There’s always something changing or new going on in the world of tax, especially sales tax. Here’s a review of some of the changes and updates in the last few months.
Nationwide, the Streamlined Sales Tax Governing Board has made amendments to the Streamlined Sales and Use Tax (SST) Agreement to revise its amnesty-related provisions. A member state now must provide amnesty for uncollected or unpaid sales or use tax to a seller (who registers through the SST registration system for the state in which amnesty is sought) if the seller pays or collects and remits the applicable tax according with the terms of the SST Agreement.
Alaska’s sales tax collected from online sales into Alaska (in certain local jurisdictions) have helped remote communities balance lost local taxes, news reports say. Alaska still has no state-wide sales tax, but the state’s local jurisdictions have formed the Alaska Remote Seller Sales Tax Commission for a streamlined administration of sales tax collection and remittance. It’s reported to bring about $9 million in revenue annually.
The Illinois Department of Revenue issued a general information letter discussing the sales and use taxability of web-based service. The case in point brought out how a transaction in which a provider doesn’t transfer tangible personal property to a customer generally would not be subject to retailers’ occupation tax, use tax, service occupation tax or service use tax. But if a provider transfers to the customer an API, applet, desktop agent or a remote access agent to enable the customer to access the provider’s network and services, the subscriber is receiving computer software that is subject to tax.
Also in Illinois – January 1, 2021 was the beginning of the “Leveling the Playing Field for Illinois Retail Act” in which remote sellers (those that have established economic nexus within the state of Illinois) and marketplace facilitators are required to also submit State and Local retailer’s occupation tax as well.
Massachusetts has extended relief for companies with staff working remotely in the staff due to the pandemic. These employees will not trigger nexus for sales and use tax purposes – a real worry for online companies during work-from-restrictions.
Michigan is waving penalty and interest for the late reporting or late payment of sales, use and withholding tax for any non-accelerated return or payment due on Jan. 20, 2021, for in-state companies affected by the state’s pandemic measure. The waiver will be effective until Feb 22. The waiver does not apply to any accelerated return or payment of sales and use tax that may be due on Jan. 20 and not to any withholding required to be paid on an accelerated schedule.
South Carolina has extended through June 30, 2021, relief that it previously announced regarding the establishment of income and sales tax nexus solely because an employee is temporarily working in a different work location due to COVID-19. In an unrelated matter, a judge has held that Amazon Services owes uncollected taxes, penalties and interest on third-party sales made through the facilitator in the state for pre-Wayfair tax periods at issue. The assessment covered Q1 of 2016 only.
The Texas Comptroller has posted FAQs on its website regarding post-Wayfair obligations for remote sellers, marketplace sellers and marketplace providers. Among topics: a marketplace provider is subject to audit for all transactions on the marketplace; marketplace providers are not required to use a special form or language to notify marketplace sellers that the provider is collecting and remitting tax for Texas; the state’s single local use tax rate is not available to marketplace providers; and all sellers must keep required records for at least four years.
Especially in this economic climate, the continual updates associated with sales tax can be a lot to keep track of, especially if relying on an internal team whose main function is not sales tax compliance. 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.