There’s always something changing in the world of tax, especially sales tax. Here’s a review of some of the recent changes and updates.
Blue bayou: Sales tax won’t be getting simpler in Louisiana any time soon.
Voters have defeated an amendment that would have authorized a new commission to work on simplified electronic filing and remittance for all the state’s many sales and use taxes (each parish currently can have their own rules and tax rates).
The vote was quickly followed by a lawsuit from Arizona-based Halstead Bead, an online seller of jewelry-making supplies, challenging what news reports called Louisiana’s “patchwork approach” to collecting sales taxes. The suit reportedly claims that the state’s parish-by-parish sales tax filing system is a “compliance nightmare” with Halstead Bead asking the court to declare it an unconstitutional burden on interstate commerce. Reports added that Halstead Bead is represented by “several small-government, right-leaning groups.”
Colorado voters in the city of Littleton have passed a 0.75% hike in the city's sales tax, the first increase in the tax in nearly half a century.
Illinois reported that its sales tax revenue was up 17% from January to September this year compared to the same period before the pandemic in 2019. Online retailers now must charge the sales tax rate collected where the shopper lives, reports said, including full local rates and the local taxes that cities and counties impose on brick-and-mortar retailers. Before this year, online retailers only had to charge the 6.25% state sales tax.
Iowa has issued updated guidance regarding the taxation of specified digital products, software and related services. The guidance provides that web hosting is not a taxable service, explaining that, as opposed to web-based storage, web hosting “is focused on the publication of the data and not its mere storage.”
Kansas has issued guidance providing that while a remote seller is not required to collect tax on its first $100,000 in sales for purposes of determining when economic nexus first begins, remote sellers should advise purchasers they have a use tax obligation if no tax is collected on the sale. Once the $100,000 threshold is passed, remote sellers must begin collecting and remitting sales tax on any further sales to Kansas customers. In addition, for purposes of determining when a remote seller passes the $100,000 threshold, all sales made by the remote seller to Kansas customers count toward the threshold, regardless of whether the item purchased is taxable.
In other news, Kansas AG Derek Schmidt, a Republican, told an assembly of GOP lawmakers that the state should cut its sales tax on food in response to inflation in grocery stories. News outlets said that Schmidt’s likely opponent in next year’s gubernatorial race, Democratic Gov. Laura Kelly, has also called for the cut. Kansas reportedly has one of the highest sales taxes on food in the country.
Ohio has issued an FAQ addressing the gross receipts calculation regarding remote sellers’ registration and tax remittance requirements. The FAQ reminds taxpayers that for purposes of calculating the $100,000 economic nexus threshold, gross receipts only include receipts from retail sales. The FAQ does not address whether sales for resale count toward the 200-transaction threshold.
Texas sales tax revenue totaled $3.56 billion in November, up 19.4% from November 2020 and 11.8% better than pre-pandemic November 2019. Growth in spending at online merchandisers slowed in comparison to other sectors but still achieved growth year-over-year. Total sales tax revenue for the three months ending in November was up 22.2% compared with the same period a year ago and 15.7% compared with 2019. Sales tax is the largest source of state funding for the Texas budget, accounting for 59% of all tax collections.
If you think your business may be impacted by sales tax developments or can’t seem to keep track of all the updates on your own, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more.