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.
Give us a break. Inflation and other spiraling prices have driven states’ lawmakers to consider relief via sales and other taxes.
Florida seems to be leading the way, proposing sales tax holidays and other short- and long-term tax relief on a broad range of products. One of these holidays includes a new seven-day “Skilled Worker Tools Sales Tax Holiday” with tax-free hand and power tools, work boots, safety equipment and other items; and expansion of the state’s Back-to-School Sales Tax Holiday, Freedom Week Sales Tax Holiday on tickets and admissions and Disaster Preparedness Sales Tax Holiday.
Proposed in the same Florida bill are months’-long exemptions on some hurricane-recovery and energy-efficient purchases; one-year exemptions on retail sale of baby and toddler clothing and shoes and the retail sale of children’s diapers; and a three-month exemption on the retail sale of all children’s books.
A Kansas House tax committee has approved legislation that would shrink the overall statewide sales tax on general purchases to 6.3% and nearly halve the state sales tax on groceries, to 3.5%. The legislation wouldn’t alter local city or county sales tax.
Sales tax relief isn’t being proposed everywhere though. Kentucky is considering gradually eliminating its individual income tax in favor of a broader sales tax. South Dakota has rejected a proposal to cut the state sales tax by a half a percent. Michigan lawmakers have shot down proposals that would have exempted diapers and similar products from the state sales tax. A similar bill in Florida died in senate committee.
Alabama lawmakers are moving forward with the “Small Business Relief and Revitalization Act of 2022,” part of which raises the monthly filing requirement for making estimated sales tax payments from $2,500 to $5,000 in average monthly tax liability during the prior calendar year.
Massachusetts has added new lines on returns for taxpayers who collect and pay sales/use tax. Changes were made regarding sales tax for meals, advance payment and telecommunication services.
Missouri lawmakers are continuing work on the state Senate Joint Resolution 33, which provides that voters will decide whether to amend the state constitution to tax digital products. Joint Resolution 33 proposes to allow taxation of “subscriptions, licenses for digital products, and online purchases of tangible personal property.” It still needs approval from the full House.
North Carolina has issued a private letter ruling finding that a B2B online platform where businesses list inventory for sale for other businesses to order and pay was a marketplace facilitator responsible for collecting and remitting tax on sales that took place over its platform.
South Dakota is proposing an exemption from gross receipts tax for sales of “enterprise information technology equipment” and software exceeding $2 million used in South Dakota data centers.
Tennessee has ruled that industry machinery used in quarries where raw materials are mined is exempt from sales and use taxes. To claim the exemption, taxpayers must submit an “Application for Industrial Machinery, Energy Fuels and Water Sales and Use Tax Exemption” form. Conditions apply, and revenue rulings such as these are advisory but not binding.
Virginia’s sales and use tax exemption for retail sales of gold, silver and platinum bullion and legal tender coins that was set to expire this summer has been extended to June 2025. Purchases must exceed $1,000.
Washington’s Department of Revenue’s Administrative Review and Hearings Division issued a determination concluding that a company providing a license to use data center space owes business and occupation tax on profits from the service.
Wisconsin’s Supreme Court has rejected arguments that a half-percent sales tax implemented in Brown County in 2018 is illegal. A local taxpayers’ association filed a suit alleging the tax was illegal because it doesn’t directly reduce the county’s property tax levy as required by state law.
In a private letter ruling in another matter, the state concluded that certain online learning platform services were not subject to sales tax, whereas others were potentially taxable as a bundled transaction. The company in question offered packages to students that allowed them to stream on-demand digital academic courses.
If you think your business may be impacted by sales tax developments or you’re just sick of all the changes and ready to get it off your plate, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more.