Transaction Tax

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. 
 

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During this event, you will learn:

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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.

Let me start by saying - I love use tax!  I know, it's crazy, but not all transaction tax people are sane.  When I ask prospective customers about sales tax, they all know what that is, and that is the reason they are talking to us in the first place.  However, when I ask prospective customers about use tax, I usually hear the sound of crickets chirping. 

Everyone I talk to has a sales tax need, or at least they think they do.  On the flip side, I would say less than 10% of the companies I work with know they have a use tax need as well.  When I ask people "how do you handle use tax today?" they often tell me "we don't have use tax".  Really?  I think most taxing jurisdictions would beg to differ.

Most taxing jurisdictions find most of their audit errors in use tax rather than sales tax.  For example, approximately 2/3 of the audit dollars for the City of Denver come from use tax.  That's a lot, and it is consistent across the board.  Taxing jurisdictions will review sales tax transactions, but their primary focus is on use tax transactions.  That is where the auditors will spend a lot of time - digging, questioning, and looking for those hidden treasures.

What can you do to ensure you are doing things correctly?  You should build a solid use tax process, just like you would build a sales tax solution.  How do you do that?  Well, you could start by checking us out.  Use tax is just one of the things we do best.  You can contact us at inforequest@sabrix.com or www.sabrix.com.
 

San Ramon, Calif., March 18, 2010 – The Tax & Accounting business of Thomson Reuters has now integrated its latest version of the Sabrix Application Suite with Oracle E-Business Suite Release 12. Building on previous integration support for Oracle 12, this latest solution provides the broadest support for global transaction tax management covering sales, use and value-add tax (VAT), across order-to-cash and procure-to-pay processes for multi-national companies. Click here for the full press release.

According to the Spanish Tax Authorities, the Value Added Tax ("VAT") package will not be implemented in  Spain's VAT law in time for the January 01, 2010 deadline.  It is hoped that  a lower level Resolution from the Spanish General Tax Directorate, will be adequate to support the new EU VAT related changes, instead.  This brings about uncertainty in respect of Spain's treatment of VAT rules, such as the reverse charge, use and enjoyment, etc. and makes it necessary for you to rely on the VAT Directive under those circumstances. 

I would like to know the effect if any of the above development on your sales tax transaction compliance in Spain and in regards to your ERP's tax determination, reporting, etc. I encourage you to share your experience in my blog.

Below are highlights of scenarios that show how the application of the general transitional rules depend on the type of transactions involved:

The Sale of Tangible Personal Property ("TPP")

Generally, HST will apply to the sale of TPP where the TPP is delivered and ownership is transferred to the purchaser on or after July 01, 2010.  HST will also apply to payments that become due or are prepaid on or after May 01, 2010 where the TPP is delivered and ownership is transferred on or after July 01, 2010.  However, HST will not apply to payments made before July 01, 2010 for subscriptions to newspapers, magazines or other periodical publications.

The Provision of Services 

Generally, HST will apply to provision of services on or after July 01, 2010, however, where all or substantially all ie., 90% or more of the service is provided before July 01, 2010, then HST will not apply.  HST will apply to payments that become due or are prepaid on or after May 01, 2010 for services to be provided on or after July 01, 2010. 

The Provision of Licenses and Leases

Generally, HST will apply to the provision of leases and licenses for that portion of a lease interval that begins after July 01, 2010.  The HST will not apply to a lease payment that pertains to a lease interval that will begin before July 2010 and will end before July 31, 2010.  HST will however apply to payments that become due or are prepaid on or after May 01, 2010 for the provision of a lease or license to the extent that they are for a lease interval that will occur on or after July 01, 2010 unless the lease interval ends before July 31, 2010.   

The Sale of Intangible Property

Generally, HST will apply to the sale of intangible property supplied by way of sale where payment becomes due or is prepaid  on or after July 01, 2010. 

The Sale of Real Property

The HST will generally apply to the sale of real Property ("RP") other than used residential housing if both ownership and possession of the RP is transferred to the purchaser on or after on or after July 01, 2010.  

The above highlights are for your general information and should not be used as substitute for the law.  Should you need assistance with the rules you should contact your adviser.  However, I am interested in discovering if there is a particular element in the transitional rules that concern you.
 

San Ramon, Calif., Feb. 16, 2010 – The Tax & Accounting business of Thomson Reuters announced today availability of two new online services – Taxcast International and Ask the Expert Webinar – to help businesses stay abreast of the latest sales and use tax and value added tax (VAT) changes. Read the full article.

Update: HB50 has been tabled for now. This does not necessarily mean that we have heard the last of it, however. It is possible that HB50 could be resurrected or incorporated into another bill. We will continue to monitor its status.

Here is an update to my previous post regarding the affiliate nexus bill in Virginia:

http://blog.sabrix.com/blog/transaction-tax-talk/0/0/yes-virginia-there-is-an-amazon-tax-bill

Update 2/10/2010: S.B. 660 was approved by the Senate Finance Committee 14-1 today. It now moves to the full Senate for vote.

Update 3/1/2010: S.B. 660 was tabled by the Virginia House of Delegates Committee on Finance on February 24, 2010.

San Ramon, CA, February 2, 2010 – The Tax & Accounting business of Thomson Reuters announced today availability of Sabrix Managed Tax Service (MTS) Winter 2010 version. Sabrix MTS combines an on-demand version of the same trusted tax platform that powers over $1.7 trillion in transaction taxes for companies worldwide, service from a multidisciplinary team of tax experts, and SAS 70 certified processes. The latest version includes a new remittance and filing service, and additional reporting capabilities to provide an end-to-end solution for sales and use tax compliance, while increasing visibility and control so that financial executives can feel confident outsourcing the process. You can read the full press release here.