An Interesting Look: Alabama's Latest Online Sales Tax News
A couple of weeks ago we started a series that looks at the ramifications of various online sales tax legislation states across the country are proposing and signing into law. We started with Colorado as they’ve been at the forefront of the debate since 2010. Today we take a look at Alabama!
Alabama has been making waves in the state tax world because it passed legislation in 2015 that requires an out-of-state seller making retail sales within the state to register, and collect and remit sales tax on these sales by virtue of “economic nexus” if the seller has sales of more than $250,000 within Alabama, and engages in certain limited activities in the state. However, it does not require substantial physical presence as required in the 1992 Supreme Court decision (Quill). With the passage of these laws, Alabama drafted legislation that is unconstitutional and effectively challenging taxpayers to take the issue to court (or is challenging the federal government to finally enact some of the bills which have been circulating in Congress but have not passed). Whether that’s “simplified” or not is a question, but read on for a summary of the latest activities in the state.Read more
FOCUS ON MARYLAND
This month we travel to the birthplace of religious freedom in America, the state of Maryland. Formed by George Calvert in the early 17th Century, the state was intended as a refuge for persecuted Catholics from England. George Calvert was the first Lord of Baltimore and the first English proprietor of the then-Maryland colonial grant. Maryland was the seventh state to ratify the U.S. Constitution, and played a pivotal role in the founding of Washington D.C., which was established on land donated by the state.
Mid-Atlantic Maryland is defined by its abundant waterways and coastlines on the Chesapeake Bay and Atlantic Ocean. Its largest city, Baltimore, has a history as a major seaport, and is also home to such tourist attractions as the National Aquarium and the Maryland Science Center.
Fascinating Ramifications of Colorado's New Online Sales Tax
As we’ve been following the online sales tax debate in previous posts, we’ve mostly approached the issue as it affects the country as a whole. While Congress has continued to debate how to handle taxing internet shoppers, however, states have been taking matters into their own hands. This upcoming series will look at new legislation coming out in different state legislatures across the country, beginning with Colorado.
A Summary of Colorado’s Online Sales Tax Legislation
Colorado has been at the forefront of the internet sales tax debate since 2010, when it passed a law that required companies with more than $100,000 in sales that did not have nexus in the state to do two things:
- Alert Colorado customers that Colorado sales or use tax is due
- File annual reports to the state, listing all the names, purchases and shipping addresses of Colorado customers
Although this legislation seemed egregious to most of us in the business, it went to court and, after many rounds in various courts, the law will now be effective as of July 1, 2017 because the U. S. Supreme Court denied certiorari – meaning they won’t hear the case. There have been some recent modifications that stipulate retroactive reporting won’t be necessary, but businesses will need to report on all sales after July 1 of this year.Read more
PENNSYLVANIA- CLARIFICATION ISSUED ON LEGISLATION?
Businesses obviously grow by selling their products outside of their local boundaries and across state lines. Pennsylvania (PA) has experienced, like most states, a relatively large amount of sales from companies outside PA, and, with that, the loss in sales tax revenue from those sales, as out of state companies do not often collect sales tax. Pennsylvania has a growing economy, and like most states, it is continually modifying its tax laws to be current with changing conditions and technologies.
Last summer, we wrote an article about a new Pennsylvania law going into effect related to taxing software that is digitally downloaded. This law went into effect on August 1, 2016.
How to Determine Taxability of Services, Part 2
A couple of weeks ago we introduced the general guidelines surrounding taxability of services. Because taxability varies by state, we wanted to share a few examples of how selected states determine if a company is responsible for sales and use tax on their services.
Arizona’s Take on Taxability of Services
In Arizona, transactions that include both tangible personal property and services may be subject to sales and use tax collection (note that AZ has what is called the Transaction Privilege Tax, which is similar to a sales tax for purposes of this example). So, for example, a company that sells a physical widget and then operates it for you would need to charge taxes on the entire transaction.Read more
FOCUS ON MISSOURI
This month we travel to the “Show Me” state of Missouri. The people of Missouri have earned their motto as the “Show Me” state for their very practical skepticism of the fads that sweep other parts of the country. This attitude manifests itself in the state government’s approach to business encouragement and regulation. So, let’s look at the state and see how their approach could help your business.
The state is the 21st most extensive by area and is geographically diverse. North of the Missouri River, the state is primarily composed of rolling hills of the Great Plains and south of the Missouri River, the state is dominated by forests. The Mississippi River forms the Eastern Border of the State, eventually flowing into the swampy Missouri Bootheel.
How to Determine Taxability of Services, Part 1
If you followed our recent series about multi-state tax facts for various types of technology companies, you likely noticed a common theme: it's important to determine which states a business has created in so that they know which sales and use tax laws to follow. Although it can be tricky, the good news is there are some generalities that can help get a company started with the process.
Sales and Use Tax in Regards to Services
In general, the sale of tangible property starts out as subject to sales tax, but then may ultimately be non-taxable as a result of statutory exemptions. On the other hand, services are generally non-taxable unless specifically delineated by a state’s statutes as taxable. Bloomberg BNA* does a good job of describing the general rules around taxation of services.Read more
7 Important Multi-State Tax Facts for BioTech and Pharmaceutical Companies
If you’ve been following our series about multi-state tax facts for various facets of the technology industry, you may be aware of one more niche we haven’t discussed yet: BioTech and Pharmaceutical companies. While both these categories fall under scientific research and medicine, they’re integral to technology as well.
- BioTech organizations research living cells, studying and discovering ways to duplicate or modify them so they’re more predictable. This research has a lot of potential for curing or improving the lives of those with all sorts of diseases and conditions, and is at the forefront of scientific discovery, which is reliant on top-of-the-line, innovative tools and technology.
- Pharmaceutical companies specialize in everything surrounding drugs, specifically in-house research and licensing from academia and other businesses (including BioTech companies).
7 Multi-State Tax Facts BioTech and Pharmaceutical Companies Need to Know About
Fact 1: BioTech companies need to be aware of where they’re creating nexus beyond where the company is physically located. Many BioTech firms keep the research in their primary location, which limits instances of nexus being established in other states; however, some companies outsource some aspects of the research, which means nexus could be established beyond their home state.
Fact 2: Pharmaceutical companies may establish nexus in states in which sales representatives visit, even if they don’t complete a sale. In many states common sales activities may trigger nexus.Read more
6 Important Multi-State Tax Facts for Semiconductor Manufacturing Companies
As a semiconductor manufacturing company, what do you need to know about nexus and multi-state tax laws? Despite the fact that much of the manufacturing is often done in other countries (often by third party contract manufacturers), many of these businesses engineer and test the devices domestically, which often makes them subject to a wide range of laws from various states across the country.
6 Multi-State Tax Facts Semiconductor Manufacturing Companies Need to Know About
Fact 1: Nexus extends beyond states in which companies manufacture semiconductors. If they send sales representatives or store inventory across state lines, they may establish nexus without realizing it. Businesses need to be aware of what types of activities create a taxable presence from state to state; we can help with that!
Fact 2: In addition to knowing in which states they’ve established nexus, companies need to note if they’re selling directly to consumers or to resellers. If selling to the end consumer in a state where they have nexus, they’ll need to collect and remit sales tax, whereas if they’re predominantly selling to resellers it’s important they acquire valid resale certificates from their customers. Either case could result in having to file monthly or quarterly sales tax returns. Many businesses miss this step and end up facing headaches under audit, which could have been avoided altogether with proper documentation up front.Read more
FOCUS ON VIRGINIA
This month we travel across the country to Virginia. One of the original 13 colonies, Virginia possesses a lot of living history with the Jamestown Settlement and Colonial Williamsburg being notable historic landmarks.
The Shenandoah National Park lies in the eastern part of the state deep in the Blue Ridge Mountains. Mostly forested, the park features wetlands, waterfalls and rocky peaks, like Hawksbill, and Old Rag mountains. It is also home to many bird species, deer, squirrels and the elusive black bear.
