Sales and Use Tax Updates from March

By Robert Dumas on Tue, Apr 06, 2021 @ 11:00 AM

There’s always something changing in the world of tax, especially sales tax. And 2021 continues to prove that. Here’s a review of some of the recent changes and updates.

Update hand writing with a blue mark on a transparent boardThe Alaska Remote Seller Sales Tax Commission has approved its “Remote Seller Sales Tax Code & Common Definitions” that would apply to local municipalities in Alaska that choose to adopt it. The code accommodates the individual rates and exemptions of multiple local jurisdictions within Alaska, with single-level, statewide administration. Under the code, remote sellers and marketplace facilitators are required to collect and remit local sales tax, provided that the remote seller or marketplace facilitator has met certain criteria. Municipalities in Alaska, which has no statewide sales tax, have begun banding together to impose tax on remote online sales into their jurisdictions.

Georgia lawmakers have introduced H.B. 594, which would impose the Georgia sales tax on digital goods or services. The bill defines digital goods or services to include specified digital products or software delivered electronically; a digital code that provides a purchaser with a right to obtain digital products (excluding gift cards); and digital products or software for which rights may be permitted for access or use, among others. The bill does not specifically repeal a law that exempts “sales of prewritten software which has been delivered to the purchaser electronically or by means of load and leave.” A specified digital product includes digital audiovisual works, audio works, books, artwork, photographs, periodicals, newspapers, magazines, video greeting cards, audio greeting cards or video games. If passed, this law would become effective on July 1.

Taxation of digital advertising has emerged as a surprise U.S. tax issue this year as other states move to join Maryland in trying to levy taxes on this commercial internet-based activity.

Nebraska has released guidance on the handlings of use tax in the state regarding remitting use tax, exemptions, interest and penalties. Use tax remittances are paid by the purchaser to Nebraska using one of two returns. Businesses with sales tax permits may use Nebraska and Local Sales and Use Tax Return, Form 10 to report use tax. Individuals may report their use tax liability using Nebraska and Local Individual Use Tax Return, Form 3. All transactions with proper payment of sales tax are exempt from use tax. All transactions that are exempt from sales tax are also exempt from use tax. Additional situations are exempt from use tax.

Tennessee finance leaders might have overpredicted COVID’s impact on the state’s revenue: February tax collections were 11% higher than the same month in 2020, just before the pandemic disrupted the economy.  Tennessee Department of Finance and Administration Commissioner Butch Eley said the two largest contributors to the state’s tax base, sales and corporate tax revenues, delivered extraordinary growth for the month of February. Revenues from online sales taxes boosted monthly growth rate with approximately $44.5 million in growth attributed to remote sales and marketplace facilitator laws. Online sales tax revenues have accounted for about 66.4 percent of all sales tax growth to the state.

Texas has issued new guidance for manufacturing exemptions, stating that exemptions for state sales and use tax apply to those who manufacture, fabricate, or process tangible personal property (TPP) for sale. Exempt from Texas sales and use tax: TPP that is an ingredient or component of an item manufactured for sale and/or that makes a chemical or physical change in the manufactured product and is essential in the manufacturing process; and taxable services performed on a manufactured product to make it more marketable.

West Virginia lawmakers have introduced a bill that would assess a 2% “impact fee” on internet sales originating or ending in the state. It would also establish a special fund to help preserve retail storefronts – but other West Virginia businesses that make online or phone sales for delivery in the state claim it would hurt them.

Wisconsin has eliminated its 200-transaction threshold and, as a result, a remote seller is only required to collect and remit sales or use tax if its gross sales into Wisconsin exceed $100,000 in the previous or current calendar year.

If you think your business may be impacted by sales tax developments, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more.

Robert Dumas

Written by Robert Dumas

Accountant, consultant and entrepreneur, Robert Dumas began his public accounting career on the tax staff at Arthur Young & Co., followed by a brief stint at Grant Thornton. In 1998, Robert founded Tax Partners, which became the largest sales tax compliance service bureau in the country, and later sold it to Thomson Corporation. Robert founded TaxConnex in 2006 on the principle that the sales tax industry needed more than automation to truly help clients, thus building within TaxConnex a proprietary platform and network of sales tax experts to truly take sales tax off client’s plates.