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.
Colorado will begin imposing a 27-cent fee on every retail delivery made by motor vehicle to a destination in the state, beginning July 1. The fee will apply when at least one item is subject to sales or use tax and the delivery is mailed, shipped or delivered by motor vehicle. Wholesale sales or sales of exempt goods are not subject to the fee. The seller is responsible for collecting and remitting the retail delivery fee even when delivery is made by a third party and the retail delivery fee must be separately stated on the customer’s invoice.
Georgia has amended the exemption from sales and use tax on the sale or lease of computer equipment to be used by qualifying Georgia high-tech companies. The legislation extends the sunset date for this exemption to Dec. 31, 2028. Taxable purchases and leases of equipment must be at least $15 million for any calendar year, with additional conditions effective Jan. 1, 2024. The bill also extends the sunset date of the sales tax exemption for the purchase of high-technology data center equipment to Dec. 31, 2031.
Illinois requires retailers to notify customers of the suspension of the state 1% rate of sales and use tax on retail sales of groceries, effective July 1 through June 30, 2023. For retailers that can’t include the required statement on their cash register tape, receipt invoice or sales ticket to customers, a clearly visible sign must be posted. The Department is providing a printable image of the sign.
The state made permanent the sales and use tax exemption for tangible personal property sold to or used by a hospital owner that owns one or more hospitals licensed under the Hospital Licensing Act or operated under the University of Illinois Hospital Act, or a hospital affiliate that is not already exempt and meets the criteria for an exemption.
The state extended its sales and use tax exemption for coal and aggregate exploration, mining, off-highway hauling, processing, maintenance and reclamation equipment to July 1, 2028.
Finally, retailers who make a sale of building materials that will be incorporated into real estate in a qualified facility for which an Illinois certificate of exemption has been issued may deduct receipts from such sales when calculating state or local use and occupation taxes, with some conditions.
Indiana modified its Sales Tax Bulletin No. 89 to reflect recent clarification that a marketplace facilitator must collect sales tax for each retail transaction it facilitates regardless as to whether it has a contractual relationship with the seller as long as the marketplace satisfies one of the following: collects the price of the seller’s products; provides access to payment processing services; or charges, collects, or receives fees or other consideration from the purchaser for transactions made on the marketplace.
Kansas retail sales tax collections in May were $240.8 million – $13.8 million, or 6.1%, over the estimate and 5.7% over May 2021 sales tax receipts, the governor said.
Maryland has altered the definition of “digital product” to clarify that digital goods do not include: products having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities where the purchaser has a copyright or similar interest in the product and the product is used solely for commercial purposes; and software, including SaaS purchased or licensed solely for commercial purposes in an enterprise computer system, including operating programs or application software for the exclusive use of the enterprise software system, that is housed or maintained by the purchaser or on a cloud server. This definition becomes effective July 1.
Mississippi withdrew a proposed regulation which sought to expand the state’s sales tax to apply to cloud computing. There may still be changes to Mississippi’s sales tax on software, as the Governor has greenlighted studying the state’s taxation of remote and internet-based computer software products and services.
Ohio revised its sales and use tax rule to add certain exempt construction contractor purchases. A construction contractor may purchase exempt materials and services incorporated into an exempt computer data center; a building under a construction contract with an organization exempt under 401(c)(3) of the Internal Revenue Code; and materials and services sold for incorporation into real property comprising a convention center qualifying for property tax exemption.
Oklahoma amended its definition of “marketplace facilitator” to include a person that facilitates not only retail sales of tangible personal property but all retail sales. The new law also provides that the marketplace facilitator’s tax collection obligation applies to any other taxes administered by the Oklahoma Tax Commission, which are levied by a local jurisdiction on the retail sale of a product. The changes become effective Jan. 1 next year.
Pennsylvania is changing how taxpayers e-file sales and use and excise returns, make payments and renew licenses, among other services. The current online resource used for sales tax filing (e-TIDES) will be retired this November and the state will move sales tax services to the online system currently used for most other tax types, myPATH. The online portal for the Department of Revenue is currently used for individual income tax and business registrations and the state will provide further instructions for how this will change sales tax filing and other taxpayer services when the transition occurs.
Texas sales tax revenue for the three months ending May 2022 was up 15.7% compared to the same period a year ago. Sales tax is the largest source of state funding for the state budget, accounting for 59% of all tax collections.
The Texas Comptroller has issued a publication discussing applicability of sales tax to data processing services listing taxable and nontaxable services.
Utah has released and updated a publication regarding the sales taxation of tangible personal property attached to real property, as well as guidelines on who must collect and pay the sales tax on those sales.
Washington released a notice providing that effective in June that qualifying businesses and tenants may apply for a sales and use tax exemption for purchases of server equipment and infrastructure for computer data centers in urban areas. Eligible urban areas are those counties with populations greater than 800,000; data centers must have at least 20,000 square feet dedicated to working servers. In the first calendar year, the Department will review applications on a first-come first-served basis and approve only six applications.
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.