TaxConnex Sales Tax Blog

Ask a Sales Tax Pro Q&A

Posted by Brian Greer on Thu, Mar 23, 2017 @ 10:30 AM

A colleague of mine and I were recently discussing that there are some common sales tax questions we receive just about every day.  We’ve outlined some of them below:

Q&A.jpg


Does an internet e-tailer need to collect sales tax? 

Yes, provided the e-tailer has sales tax nexus in the destination state where the product is being shipped.

What creates sales tax nexus for an e-tailer? 

Besides the traditional office and employees, many e-tailers have inventory in warehouses in various states.  Owning inventory is a sales tax nexus creating activity.  Also, some e-tailers have affiliate programs where a business will refer a potential buyer to an e-tailer via a link.  The e-tailer then pays a commission to the business if the buyer makes a purchase.  This is common with bloggers that review a product and then provide a link to the e-tailer’s site.  Multiple state have passed “Amazon Laws” directed at this type of activity which can be a nexus creating activity in some states.

 

Do I need to register with the Secretary of State in addition to the Department of Revenue?

  The requirement to register with the Secretary of State (SOS) should be determined by a company’s legal staff, outside counsel, or a firm specializing in Secretary of State compliance.  TaxConnex frequently manages the sales tax registration process with the Departments of Revenue (DOR).  Historically, when the sales tax application was paper based, very seldom was a SOS registration required to successfully complete the sales tax registration.  (There could have still been the need to register with the SOS – it just wasn’t a requirement to receive a sales tax ID via the DOR.)  More recently, with the proliferation of e-file sites, most states require a SOS registration before they will process a sales tax registration.

 

If I provide telecommunications services, where should I collect the applicable taxes? 

The telecommunications industry is one of the most highly taxed industries.  The question is generally coming from someone who is new to the industry and is offering a VoIP service.  There are a couple of items to highlight to address this question: 

(1) First, nexus should be determined.  Interestingly, within the telecommunications industry, nexus for transactions tax purposes (sales tax, communications services tax, etc.) is applied based on where the service provider has customers.  This is different than traditional sales tax nexus.  The overall concept is that the telecommunications service provider is taking advantage of infrastructure within the state – switches, routers, towers, etc.  Notwithstanding the fact that the provider doesn’t own the infrastructure it is still critical in helping the provider establish and serve a market.  As a result, telecommunications service providers will have nexus wherever they have customers. 

(2) The second part of the question is focused on where tax should be applied (technically referred to as the point of situs).  The easy answer related to the collection of taxes on telecommunications services is that tax should be charged based on the “benefit of service” which is where the user is located – not necessarily where the bill-to is.  The concept is easy but the execution can be challenging as a provider could have the same customer with users in many different states – and thus taxes due in many different states.  Sometimes, a provider will not know where every user is located and the bill-to is used as a default.

 

Stay tuned for additional Q+A in the future.  And check out Ask a Sales Tax Pro on our website for more.

Topics: sales tax

EYE ON Montana Sales Taxes

Posted by Jeff Meigs on Tue, Mar 14, 2017 @ 10:30 AM

eye on montana.pngGenerally, the state of Montana does not impose sales and use tax on purchases of tangible personal property. 

However, effective 2003 Montana legislated a transaction tax on lodging/accommodations, vehicle rentals and telecommunications services.

montana.jpg

The rate of tax imposed on these services is as follows:

  • Lodging/accommodations – 3%
  • Vehicle rentals – 4%
  • Telecommunications (Excise Tax) – 3.75%

Some local jurisdictions impose resort taxes on sales of tangible personal property and services (including restaurant sales and lodgings).  

Since publishing this blog series, we have seen three states that don’t impose a traditional sales or use tax (Alaska, Delaware and now Montana).  Since the EYE ON blogs are delivered in alphabetical order, there remain two additional states that we will review later that don’t have a traditional sales or use tax. 

Stay tuned for more of Jeff's EYE ON series as he blogs aboout sales and use tax State by State.

Topics: sales tax

Have You Paid Your Sales Tax Premium?

Posted by Robert Dumas on Thu, Mar 09, 2017 @ 10:30 AM

Over the years, I have come to respect the uniqueness of our business and how we help companies comply with the myriad sales tax laws.   Like most government mandated activities, businesses get absolutely no “value add” by completing forms, submitting information and remitting taxes and fees to government agencies.  I have never heard of a business growing revenue or creating efficiency by complying with government red tape.  

Because of this, TaxConnex is in the business of helping companies comply while minimizing the risk of non-compliance.   

Sometimes I feel like our service is like insurance.  That is…no one values the premium payment until the insurance pays a claim.   Similarly, no one appreciates the monthly sales tax compliance costs until there is a notice or assessment from a jurisdiction. 

We don’t make the rules, but we do our best to help businesses comply with them with the least amount of risk and cost. 

I can’t promise you more revenue, but I can promise you a more secure business that does not have the financial risk of an uncertain government liability.

 Are you Covered? written on the road.jpeg


A few things to remember:

The more States in which you do business, the more government rules and regulations that apply. Make sure you know which rules and regulations apply to your business.

 

  • If you plan to sell your business, you should expect to demonstrate a few years of compliance with the rules. Anyone interested in buying you will want to avoid uncertain government liabilities.

  • Sales tax compliance should not be an after-thought in your business. It’s an important business process and when managed properly will minimize risk.  However, if it is managed improperly or not managed at all, the risk will eventually catch up with you.

 

Like insurance, expect to pay your premiums in order to get peace of mind that sales tax is managed properly.

 

5 Steps to Sales Tax Compliance

Topics: sales tax compliance

2017 State Sales Tax Holidays

Posted by Noelle Ard on Thu, Mar 02, 2017 @ 02:00 PM

It’s hard to believe that Spring has sprung…at least down in the South it has.  With the comingDetail view of Spring Daffodils.jpeg of spring and daylight savings time on the horizon, many people find themselves starting that to do list and preparing budgets for home improvements, summer vacations, back to school, and more.

 

Below is a list of recently announced 2017 State Sales Tax Holidays taken from the FTA website:  http://www.taxadmin.org/sales-tax-holidays - check your state out to see how sales tax savings can benefit you!

 

State

 

Days

 

Items Included

 

Maximum Cost

 

2017
Dates

 

Information Links *

Alabama

3

hurricane preparedness
generators - $1,000
supplies - $60

February 24-26

http://www.revenue.alabama.gov/

Alabama

3

clothing - $100
computers - $750 
school supplies - $50 
books - $30

August 4-6

http://www.revenue.alabama.gov/

Arkansas

2

clothing - $100
school supplies

August 5-6

http://www.dfa.arkansas.gov/

Connecticut

7

clothing and footwear - $100

August 20-26

http://www.ct.gov/drs/

Iowa

2

clothing - $100

August 4-5

https://tax.iowa.gov/

Louisiana

2

all TPP - $2,500
(2% rate reduction)

August 4-5

http://www.revenue.louisiana.gov/

Louisiana

3

firearms, ammunition and hunting supplies
(2% rate reduction)

September 1-3

http://www.revenue.louisiana.gov/

Maryland

3

energy star products

February 18-20

http://www.comp.state.md.us/

Maryland

7

clothing & footwear-$100

August 13-19

http://www.marylandtaxes.com/

Mississippi

2

clothing & footwear - $100

July 28-29

http://www.dor.ms.gov/

Mississippi

3

firearms, ammunition and hunting supplies

August 25-27

http://www.dor.ms.gov/

Missouri

7

energy star products - $1,500

April 19-25

http://dor.mo.gov/

Missouri

3

clothing - $100
computers - $1,500
school supplies - $50

August 4-6

http://dor.mo.gov/

New Mexico

3

clothing - $100
computers - $1,000
computer equip. - $500
school supplies - $30

August 4-6

http://www.tax.newmexico.gov

South Carolina

3

clothing
school supplies
computers
other

August 4-6

http://www.sctax.org/

Tennessee

3

clothing - $100 
school supplies - $100
computers - $1,500

July 28-30

http://tn.gov/revenue/

Texas

3

generators - $3,000
storm devices - $300
preparedness items - $75

April 22-24

http://comptroller.texas.gov

Texas

3

energy star products 
air conditioners - $6,000; other - $2,000

May 27-29

http://comptroller.texas.gov/

Texas

3

clothing, backpacks and school supplies- $100

August 11-13

http://comptroller.texas.gov/

Topics: sales tax holidays

EYE ON Missouri Sales Taxes

Posted by Jeff Meigs on Wed, Feb 22, 2017 @ 10:30 AM

eye on missouri.pngThe Missouri sales and use tax is imposed on taxable retail sales of tangible personal property and certain services.  The statewide general tax rate is 4.225%. 

Cities and counties are authorized to impose sales and use taxes for various purposes. These local sales and use taxes are generally imposed in the same manner, on the same subject, and collected in the same way as the state sales and use tax. 

However, in many jurisdictions, the local use tax rate is less than the local sales tax rate.  This is unusual in the world of sales and use tax – in almost all states and local jurisdictions throughout the country, the sales tax rate is the same as the use tax rate.  The average local sales and use tax rate in Missouri is 3.66%. 

Missouri also has special taxing districts as follows:

  • Transportation development district sales tax;
  • County Transit Authority sales tax;
  • Museum district sales tax;
  • Fire protection district sales tax;
  • Theater, cultural arts, and entertainment district sales tax; and
  • Branson/Lakes tourism community enhancement district sales tax.

There are special/lower local rates on food and sales of qualified machinery and equipment used in manufacturing, while food and manufacturing purchases are entirely exempt from the state sales and use tax.  Further, there is no state or local USE tax imposed on qualified manufacturing machinery and equipment. 

Contrary to logic, Missouri requires that a paper sales and use tax paperwork piles.jpgreturn be filed when there are more than 150 local jurisdictions to report – there is no electronic upload option.  A paper return for a taxpayer with customers throughout the state can be as many as 50 pages.  An e-file option is available to those taxpayers with less than 150 local jurisdictions to report. 

Somewhat unique to Missouri is that sales and use tax are reported on different returns.  Sales tax is reported on form 53-1, vendor’s use tax on form 53-V and consumer’s use tax on form 53-C. 

With a combined average sales tax rate of 7.885%, Missouri is an average state from a sales and use tax burden perspective. However, compliance with Missouri’s local tax rates and filing requirements are a bit more taxing than most states. 

 Stay tuned for more of Jeff's EYE ON series as he blogs aboout sales and use tax State by State.

 

Topics: sales tax, Missouri

TaxConnex Honored at Bulldog 100 Dinner

Posted by Kate Bennett on Wed, Feb 08, 2017 @ 10:30 AM

TaxConnex was recognized as the No. 100 fastest-growing business owned or operated by a University of Georgia graduate during the 2017 Bulldog 100 Celebration February 4 at the Atlanta Marriott Marquis in downtown Atlanta.

 Bulldog 100 photo.jpg

TaxConnex founding Partner and UGA graduate Robert Dumas (BBA '84) center, with Partners Jeff Meigs and Brian Greer.

 

TaxConnex, “your outsourced sales tax department", 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 VoIP tax service to businesses of all sizes with a focus on technology companies, small and mid-sized businesses, and VoIP providers.

 

The Bulldog 100, coordinated by the UGA Alumni Association, recognizes the 100 fastest-growing businesses owned or operated by UGA graduates.

2017 Bulldog 100 Class Photo.jpg

To recognize the 100 businesses and the 131 alumni who lead them, the UGA Alumni Association hosted the 2017 Bulldog 100 Celebration February 4 in Atlanta. The evening began with an exclusive reception for honorees hosted by FirstData, a global leader in commerce-enabling technology and solutions. This year’s keynote speaker was Debbie Storey, retired Executive Vice President of AT&T Mobility Customer Service and author of the book Don’t Downsize Your Dreams. Storey spoke about the importance of strong vision, adaptability and creative thinking in an ever-changing economic and technological landscape.

 

“The UGA Alumni Association is excited to honor our graduates who are founding and leading these prosperous enterprises,” Ruth Bartlett, president of the UGA Alumni Association board, said. “It is inspiring to see the influence these businesses have on our students. Student participation in Bulldog 100 allows our scholars a unique opportunity to network with these accomplished business leaders, and also to observe the best examples of success from people who once were where they are now.”

 

To view the complete list of 2017 Bulldog 100 businesses, photos from the event or nominate a business for the 2018 Bulldog 100, see www.alumni.uga.edu/b100.

 

Topics: Robert Dumas, Bulldog 100, University of Georgia

Super-Bowl Favorite Sees 20% Increase…

Posted by Noelle Ard on Thu, Feb 02, 2017 @ 10:30 AM

RISE UP ATLANTA FANS – Super-Bowl Sunday is just three short days away!  While I’ve been falcons.pngstudying up on Matt Ryan, Julio Jones, and the rest of the Falcons team, I’ve also been planning my Super-Bowl Sunday Snacks and I love some chips, salsa, and home-made guacamole.

 

Late last week, I heard some ramblings about our new administration and the fact that Mexican imports could soon be imposed with a 20% tax.   A 20% tax…wow that is steep.  A ripe green avocado which normally sells for around $1.50 could graze the $2.00 per piece rate because the best avocados are imported from Mexico.  How could this possibly be?  What did the helpless avocado do to us? 

 

Here’s the skinny:  White House Press Secretary, Sean Spicer announced last week that one of Trump’s ideas to fund the border wall is a 20% tax on Mexican imports.  The additional tax would raise $10 billion a year (which would easily pay for a border wall, which has an estimated cost of $8 - $20 Billion) – not to get political, but, I know that I wasn’t supposed to have to pay for that wall…but by taxing my favorite Mexican produce, it appears I am going to be paying for that wall. Hmm…. 

 

I wanted to do some more research and really get to the bottom of this.  Did you know that the US Department of Agriculture has indicated each year since 2013 that Mexico is responsible for almost 70% of our imported fruit and produce?  So while the proposed 20% tax would be assessed on the importer of such goods, you can rest assured that the impact will be passed down to the consumer. 

 

This means that fruits, and produce will increase in stores, as well as in restaurants, and then restaurant prices will increase to include the additional tax.  So while the avocado, in recent years, has shot to the spotlight of healthy produce, American’s may soon have a new reason to pass on the guacamole or avocado spring rolls with this new tax.  In addition to fresh fruits and produce, Mexico is also responsible for the following imports where American consumers would see a stiff increase:  Tomatoes, Beer, Tequila, and Sugar. 

 

How will Mexico react?  Word on the street is that just as our legislation is discussing this 20% increase in tax, Mexico could easily impose similar or more expensive tax tariffs on imports from the U.S.

 

So while you enjoy your Super-Bowl Sunday snacks, think about how your diet would be impacted by a 20% tax?  Will this tempt you to try your hand at gardening and growing your own fresh fruit and produce? Or do you see the potential impact as small enough that it isn’t worth all the hoopla?  Regardless, we at TaxConnex wish you an exciting and yummy Super-Bowl and have (with the help of Bobby Flay) included a recipe below for our favorite snack-time spicy guacamole!  http://www.cookingchanneltv.com/recipes/bobby-flay/spicy-guacamole.html

 

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Topics: sales tax

Arizona – Transaction Privilege Tax Simplification is HERE!

Posted by Noelle Ard on Thu, Jan 26, 2017 @ 10:30 AM

The long awaited day has finally come, the day in which all Sales & Use tax compliance addicts rejoice as Arizona finally rolls out the TPT Simplification.  That’s right folks, after a couple of false starts in recent years, TPT Simplification is LIVE on the Arizona website and I’m going to tell you all you need to know to quickly make the transition.

aztaxes.png

First things first – are you a new user?  If so, you will need to complete the New User Enrollment located at https://www.aztaxes.gov/Home.  Want to have some step by step help?  Check out the step-by-step tutorial by Arizona located here: https://www.azdor.gov/tutorials/enrollmentstart.html.  Arizona has done a fantastic job providing documentation and step by step tutorials for all aspects of this launch.

Need to file a TPT return?  Check out the step by step instructions and tutorial located here:  https://www.azdor.gov/tutorials/filingstart.html.  Not seeing your local level accounts or need some additional assistance with troubleshooting?  Check out this page and if you don’t see the tutorial you are looking for and you can browse on additional resources:  https://www.azdor.gov/tutorials/index.html.  If you choose additional resources, you will be provided with links to the AZ DOR website, the AZ DOR Education Website, and the AZ DOR YouTube Channel.

In addition to the tutorials listed above, the AZ DOR has a webpage designed specifically for TPT tax where you can find additional guidance, resources, and subscription opportunities.  To find this page, navigate to:  https://www.azdor.gov/TransactionPrivilegeTax(TPT).aspx

Here is a snippet from the page that provides insight into the information that you can find and the guidance available:

The State of Arizona and its Cities and Towns (Cities) continue to work together to achieve the goal of simplifying the manner in which taxpayers report and pay their Transaction Privilege Tax (TPT) through the centralization of licensing and reporting of TPT liabilities for all Cities with the Arizona Department of Revenue. 

  • The Arizona Department of Revenue (ADOR) is the central licensing and reporting for Transaction Privilege Tax (TPT), as required by law, effective January 1, 2017.
  • ADOR strongly encourages all businesses to register and file their transaction privilege taxes using AZTaxes.gov.
  • All businesses must file by location number on the city detail section of your return. The location number can be found on your TPT License. Taxpayers registered in AZTaxes may access their location list online.
  • State law requires businesses with more than one physical location in Arizona to file tax returns electronically via AZTaxes.gov (see A.R.S. § 42-5014.H.
  • ADOR no longer accepts the TPT-1 form for reporting periods beginning on or after June 1, 2016. Two new forms are available to accommodate location-based reporting for filing periods beginning on or after June 1, 2016. The TPT-EZ is a simplified tax form for businesses with one location or jurisdiction. The TPT-2 replaces the outdated TPT-1 for use by multi-location or multi-jurisdiction businesses. 
  • ADOR staff is available weekdays between 8 a.m. and 5 p.m. (M.S.T.) if you have questions or need assistance on using AZTaxes.gov, contact us toll-free at 1(844) 698-9176 or by email at AskTPT@azdor.gov.

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Topics: transaction privilage tax

The Rapidly Changing Landscape of Sales & Use Tax

Posted by Kate Bennett on Fri, Jan 20, 2017 @ 11:39 AM

Like self-driving cars, some things are best not 100% automated - sales and use tax is one of those things. 

In OPPORTUNITY IN COMPLEXITY, THE RAPIDLY CHANGING LANDSCAPE OF SALES & USE TAX, as seen in the latest supplement from Accounting Today, TaxConnex’s Managing Partner, Robert Dumas explains the importance of working with an experienced Sales Tax Outsourcing Service Provider, with a breadth of knowledge of sales and use tax accounting, and not solely a sales tax technology solution.

Robert Dumas AT.png

At TaxConnex we focus on providing service. Whether that be through our sales tax outsourcing practice or our consulting practice where we assist with sales tax nexus reviews, audits, VDA’s, and taxability reviews. Service is key – understanding clients’ issues, developing solutions, following through on our commitments, being responsive to questions and requests – all are critical. Technology complements the great service, but never replaces it.

 

Click below to read entire article in Accounting Today  

OPPORTUNITY IN COMPLEXITY

THE RAPIDLY CHANGING LANDSCAPE OF SALES & USE TAX


 

Topics: sales tax outsourcing

Sales Tax Returns Are Not Commodities

Posted by Brian Greer on Wed, Jan 18, 2017 @ 10:30 AM

I’m not sure when a sales tax return turned into a widget.  It seems that in the almost 17 years I’ve been in the sales tax compliance outsourcing business, sales tax returns have been treated like a commodity with contracts awarded all too often to the lowest cost provider.  My income tax brethren may feel the same way about the commoditizing of income tax returns.

 


I was reminded of this fact recently when a long standing customer asked me to reduce our fees in order to keep their business. 
Granted this is a client that we’ve successfully served for seven years who was outsourced to a low cost competitor prior to switching to TaxConnex seven years ago. The low cost competitor missed various filings, overpaid some jurisdictions, failed to take credits where applicable, and overall provided a poor level of service.  However, the current decision makers were not at this business seven years ago and did not feel the pain of poor service. 
commodity.jpg
They see a sales tax return and believe it’s a commodity and the lowest cost provider should get the work.

 

 


 

Commodity buyers gravitate to return prep providers.  Return prep providers do just that and only that – and sometimes they fail at that task.  Decision making is pushed back to the customer, risk is pushed back to the customer, flexibility is not allowed, and be ready for frequent turnover with the primary point of contact.

 

Contrarily, I believe that sales tax returns are not commodities.  I believe there’s a level of skill involved in preparing the returns.  I believe a reliable, consistent, and available point of contact is important.  I believe answering questions thoroughly and timely means something.  I believe providing sales tax guidance and expertise as part of the compliance service is important.

If you are currently outsourced to a return prep provider or are evaluating return prep providers, let’s talk.  There really is a better way.

The TaxConnex Difference

 

Topics: sales tax, sales tax outsourcing