TaxConnex Sales Tax Blog

Sales Tax Nexus and Amazon Laws – HB2370 Passes in Tennessee

When sales tax laws were first framed almost 100 years ago, no one considered the implications of Amazon and their affiliates on sales tax nexus and sales tax revenue.  Sales tax nexus was a simple matter to determine.  You didn’t need to engage a sales tax consulting firm to figure out if taxes needed to be collected and remitted.

As states continue to lose revenue to Amazon and other online retailers, sales tax nexus has become a significant issue.  Tennessee, a state that does not tax wages and salaries, relies on sales tax revenue.  Tennessee recently passed HB2370 in an effort to capture more tax from internet sales. Here’s an excerpt of Tennessee’s new law:

“This bill specifies that the activities of a business's affiliates in Tennessee, including the sale of tangible personal property for resale and other non-retail activities, may not be considered in determining whether the person has a physical presence in Tennessee sufficient to establish nexus for sales and use tax purposes. However, this provision would not apply to an affiliate that performs, within Tennessee, the following retail activities on behalf of a business…”

Not exactly straightforward and easy to understand.  You can read the entire bill here:  TN HB 2370

This is just one example of how interpretive sales tax statutes can be and illustrative of the need for sales tax consulting in certain situations.  At TaxConnex, we offer sales tax consulting and can help you figure out issues like sales tax nexus, sales tax audits, voluntary disclosure agreements and more.

Telecom Taxes for VoIP Providers

Most days I talk with at least one company that’s preparing to launch a VoIP service.  Various platform providers have made it simple to deliver the service; however, the various sales and telecom taxes (not to mention the regulatory requirements) add a great deal of complexity to a start-up business.  Consider a company preparing to launch a VoIP service and the various taxes and fees they must contend with – sales tax, communications services tax, utility users tax, gross receipts tax, 911 fees, USF contributions, FCC licensing…the list is seemingly endless.

Defining how these various taxes and fees apply to a provider’s services is usually the first step.  The next step is implementing a compliance solution to manage the process long-term.  During this step, it's important to leverage the right expertise along the way.  There are some one-stop shop answers but they deliver a watered-down version of what is needed.  A best of breed solution with well coordinated service providers is a better approach.  TaxConnex along with CCH SureTax and The CommLaw Group have formed the Cloud Commpliance Solution to provide this best of breed solution.

In this solution, CCH SureTax provides a SaaS-based calculation service that calculates the various telecom taxes and fees to add to each invoice.  The CommLaw Group and their affiliate The CommPliance Group manage the ongoing regulatory reporting requirements while TaxConnex manages the ongoing tax reporting requirements.

A comprehensive approach to telecom taxes and fees managed by firms with specific domains of expertise will minimize compliance risk.

Sales Tax Nexus for Internet Retailers in Georgia

Georgia House Bill 386 is running through the Georgia legislation quickly and stands a final vote in the Senate today.  The bill passed in the House earlier this week by a vote of 155 in favor and 9 against.  Among other tax reforms, this Bill introduces “Amazon Laws” to Georgia.  Currently, out-of-state online retailers with no sales tax nexus in the state are not required to collect sales tax.  However, online retailers with in-state affiliates that refer business to the out-of-state retailer for some type of consideration (for example, a commission) via a click-through on their website will now be considered to have sales tax nexus in Georgia.  As such, they will be required to collect sales tax.  Similar legislation has been enacted elsewhere with the typical result being that the out-of-state retailer drops their affiliate program in said state.  The end result has been no additional sales tax revenue.  Stay tuned to see if this Bill passes – all indications are that it will.  Then we’ll wait and see how the internet retailers react.

Has anyone seen when Governor Deal plans to sign this bill?  Has anyone heard what the internet retailers plan to do once this is signed?

Exemption certificate risks and management webinar - April 25

Join us for a webianr on Exemption Certificate Risks and Manangement

The webinar will begin with an overview of the risks associated with poor exemption certificate management and conclude with a demonstration of TTS’s flagship product, CertCapture.

“As a former state auditor in North Carolina, I can tell you that missing or invalid exemption certificates are an easy source of revenue,” says Jeff Meigs, TaxConnex Partner.  “I would always look at the exemptions claimed on the return and ask for documentation to substantiate the exemption.  If you can’t provide your exemption certificates and demonstrate they are complete and valid, then the transaction is taxable and you will be assessed the additional tax.  It’s that easy.  For the business, it means you have to have a well managed process to gather the certificate, validate it, and manage it over time.

“Now more than ever, companies must take stock of all their exemption certificates by verifying that they are on file, organized, accurate and up-to-date,” adds Silvia Aguirre, TTS Principal and former State Auditor for Texas.  “That’s the benefit of our flagship product, CertCapture.  It enables businesses to manage the exemption certificate process, demonstrate compliance and avoid penalties.”

The webinar is open to all businesses that are interested in exemption certificate management.  The webinar takes place April 25, 2 PM EDT.  More details can be found at TaxConnex Sales Tax Consulting Webinars.

Sales Tax Nexus and Affiliates

Just yesterday I started the information gathering portion of a sales tax nexus engagement.  One of the questions I asked the client was whether they had any affiliates in a particular state we were reviewing.  Their immediate question was “what do you mean by an affiliate?”  In this situation I was attempting to understand whether the client had any entity that operated on their behalf for compensation.  This could be an independent sales representative or a company performing services on behalf of the client.  While these may be independent contractors the type of services they perform could very likely create sales tax nexus.  Independent contractors don’t always create nexus; it depends on the type of service that’s being performed.  The key phrasing the states use is whether these activities help “establish or maintain a market” in the state.  An independent sales rep or a manufacturers’ rep could very easily be deemed to establish a market for a company.  Similarly, if a company sells a product that has a warranty and they use an independent, local business to service the warranty, that independent business is very likely helping the original company maintain a market in that state.

What about internet affiliates?  There’s significant conversation surrounding affiliates from an internet perspective and internet retailers.  While states are attempting to pass new “Amazon Laws” that more formally attach sales tax nexus to the out-of-state internet retailer that has affiliate programs with in-state businesses; a case could be made that these affiliates have helped the internet companies “establish a market” in their state and as such sales tax nexus exists with or without any new “Amazon Laws".

The key point is that the type of activities performed on behalf of a company by their affiliates or independent contractors should be considered as part of a sales tax nexus review.

If you have questions, call us or look at TaxConnex Sales Tax Consulting for more info.

TaxConnex to Present at ISPAmerica 2012 Tax Compliance VoIP Workshop

(PRWEB) TaxConnex, America’s leading independent provider of sales and use tax outsourcing services, invites Telecom and VoIP service providers to meet and hear TaxConnex’s Founding Partner, Robert Dumas, CPA at the ISP America conference.  Robert will speak at the Tax Workshop and Presentation, covering topics related to telecom tax for start ups and new entrants.

“We talk with a lot of VoIP providers that are either just entering the market or have been in the market for a fairly limited amount of time”, says Robert.  “We spend a good bit of time helping these companies take the right compliance steps to enter the market.  We also spend time with companies that need to correct prior period issues.  The workshop at ISPAmerica 2012 is designed to help both types of companies, start-ups with a clean slate and new entrants that need some correction.  The workshop is an opportunity for these companies to learn about telecom tax issues and leave with a plan for compliance.”

The workshop and presentation takes place at ISPAmerica 2012 on Tuesday, March 27, from 11:30 – 1:00 PM.  The presentation is in two parts.  Part One, for new VoIP providers covers:

• What creates nexus for new VoIP providers;

• Understanding taxability of your products and services;

• Seeking exemptions with your carriers;

• Calculating tax and invoicing your clients;

• Registering with the Departments of Revenue; and

• Filing your first return.

Part Two, for VoIP providers that are already in the market, covers:

• Understanding the taxability of your products and services;

• Determining your prior period tax exposure;

• Voluntary disclosures or amnesty filings;

• Seeking exemptions with your carriers;

• Calculating tax and invoicing your clients;

• Registering with the Departments of Revenue; and

• Filing your first return.

ISPAmerica 2012 is produced by WISPA and FISPA.  This year's event is scheduled from March 26th to March 30th at the Disney's Coronado Springs Resort at Walt Disney World®.

 

Sales Tax Nexus Doesn't Mean You Should Register

Having sales tax nexus doesn’t always mean that a business should immediately register with the respective Department of Revenue.  There are several additional questions and business practices that should be reviewed as part of a decision to register and comply.  If a company’s products or services are statutorily exempt and no sales tax is due, then the registration is likely unwarranted.  However, there are some states with a gross receipts tax where the registration and compliance would be required.

I hope no auditors see this next piece of advice, but I frequently advise companies to not register even when they have sales tax nexus and their products/services are taxable.  Here are some situations to consider:

• I have often seen companies that have a transaction or two with minimal sales tax associated with the transaction.  If these are one-off sales and no future sales are expected, it’s hardly worth it to register and start filing prospectively for what’s likely a non-material tax liability.
• If you have collected the tax and it seems non-material but you just don’t want it on your books, some jurisdictions allow you to remit sales tax without a tax id or apply for an occasional filing frequency so as not to have to file a monthly return.
• One of the more common approaches is to accrue the tax and wait until a particular threshold is reached before registering and complying prospectively.
• Another potential option associated with local filings in Alabama, Arizona, Colorado, or Louisiana would be to remit the local tax to another local jurisdiction or remit it all to the state.
• Discovering that you’ve had sales tax nexus historically and have prior period tax obligations is another variable to consider.  In this situation, a Voluntary Disclosure or Amnesty approach could be helpful.

Each of these options carries a different level of risk.  It’s helpful to review the risk and understand the costs of compliance as well.  Knowing these two factors, a business can balance risk and cost and make the decision that most closely aligns with their business practices.

If you have questions, call us or look at TaxConnex Sales Tax Consulting for more info.

Announcing the Release of TaxConnex Office Suite Version 2.0.

(PRWEB) TaxConnex, America’s leading independent provider of sales and use tax outsourcing services, announces the release of TaxConnex Office Suite 2.0.  TaxConnex Office Suite is the sales and use tax management platform that connects the TaxConnex Practitioners with their clients and provides a portal to distribute various applications used during client engagements.

“As an outsourced sales tax department provider, this latest version of TaxConnex Office Suite aligns with our goal of increasing the transparency between the TaxConnex Practitioners and clients,” said Robert Dumas, founder of TaxConnex.  “Version 2.0 contains several enhancements that increase filing efficiency including an automated certificate of mailing and “expeditors” that facilitate the mapping of clients’ tax data to returns.  It also significantly increases the client’s ability to view, track and reference completed returns and filings. Version 2.0 is part of our continuing strategy to enhance the technology platform shared between our Practitioners and clients.”

These technology enhancements are necessary to manage some of the more administrative functions and thus enable the Practitioner to focus on delivering the value-add services that TaxConnex clients have grown accustom to such as addressing addressing nexus issues managing taxability questions, and helping them determine the best audit strategy.

“As a TaxConnex Practitioner, I view myself as my clients' sales tax manager.  It’s important my clients have access to the returns and various work papers.  It’s just as important though to have the right tools to free me up to address the more strategic issues of my clients' businesses,” said Donna Contestabile, TaxConnex Practitioner.

About TaxConnex
TaxConnex is America’s leading independent sales and use tax outsourcing and consulting firm. Using a team of experienced tax and accounting professionals, TaxConnex provides sales tax outsourcing, sales tax consulting and telecom tax services to businesses of all sizes with a focus on technology companies, small and mid-sized businesses, and VoIP providers.  TaxConnex provides a complete set of highly customer intimate services including end-to-end compliance, data analysis, remittance, reporting, notice resolution, question handling, proactive suggestions, straightforward advice, and audit support.  TaxConnex is your “on-call” Sales & Use Tax Department.

Telecom Tax Calculation Just Got Easier

One of TaxConnex’s business partners recently launched a new Software as a Service (SaaS) solution aimed at calculating telecom taxes and VoIP taxes.  The newly launched CCH CorpSystem SureTax Telecom solution provides a real-time, web-based tax calculation solution that leverages CCH’s telecom tax rates and applicability rules.

Telecom firms are often challenged by the numerous taxing jurisdictions and their respective rates and applicability rules.  With the low barriers to entry and rapid growth of VoIP service providers, this SaaS model for telecom tax calculation will be a great way to keep the upfront investment costs to a minimum.  Pair this with CCH’s rates and rules (which are often considered the gold standard in the industry) and SureTax Telecom’s ease of use and customizable data reports, and I think we have a winner.

If I look into my crystal ball this will prove to be a strong competitor to both BillSoft and Vertex who have dominated the telecom tax calculation space up to this point.

You can check out the official press release here.

Join the Sales Tax Outsourcing Group at LinkedIn

(from PRWeb)

ATLANTA, GA - TaxConnex, America’s leading independent provider of sales and use tax outsourcing services, announces the formation of a new LinkedIn group.  The group - Sales Tax Outsourcing – was formed for the purpose of sharing best practices, discussing current trends and gaining better insight into successful tax outsourcing engagements 

“The Sales Tax community is relatively small, so many of us have connections to each other” says Brian Greer TaxConnex Partner and founder of the Sales Tax Outsourcing group.  “The Sales Tax Outsourcing group on LinkedIn is a place online where the sales tax community can meet to network and share ideas.”

“One of the benefits this group is staying ahead of important industry trends.  For example, there is a lot of turmoil in the Sales Tax space right now.  Major vendors are leaving the space or closing service centers - causing significant disruption in the way some businesses are handling their sales tax needs.  This group enables us to connect with others and work through some on this together”, continues Greer.

TaxConnex welcomes all persons interested in sales and use tax to join the conversation at Sales Tax Outsourcing.