FOCUS ON NORTH DAKOTA
This month we travel to the Great Plains state of North Dakota. It is the 19th largest in area, the 4th smallest by population, and also the 4th most sparely populated of the 50 states. North Dakota is situated near the middle of North America with a stone marker in Rugby, North Dakota marking the “Geographic Center of the North American Continent.”
The western half of the state consists of the hilly Great Plains as well as the northern part of the Badlands, which are to the west of the Missouri River. The region is abundant in fossil fuels including natural gas, crude oil and lignite coal. The Missouri River forms Lake Sakakawea, the third largest artificial lake in the U.S.
FOCUS ON INDIANA
This month we travel to the Crossroads of America, the Midwest state of Indiana. It is known for its farmland and renowned auto race, the Indianapolis 500, held at the Indianapolis motor speedway. In the capital, Indianapolis, theatres and galleries line Massachusetts Avenue. The city’s downtown is home to the iconic Soldiers and Sailors Monument, the Canal Walk promenade and the Indianapolis Museum of Art and its wide-ranging collections.
The state includes two natural regions of the United States: the Central Lowlands and the Interior Low Plateau. The Till Plains make up the northern and central regions of Indiana. Much of its appearance is a result of elements left behind by glaciers. Central Indiana is mainly flat with some low rolling hills (except where rivers cut deep valleys through the plain, like at the Wabash River and Sugar Creek) and soil composed of glacial sands, gravel and clay, which results in exceptional farmland. Northern Indiana is similar, except for the presence of higher and hillier terminal moraines and hundreds of Kettle lakes.
U.S. SUPREME COURT SALES TAX DECISION (WAYFAIR)- Q&A PART 2
If you’re a frequent reader of this blog (or you’ve just been scanning headlines), you know that the hot news in the sales tax world is the recent U.S. Supreme Court’s June 2018 ruling in South Dakota v. Wayfair, Inc. This ruling overturned the high court’s 1992 decision in Quill (Quill Corp v. North Dakota, 504 U.S. 298 (1992)), which established a physical presence standard before a state could enforce sales tax collection responsibilities on a seller. With the Wayfair decision, the Supreme Court effectively ruled that another indicator of sufficient presence in a state is “economic nexus”. Essentially that means that a certain dollar volume or number of transactions in a state can create nexus and therefore a responsibility on the seller to collect and remit sales tax. In the South Dakota statute, those amounts are SD sales in excess of $100,000 or 200 transactions in the state within a year.
In the last month, we’ve received many questions from our clients and referral partners about what this really means for them and what they should be doing next. We addressed a few of those questions in a previous blog and here, we tackle a few more.
More Amnesty in the Wake of the Wayfair Decision!
There always seems to be an amnesty program going on somewhere. We recently reported on an amnesty program in Texas and other states are jumping on the bandwagon as well. The recent Wayfair Supreme Court decision has shed light on the requirements to collect sales tax and as a by-product more companies are focusing on getting into compliance. States are encouraging this behavior by administering amnesty programs.
When businesses become delinquent on their taxes, they often accrue penalties and interest with the states. During these amnesty programs, states may waive penalties and/or interest. States administer amnesty programs because they want companies doing business in their state to be compliant and in the process collect the revenue!
U.S. SUPREME COURT SALES TAX DECISION (WAYFAIR)- Q&A
The hot news in the sales tax world within the last week is, of course, the U.S. Supreme Court’s 6/21/18 ruling in South Dakota v. Wayfair, Inc. This ruling overturned the high court’s 1992 decision in Quill (Quill Corp v. North Dakota, 504 U.S. 298 (1992)), which set a standard requiring substantial physical presence before a state could enforce the sales tax collection responsibilities on a seller. It’s a standard that we’ve lived with for over 25 years. But in the decision for the majority in Wayfair Justice Anthony Kennedy, who served on the Court in 1992 and at the time voted in favor of the Quill decision, now indicated that “the internet’s prevalence and power have changed the dynamics of the national economy” since 1992’s ruling, and that for many reasons, it was time to revisit and overturn the ruling.
So, what does it mean for our clients? In this blog, we address a few of questions that have come up for us in the past few days.
An Update On Recent California Taxes: What You Need To Know
Have you been keeping up with California’s recent news regarding taxes? From cannabis to tap water and gas, California’s various tax legislation would impact all residents. Here’s a recap of each one.
California’s Taxes on Gas
Senate Bill 1 increased gas taxes by 12 cents per gallon, diesel fuel 20 cents per gallon and raised vehicle fees. The legislation was approved by both the Legislature and the governor back in April and is projected to raise $5.4 billion a year for road and transit projects. While the tax revenue is earmarked for important work within the state, 51 percent of registered voters report they'd repeal the tax if it were placed on the statewide ballot in November.Read more
FOCUS ON RHODE ISLAND
This month we travel north east to The Ocean State of Rhode Island. It is nicknamed the Ocean State due to its large number of ocean front beaches, large bays and inlets that amount to about 14% of its total area. The state is mostly flat with no real mountains.
Rhode Island has two distinct natural regions. Eastern Rhode Island contains the lowlands of the Narragansett Bay, while Western Rhode Island forms part of the New England Upland. The state’s forests are part of the Northeastern coastal forests ecoregion.
Georgia's New Online Sales Tax Bill: What You Need To Know
While we wait for the U.S. Supreme Court’s decision regarding online sales tax, states are continuing to take matters into their own hands. Georgia recently passed House Bill 61, legislation requiring online retailers that make at least $250,000 or 200 sales a year in the state to collect sales tax or send "tax due" notices to customers spending a minimum of $500 on their websites.
Georgia’s Online Sales Tax Bill & The Supreme Court
Georgia’s new online sales tax law will go into effect January 1, 2019, however depending on how the Supreme Court rules on the Wayfair v. South Dakota case, Georgia's new legislation may be blocked. That doesn't necessarily mean the end of the law, though.
As Bloomberg explains, "Either way, the requirements might put Georgia in line for a lawsuit of its own... if the Supreme Court upholds the physical presence standard, Georgia’s collection requirement would remain constitutionally unenforceable, but dealers meeting either of the thresholds would be subject to the notice and reporting requirements."Read more
CALIFORNIA AND MARKET BASED SOURCING-ATTEMPTED CLARIFICATION?
Market-Based Sourcing of revenue for services as related to income tax apportionment purposes is becoming a trend among states. As our economy becomes more service intensive, determining how to properly source service and intangible revenue is vital to the states. According to Bloomberg BNA, California’s latest draft rules for market-based sourcing of sales of intangibles are confusing and could affect defense contractors, asset managers, and R&D service companies.
On May 18, 2018, the California Franchise Tax Board (FTB) held its third Interested Parties Meeting (IPM) regarding proposed amendments to California Code Regulations, Title 18 (CCR), Section 25136-2. This section of the CA Regulations describe the provisions of market-based sourcing rules for California taxpayers.
What You Need To Know About California's SB 993 & Why We're Against It
Sales tax is a major revenue source for many states, including California, which is why its legislature has been looking for additional ways to collect fees under the ‘sales tax’ umbrella.
For years, State Senator Bob Hertzberg has been trying to extend the state’s reach by imposing sales tax on services. Although 2015’s Senate Bill 8 didn’t pass, there’s another bill recently heard in the Senate Governance and Finance Committee: Senate Bill 993 (SB 993).
How Senate Bill 993 Affects Sales Tax
While SB 993 might help increase California’s revenue, it comes at quite a cost. This legislation would create a new sales tax on services like legal and accounting, further complicating an already intricate state tax code.
CalCPA makes several key points against this new sales tax legislation:
1. Ultimately, the sales tax burden will fall to consumers.
In order to compensate for the additional expense, businesses will increase their rates. This will happen in companies across the board – not just those providing legal or accounting services. Here are a couple of examples from CalCPA:
Consumers might not be taxed on the food they buy, but the cost of produce at the grocery store will likely increase since the grocery store overhead has gone up to include more costly accounting and tax services…or a small business that elects to have a retirement plan for its employees is required by law to meet certain audit requirements, which requires the use of an external CPA. Or they may need an audit or review as part of their application for a bank loan. Either the business absorbs the added tax on the service they are required to get, passes the cost to their consumers or elects to no longer offer a retirement plan to employees or opt to not pursue a planned expansion.Read more
