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 that occurred over the last month.
Colorado lawmakers have adopted SB21-282, which extends the exception to destination sourcing requirements; the exception applies only to businesses with less than $100,000 in retail sales. As of Feb. 1, 2022, though, all retailers must apply the destination sourcing rules when calculating, collecting and remitting state sales tax.
Illinois lawmakers have passed S.B. 2066, which creates an exemption and retroactive credit for marketplace sellers for transactions in 2020 where tax was paid by the marketplace seller and the marketplace facilitator. Marketplace sellers that properly remitted tax can file a claim for credit.
The Illinois Department of Revenue has updated its FAQs for marketplace facilitators, marketplace sellers and remote sellers, revised its “Leveling the Playing Field Retailer Flowchart” and published the “What’s New in 2021 for Remote Retailers and Marketplace Facilitators PowerPoint Presentation.”
Louisiana lawmakers have recently passed H.B 199, which would establish a centralized sales tax commission. Right now the state allows parishes to independently collect their own sales and use taxes from in-state businesses while the Louisiana Remote Sellers Commission collects for out-of-state sellers. Voters cast ballots on the matter on Oct. 9.
The state’s HB 514, which would indefinitely extend a 0.45 percent sales tax created three years ago to address a budget crisis, has been sent to the governor for executive approval. The money collected would go toward infrastructure.
Maryland is offering a vendor credit of up to $3,000 on sales tax returns for the months of March, April and May 2021. The credit is equal to the sales tax collected during each of the three months, up to $3,000 per month. Businesses can take the credit on returns for any of the three months if sales tax due on the monthly return does not exceed $6,000; the business does not take the standard vendor’s discount on the return; the return is timely filed through the state’s bFile system; and the sales tax used to calculate the credit was not collected by a marketplace facilitator.
The Maryland Comptroller has issued a revised version of Business Tax Tip #29, which clarifies the Comptroller’s interpretation of its sales and use tax on “digital products,” including software. The revision explains the Comptroller’s interpretation and application of the expanded exemption for certain software offerings; e-services; advertising agencies’ services and creation of tangible personal property and digital products; and continuing education classes, seminars, or conferences.
New Mexico will require that some businesses convert to destination-based sourcing for reporting gross receipts taxes, effective July 1. Previously, New Mexico was an origin-based sourcing state. This change will also require out-of-state businesses to collect the GRT local option taxes in addition to the state rate.
New York has issued an advisory opinion in which it concluded that the primary purpose of a marketing-consulting service was a nontaxable service, even though the taxpayer’s customers had access to software. In concluding that the taxpayer’s service was a nontaxable service, rather than the provision of a taxable information service or the taxable sale of pre-written computer software, the Department looked to the primary function of the service (creation and development of advertising campaigns).
North Carolina revenue collections for the year ending June 30 will be $1.9 billion more than once anticipated. The current-year forecast reported that corporate income and franchise taxes will be 78% higher compared to what was collected last year, with sales taxes up 16%.
Tennessee now has two more sales tax holidays in 2021, in addition to the traditional sales tax holiday on clothing, school supplies and computers. The state will also hold its first sales tax holiday on gun safes and safety equipment; that holiday runs this July 1 through June 30, 2022.
Texas reports that state sales tax revenue totaled $3.4 billion in May, the highest-ever monthly total and 30.1% more than in May 2020.
Gov. Greg Abbott has also signed S.B. 153, which excludes from the tax on data processing certain payment processing services, such as (i) “services exclusively to encrypt electronic payment information for acceptance onto a payment card network”, or (ii) settling an electronic payment transaction by a downstream payment processor, a point of sale payment processor, a taxpayer in the business of money transmission, a federally insured financial institution and a payment card network.
Washington, citing budget constraints, will significantly cut down on the number of mailed paper notices of sales and use tax changes. Businesses are urged to sign up for the state’s notification service to get future notices.
If you think your business may be impacted by sales tax developments or you’re having trouble keeping up and would rather have someone to do it for you, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department.