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.
Florida sales tax exemptions on hurricane-preparedness items may soon encompass purchases of pet food, thanks to the lobbying of a local Girl Scout troop.
Alabama has become the second state this year to expand its sales tax exemption involving gold and silver. The exemption, covering all common forms of bullion, now runs until 2028.
Connecticut has ruled that online learning plans were not taxable digital goods. The platform of the company in the ruling is accessed from computers or via the company’s mobile device application. Because the service consists of both taxable digital goods and enumerated taxable services, the state applied the “true object test” to determine taxability of the service. In this case, the “true object” of the transaction is the education or training.
Maryland held that a for-profit company’s purchases for non-profit hospitals were subject to the state’s sales and use tax because there was no agency relationship between the company and the hospitals and, even if an agency relationship existed, that alone would not entitle the for-profit company to an exemption.
Mississippi has green lighted its Taxation of Remote and Internet-based Computer Software Products and Services Study Committee, which will examine taxation of remote and internet-based computer software products and services in the state.
Also, the Mississippi Supreme Court issued an order granting review of a trial court determination that sales of digital photographs are not subject to sales tax. The trial court struck down an assessment against a wedding photographer, concluding that taxable “tangible personal property” did not include digital photographs and photography is not an enumerated taxable service.
New York has held that a limited liability company was entitled to a refund of sales tax paid on the purchase of a one-half interest in a Picasso painting because the taxpayer leased its share of the painting on the same day the painting was purchased and that it was purchased “for one and only one purpose: resale.”
Virginia has enacted H.B. 1155, which expands the sales tax exemption for amplification, transmission and distribution equipment to now include “network equipment” used to provide internet service. The expanded exemption defines a “network” to include modems, fiber optic cables, coaxial cables, radio equipment, routing equipment, switching equipment, a cable modem termination system, associated software, transmitters, power equipment, storage devices, servers, multiplexers, and antennas used to provide internet service. This exemption is available to telephone common carriers whose networks are also used to provide services other than internet. The exemption becomes effective July 1.
Washington Department of Revenue’s Administrative Review and Hearings Division released decision number 41 WTD 118 (originally issued June 4, 2020), concluding that a company providing online account access services to credit unions was providing taxable digital automated services (DAS). The decision explained that each of the services was a component of a larger integrated service that constituted a taxable DAS.
If you think your business may be impacted by sales tax developments or are just sick of trying to keep up with all the on-going changes, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more.