://www.time.com/time/nation/article/0,8599,1978353,00.html
"OLYMPIA, Wash. - A multimillion-dollar revenue package that increases taxes on bottled water, soda, candy and mass-produced beer was approved by the Washington state Legislature as lawmakers finished their work to plug a $2.8 billion budget deficit." CLICK HERE for the full article.
Another quarterly month is upon us, which means a number of sales and use tax changes are nearing. Many newly enacted tax rates are introduced and a sales tax holiday is taking place in Missouri. I can’t list all of the changes here due to the volume of changes that occur on the quarter. I urge you to contact the jurisdictions directly if you would like to know if the jurisdictions you are registered in are changing. Here are some of the highlights.
Newly Enacted Rates
Arkansas: The cities of Bella Vista and Imboden are enacting a 1% sales and use tax rate
California: A district sales and use tax rate in the cities of Gustine and San Mateo are being enacted at 0.5% and 0.25%, respectively
Missouri: Enacting 18 new district sales and/or use tax rates
Texas: Enacting 9 new district and 2 new city sales and use tax rates
Wisconsin: The county of Fond Du Lac is enacting a 0.5% sales and use tax rate
Rate Changes
Arizona:
Phoenix – 2.0% on food for home consumption
Somerton – 3.3% on food for home consumption
Minnesota:
Cook County - 1.0% sales and use tax rate
Washington:
Sequim – 2.1% sales and use tax rate
Sales Tax Holiday
Missouri and all participating local jurisdictions are having a Show Me Green sales tax holiday in April. The sales tax holiday applies to both business and non-business purchases of qualified Energy Star appliances of $1500 or less per item. The holiday is taking place April 19-25.
These were just a few of the highlights going on in April. Stay tuned for our May sales and use tax changes and updates.
February was a shorter month allowing March to creep upon us a little faster. There is not a lot going on in March in terms of sales and use tax rate changes. As usual Alabama takes the lead but if you’re in Dutchess County, New York you’ll be sure to be paying the local sales and use tax on your clothing no matter how much it costs because the exemption for clothing in Dutchess County for items costing less than $110 is going away.
The following cities had rate changes in Alabama:
Autaugaville
Napier Field
TroyEating out will also be more expensive if you are in Lee County, SC or Broadway, VA as these two local jurisdictions impose a new sales tax on meals eaten at a restaurant or similar establishment.
You can, however, save a little money on your purchases in Kodiak, AK and Vermont on March 6 during their sales tax holiday. Kodiak, AK is having a 1 day sales tax holiday for purchases of tangible personal property. Vermont is having a 1 day sales tax holiday for non-business purchases of tangible personal property costing $2000 or less per item.
Looking ahead, next month will bring quite a bit more changes as many states and jurisdictions are already announcing changes that will become effective April 1.
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