The emergence of ecommerce has compelled states to invent new ways to find their lost sales tax revenue. One novel solution states are implementing is identifying individual purchasers of goods who have not paid sales or use tax. This strategy forces remote sellers, who are not registered to collect sales tax, to turn over customer lists or face stiff penalties. Learn more in our recent article.
An Indiana married couple was recently assessed additional tax when the Indiana Department of Revenue determined that they did not qualify as professional gamblers. The State’s assessment is a result of a Federal adjustment. Professional gamblers report their winnings, losses, and expenses on Schedule C, which typically results in a lower income tax liability. The IRS’s denial of the taxpayer’s protest of their categorization as casual gamblers was adopted by the State without further analysis.
For more information on this and other income taxation rules, contact your state and local tax professional.
Membership fees to athletic clubs are typically subject to sales tax as amusement services. However, separately stated charges for workout classes are generally exempt as an instructional service. Recently, a Texas athletic club sold “VIP” memberships that provided access to workout classes as part of the membership but did not separately state the value of the classes. On audit, the athletic club bifurcated the portion of the membership fees attributable to classes, but the Comptroller’s office disallowed the taxpayer’s method because such bifurcation could only be applied on a prospective basis and not on a retrospective basis.
If you have any questions about how this development may impact sales tax in your state, contact your state and local tax professional for more information.
A Virginia Ruling of the Commissioner recently explained how the Virginia Department of Taxation would interpret and enforce a new nexus law passed this last year. Remote sellers that have inventory stored in a third party warehouse located in the State are deemed to be dealers in the State. This law appears to be intended to apply to remote sellers using Amazon fulfillment services or the like.
Other states may have similar cases in the works; contact your state and local tax professional with questions or for more information.
Are you considering doing business or having employees in the state of Illinois? Have you had issues with your state tax filing? Join us on March 30 to learn more about Illinois sales and income tax filing considerations. Click here to learn more and to register.
The U.S. Supreme Court will hear oral arguments in the South Dakota v. Wayfair case on April 17, 2018. The case involves a South Dakota law that requires an out-of-state seller to collect sales tax from South Dakota customers if the seller’s gross revenue from taxable sales delivered in South Dakota exceed $100,000 or the seller makes more than 200 deliveries in the state of South Dakota annually. We will continue to monitor developments in this historic tax case. If you have questions about your responsibilities to collect and remit sales tax, please contact a member of our state and local tax team.
Are you considering doing business or having employees in the state of Texas? Have you had issues with your state tax filing? Join our State and Local Tax team on February 27 to explore some helpful insights into Texas tax filings. This webinar will cover registration, various taxes, starting and closing a business, and other sales tax issues. Learn more and register here.