Earlier this month, TaxConnex completed and made available to our clients the results of our SSAE 16 (SOC 1) and SOC 2 Type 2 reports. We’re proud to announce that our independent auditors noted no exceptions during their testing.
TaxConnex initiated the audit process because we want our clients to know that TaxConnex has a process they can trust. Now, it’s not just something we say, but it’s something that has been validated by an independent third party.
The successful completion of these audits marks an important milestone in our business as companies continue to trust their tax compliance reporting and payment remittances to TaxConnex. Having the tax compliance reporting and payment remittance housed under one roof has proven to be an important decision criterion for companies. Many other firms that provide a similar service rely on a third party payment processor which introduces two separate businesses into a process that is best centralized with one provider.
The audits reviewed numerous aspects of our business including establishing and testing the initial set-up of new clients, the controls designed to ensure accurate and timely return preparation and filing, data security and integrity, and most importantly the management and payment of tax remittances on behalf of our clients.
We believe the successful completion of the audits will continue to be important as our clients look for assurances that we are optimally managing their tax compliance process. In addition, the reports are almost mandatory to serve any publicly traded company. We’ll continue to invest in annual audits and reports and expect similar unqualified opinions from our independent auditors
If you are a TaxConnex client and wish to review the audit results, feel free to contact me or your Practitioner.
TaxConnex’s most recent webinar,
“Telecom Tax: Simplifying the Tax and Regulatory Obligations of Your Communications Service” is now available on demand.
Presented with our partners from The COMMLaw Group and SureTax, this webinar focuses on the complexities of tax and regulatory compliance specific to telecommunications services and the solutions that simplify the process.
Topics that are addressed include:
- Myths and misperceptions of delivering communications services over the Internet
- Difference between taxes and regulatory fees
- How the changing concept of nexus affects the taxation and regulatory classification of telecommunications service
- Options for streamlining the calculation and reporting of various taxes and regulatory fees
- How to return form non-compliance to compliance
Receive great information at a fast pace during this webinar, originally presented on TMCnet.
If you are involved with communications tax/telecom tax/VoIP Tax, you’ll want to see this webinar. Click here, Telecom Tax Webinar.
For those of us that follow sales and use tax, I find the Amazon response to state "Amazon Laws" to be one of the most fascinating business stories in ages.
If you've followed our blog posts, you've also been tracking the trail of Amazon Laws, local retail pressure for internet sales tax and Amazon's strategic response. As local retailers look to level the sales tax playing field, Amazon has turned the new Amazon Laws to their advantage by using them as an opportunity to develop new distribution centers. These DC's could enable Amazon to further gain advantage over local retailers by providing same day delivery of goods. Also, with the promise of building new DC's, Amazon has received a reprieve from collecting sales tax and other consideration.
We're seeing this play out in Georgia right now. Georgia's new Amazon Law went into effect at the first of the year, but Amazon has failed to comply. This has left Georgia to contemplate pursuing a risky and expensive legal action against Amazon.
Amazon has let Georgia stew long enough. Now Amazon is ready to deal. If Georgia will delay implementation of the new law, Amazon will keep jobs in Georgia by building a new distribution center. To help state lawmakers sell the deal to constituents, Amazon positions this as a jobs program.
Amazon knows that their tax advantage will come to an end and they are making the most of it. My guess is that it won't be long before you can order something on Amazon in the morning and have it arrive before you get home from work. That's a tough service to compete against.
I wouldn't be surprised if the term "Amazon Law" develops a new meaning where "Amazon Law" is a law that is designed by an interest group to recapture competitive advantage only to backfire and develop into a strategic problem.
Read more about Georgia and Amazon here: Georgia, Amazon Face Off Over Sales Tax
Georgia's new "Amazon Law" went into effect on January 1, requiring certain online retailers to collect and remit sales tax for online sales. But, according to an article in the Atlanta Journal and Constitution (AJC), three weeks into the new year, Amazon is still not collecting and remitting Georgia sales tax.
This is interesting! Has Amazon failed to implement the new rules? Do they believe the rules, as written, don't apply? Is a showdown coming to Georgia?
As reported in the AJC, Amazon did not return several phone calls and emails when seeking comment.
“Our expectation is that the law would be abided by,” said Ryan Teague, executive counsel to Georgia Gov. Nathan Deal.
If Amazon continues to not collect the tax, the Georgia Retail Association may sue, said Rick McAllister, its president and CEO.
The full article can be found here....
http://www.ajc.com/news/news/amazon-fails-to-collect-new-georgia-tax/nT4wm/
For the calendar year 2012, state and local governments are expected to collect $246 billion in general sales and gross receipts taxes. That's a new record - a $7 billion increase over the prior 12 month collections.
With everything you hear about sales tax nexus, Amazon Laws, The Main Street Fairness and Marketplace Equity Acts, you might think that sales taxes are declining and that state and local governments are struggling to collect revenue. That's just not the case.
TaxConnex is in the business of providing sales tax outsourcing and sales tax consulting - we're not economists. But, some quick "back of the envelop analysis" makes us believe that the next twelve months will show significant gains for state general sales and gross receipts tax collections.
Why? As more people return to work, spending will rise and so will sales taxes. However, the unexpected drop in revenues in 2009 really caught the attention of the states, leading them to pass new laws. These new laws broaden the taxability of goods and services and placed a spotlight on internet sales. More people buying more taxable goods through more channels (including the internet) lead to soaring sales tax collections for the states.
We'll keep an eye on these collections in 2013, and you should too. We’re expecting a boom in sales tax collections.
For businesses, this leads to increased compliance risk as the jurisdictions enact new laws and increase enforcement efforts. Stay diligent.
A focus of our practice is telecom tax, so we couldn’t help but be intrigued by the events of the International Telecommunications Union, which recently concluded in Dubai.
The ITU, originally started in 1885 as the International Telegraph Union, is now the international governing body of the telecom industry. The Dubai meeting was primarily focused on the internet and its governance.
Going in, many thought the meeting would focus on telecom tax and how governments could increase revenue through new international internet taxes as well as how individual governments could gain more control of the internet, especially fundamental resources like DNS.
It turns out that the meeting was less about telecom tax and more about control.
As predicted, the meeting saw two factions emerge. Russia, China, Saudi Arabia, Algeria and Sudan wanted more governmental control, positioning their quest as a call for equal rights for all governments to manage “internet numbering, naming, addressing and identification resources”.
The U.S., the UK, Australia, Canada and others refused to sign the new treaty, preferring to keep governance of the internet as it is now. On December 13, the proposal for more government control was shelved.
So, internet governance remains unchanged for now.
Less than forty years ago, there were fewer than ten sites on the internet and most news could largely be controlled by governments. Now, there are over a billion websites. With 40% of the entire world’s population using internet capable smart phones, the internet is now an essential human communications tool. In a relatively short time, the internet has changed the entire dynamic of commerce, government and control…and telecom tax too as the PSTN, once the cornerstone of telecom (and reliable tax revenue), is in the process of being replaced by VoIP and anyone with a blog (like TaxConnex) can publish news distributed around the world.
For more information on the details of the conference and issues, read:
Forbes ITU Wrap Up and Lexology ITU Wrap Up.
The International Telecommunications Union’s World Conference opened in Dubai yesterday. The purpose of the meeting is to review telecom regulations created in 1988. This includes regulations on the internet.
Only governments have a vote, so it’s an uncomfortable time for corporations and individuals that have come to rely on the internet and the free flow of information. At TaxConnex, we are interested as it could affect our VoIP tax clients.
Rumors have circulated that some governments want to clamp down on internet freedom and/or levy internet taxes. The ITU chairman disputed those rumors.
A Google spokesperson said "only governments have a vote at the ITU, and some of them are trying to use a closed-door meeting in Dubai to increase regulation online. Although the ITU has helped the world manage radio spectrum and telephone networks, it is the wrong place to make decisions about the future of the Internet."
The conference is in progress and we’ll soon know if the regulations around the internet have changed.
Learn more about TaxConnex and our VoIP Tax service.
At TaxConnex, our practice revolves around the issue of sales tax nexus. We've followed the sales tax nexus issues involving Amazon Laws and the Marketplace Fairness Act as it has developed in the Senate.
It looks like The Marketplace Fairness Act may come up for a vote quickly. The Act would require online retailers to collect sales tax just like brick and mortar stores do.
The Act may be added on to the Defense Authorization Act of 2013. Sen. Richard Durbin (D-Illinois), filed an amendment on Friday to include the Act in the spending bill. Voting may be as early as next week.
As states struggle to meet revenue shortfalls, Marketplace Fairness has gained traction.
“Sen. Durbin is focused on working with his colleagues to try to get a vote on the bill before the end of this year, whether as a stand-alone bill or part of a larger piece of legislation,” said a Durbin aide. “They are keeping all options on the table at this point.”
The National Retail Federation supports the act. “As the nature of retailing evolves and Internet sales become a more prominent portion of total retail sales, it is critical that sales tax collection requirements not discriminate,” NRF Senior Vice President David French said in a letter to senators. “The current collection disparity has tilted the competitive landscape against local stores, creating a crisis for brick-and-mortar retailers around the country.”
At TaxConnex, we provide VoIP Tax outsourcing services to many of our clients. We follow the VoIP/Telecom space with interest as IP based services continue to replace the PSTN.
This news story made it onto our radar.
Recently, California Governor Jerry Brown signed California SB-1161, "Communications: Voice over Internet Protocol and Internet Protocol enabled communications service.(2011-2012)" into law. The law prohibits the California PUC from regulating VoIP services.
Traditionally, voice telecom services are viewed as public utilities and regulated by state PUCs. But, VoIP, an IP service that is a substitute for traditional wireline voice, has been in a gray area. This law makes a clear delineation.
The stated purpose of the SB-1161 is:
(1) Preserve the future of the Internet by encouraging continued investment and technological advances and supporting continued consumer choice and access to innovative services that benefit California.
(2) Ensure a vibrant and competitive open Internet that allows California’s technology businesses to continue to flourish and contribute to economic development throughout the state.
SB-1161 reads:
"Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including telephone corporations, as defined.
This bill would, until January 1, 2020, prohibit the commission from regulating Voice over Internet Protocol (VoIP) and Internet Protocol enabled service (IP enabled service), as defined, except as required or delegated by federal law or expressly provided otherwise in statute. The bill would prohibit any department, agency, commission, or political subdivision of the state from enacting, adopting, or enforcing any law, rule, regulation, ordinance, standard, order, or other provision having the force or effect of law, that regulates VoIP or other IP enabled service, unless required or delegated by federal law or expressly authorized by statute. The bill would specify certain areas of law that are expressly applicable to VoIP and IP enabled service providers. The bill would provide that its limitations upon the commission’s regulation of VoIP and IP enabled services do not affect the commission’s existing authority over non-VoIP and other non-IP enabled wireline or wireless service and do not affect the enforcement of any state or federal criminal law or local ordinances of general applicability that apply to the conduct of business, the California Environmental Quality Act, or a local utility user tax, among other things."
At least two dozen other states are contemplating similar laws to allow VoIP to grow in a less regulated environment.
Do you know where your “affiliate” has been?
Are you utilizing the services of a third party to deliver value or product to your customers?
Then you may have a nexus footprint for sales and use tax purposes far broader than you ever imagined. Technology has brought a whole new perspective to sales and use tax nexus. Most people are familiar with the “Amazon Laws” enacted by a growing number of states. But there may be a more sinister adversary at play in your everyday business – the “server” (aka software, computer equipment, or a network). If you are utilizing a third party technology enterprise to facilitate the provision of technology services to your customers throughout the United States, then you likely have nexus somewhere beyond your state of headquarters. The provision of technology services, including “Software as a Service”, “Cloud”, or “Hosting” by a third party service provider is likely going to create nexus for you in those states where the third party maintains equipment used in the provision of these services.
Do you know where your “affiliate” has been? In what states does your third party technology service provider maintain equipment or employees integral to the delivery of your services to your customers? How do you determine your nexus footprint as a result of your affiliates activities? Better yet, how do the states determine your nexus footprint relative to your affiliate?
How you determine your nexus footprint via your service provider is a matter between the two of you. It is important that you collaborate in this regard. Before entering into any agreement with a third party technology company for the provision of services to your customers, you need to consider requiring contractual obligations of the affiliate in terms of where it has nexus creating activities today and, as important, when and where it expands its nexus footprint prospectively.
All the states have to do is audit a technology service provider to identify their customers from which they received an exemption/resale certificate to get to you. One audit can result in one hundred audits and you may be caught in the net. So ready yourself today so that you aren’t surprised in the future – and more importantly, aren’t left with an audit assessment and compliance responsibility you can’t afford/manage.