Is Nexus Necessary for State Taxes? Not According to These States!
Two states, Louisiana and Alabama, recently passed legislation allowing them to tax companies making sales in the state via the Internet, even if the business doesn’t have a physical presence, or nexus. What do these laws entail, and how do they affect companies?
Louisiana’s Amazon Law
Referred to as the "Amazon Law," Louisiana's Act 22 allows the state to tax companies that don't have nexus within the state.
As the Pelican Post explains, "Act 22 requires out-of-state retailers with in-state contract affiliates – individuals or businesses that refer potential customers to the seller – typically by linking to their website – to remit taxes on sales made to Louisianans." Basically, this means the state is expanding the definition of nexus from being defined as an Internet link instead of a physical presence.
Alabama’s New Nexus Regulation
Alabama recently adopted a new regulation as well, which defines nexus within the state as exceeding $250,000 in retail sales of tangible personal property and certain additional activities, such as soliciting orders for tangible personal property through advertising.Read more
14 Years in the Making
Happy Anniversary Miles Consulting Group! In fourteen years, I’ve watched this practice change with this times – gone are the California Manufacturers Investment Credit and the Enterprise Zone benefits – both of which were significant tax credit and incentives benefits to our clients over the years. Added are some new California incentives – the CA Partial Manufacturer’s Sales Tax Exemption, and the California Competes Tax Credit. Yet tried and true multi-state tax consulting – nexus reviews, taxability studies, voluntary disclosures, and audit defense continue to be the cornerstone of our current consulting. We’ve also recently added “Jumpstart Your Rainmaking” that’s been providing some “splash”! The webinar series, aimed at helping CPAs (and others selling professional services) to enhance their marketing, networking and targeting skills begins again in May. (For more information and to register, click here.)
A lot has changed over the years that has affected not only our business, but our country. Take a trip back in time to see what was happening back in 2002 when we were founded:
In 2002...Read more
Understanding Voluntary Disclosure The BioTech and Pharmaceutical Industry & Multi-State Tax Issues
So far our State Tax Series has looked at technology niches including semiconductor manufacturing, digital goods, software companies and medical device companies. Today we look at the multi-state tax issues that the BioTech and Pharmaceutical niche faces. Keep reading for the details!
An Overview of the BioTech and Pharmaceutical Industry
BioTech companies specialize in researching ways to duplicate or change living cells in an effort to make them more predictable and controlled. They rely on genetics research to create products to help improve quality of life or cure those with a variety of diseases and conditions. The top BioTech companies currently include Emergent Biosolutions Inc, Amgen Inc, Abbvie Inc and Immucell Corp.
Pharma companies specialize in drugs. They extensively research them in-house in addition to licensing them from academia, other firms and biotech companies. Examples of these companies include Pfizer, Merck & Co, Johnson & Johnson and Bayer.Read more
Focus on Alabama
Alabama received its nicknames “The Heart of Dixie,” and “Yellowhammer” state from its historical civil war involvement. The State has come a long way from its troubled past to be a state in the forefront of innovation. In our focus of the month, we highlight the current contributions of the State to our community. Alabama has not only given us dynasty in college football (for those Crimson Tide fans), but it also has given as a foundation for a steady economic presence internationally.
Business Climate
Alabama’s economic growth is a result of its development as a manufacturing hub for transportation and technology. The State has managed to attract automotive companies such as Mercedez-Benz, Toyota, Hyundai, and Honda. These four companies alone, produced more than 1 million vehicles (valued at $7 billion) in Alabama in 2015. These vehicles are the State’s main exports delivered to over 70 countries.
In addition, Alabama is also thriving in the aerospace industry. It is the home for major manufacturers of commercial flight airplanes such as Airbus and Boeing. Other companies like Raytheon and Lockheed Martin develop aerospace and defense technology which aid our military. Read more
Understanding Voluntary Disclosure Semiconductor Manufacturing & Multi-State Tax Issues
Welcome to the latest post in our series about how state tax legislation affects various technology industry niches! Today our focus is on semiconductor manufacturing. What multi-state tax issues do they face? Keep reading to find out.
An Overview of Manufacturers
Semiconductor manufacturing is the process of creating, "A substance, as silicon or germanium, with electrical conductivity intermediate between that of an insulator and a conductor: a basic component of various kinds of electronic circuit element (semiconductor device) used in communications, control, and detection technology and in computers."Read more
Qui Tam and Tax Whistleblowers
In today’s society, one of the biggest concerns that every business or individual wants to avoid are lawsuits. Under the False Claims Act (FCA), there is a liability to businesses or individuals who commit fraudulent behavior that impact governmental programs. Most cases resulting from the FCA are in regards to health care, housing and mortgage frauds.
Unfortunately for businesses, there is a higher risk of involvement in a lawsuit due to the Qui Tam provisions of the FCA. The Qui Tam provisions allows informants or “whistle blowers” to bring forth a lawsuit against the business or individual on behalf of the government. Qualified informants must be directly involved and knowledgeable of the fraudulent behavior conducted and must not be from a secondary source. The incentive for informants to come forward is that they will receive a portion of the funds recovered from a successful settlement or judgment (generally 15 to 30 percent of the recovery).
There has been an increasing popularity in Qui Tam cases since 2009. Prior to 2009, Qui Tam cases averaged 300-400 cases per year. For years after 2009, the average rose to more than 600 new Qui Tam cases per year, with 2013 and 2014 exceeding 700. Read more
Understanding Voluntary Disclosure Digital Goods & Multi-State Tax Issues
Welcome back to our series about how state tax legislation applies to a wide variety of technology industry niches! Today’s focus is digital goods; keep reading to find out what multi-state tax issues this type of merchandise faces when it comes to nexus, state tax legislation, etc.
An Overview of Digital Goods
What are digital goods? Webopedia provides a helpful definition: "Digital goods is a general term used to describe any goods that are stored, delivered and used in an electronic format. Digital goods are shipped electronically to the consumer through e-mail or download from the Internet. Usually when you purchase digital goods online, after payment has been received the merchant will provide you with your digital item as an e-mail attachment or they may provide you with a secure link where you can download the item.
Examples of digital goods include e-books, music files, software, digital images, website templates, manuals in electronic format and any item that can be electronically stored in a file or multiple files."Read more
Focus on South Carolina
South Carolina has been gaining a lot of attention recently due to its presidential election primaries. But there are other aspects of the state that are interesting as well. The “Palmetto” State is known for its shoreline of beaches and islands, in addition to its rich history of plantations and involvement in the Civil War. Its warm weather and green surroundings are not the only things encouraging more people to migrate to the state. The beautiful town of Kiawah Island is a personal annual family vacation spot of mine as well.
Business Climate
South Carolina is a beneficiary of foreign direct investment that boosts its job growth. The State has attracted marquee companies to invest manufacturing facilities in South Carolina through its ability to provide suitable locations, existing infrastructure and a skilled workforce.
The State employs a technical college system and the Apprenticeship Carolina program, which allows students and young adults to apprentice with participating companies across a diverse array of industries ranging from advanced manufacturing to hospitality and health care. A few of the companies that have invested in the state within the last decade are: Boeing, BMW, Volvo Cars and Daimler Vans.Read more
Understanding Voluntary Disclosure SaaS Companies & Multi-State Tax Issues
Have you been following our series that chronicles how state tax legislation applies to various technology industry niches? So far we’ve covered medical device companies and software companies; today the topic is Software as a Service (or SaaS) companies.What multi-state tax issues do they face when it comes to nexus, sales and use tax, state tax legislation and more? Keep reading to find out.
An Overview of SaaS Companies
SaaS is defined as, "A way of delivering applications over the Internet - as a service. Instead of installing and maintaining software, you simply access it via the Internet, freeing yourself from complex software and hardware management."Read more
Understanding Voluntary Disclosure
State taxes can be daunting. There are so many ways companies can trip into nexus creating activities in multiple states and suddenly find themselves in a compliance nightmare. I see this situation often in my practice. Many of my clients are in the technology industry. Silicon Valley moves at an alarming speed (well, except for Highway 101 – but that’s another story!), and companies move people and product into multiple states just as quickly – sometimes without even realizing the ramifications. State taxes – including sales tax and income tax are often an afterthought, but then come back and rear their heads when a company is getting its next round of funding or needs a financial statement audit. It is at this point that people usually take notice of the state tax situation. Why? Here’s a scenario:Read more
