The Ohio Department of Taxation began sending Failure to File notices by regular mail on June 5, 2017 to taxpayers who:
- Have not filed an Ohio School District Income Tax Return Form SD 100 for 2013, 2014 and/or 2015; and
- Appear to have lived in a taxing school district based on the school district number and/or mailing address reported on the taxpayer’s Ohio Individual Income Tax Return (Ohio Form IT-1040) filed for 2013, 2014, and/or 2015.
To learn more about the Ohio School District Income Tax, read their Guide.
If you receive(d) a notice and need assistance, please contact a member of our State and Local Tax Team.
When conducting business across state lines, it is crucial to have a thorough understanding of nexus laws.
While the word “Nexus” has a variety of meanings, when it comes to taxation, “nexus” refers to whether or not a person or transaction can be subject to tax in a particular jurisdiction. Sales and use tax nexus is one of the most common considerations for businesses, and the current law requires “substantial” nexus to be had in a state before said state can move to collect any tax. However, the definition of “substantial” when it comes to establishing nexus is not exactly cut and dry and varies state by state; jurisdiction by jurisdiction. Nexus used to be established by physical presence; however, the prevalence of online sales have made it necessary for states to consider an alternative to the physical presence test. The new nexus test is fashioned more on an economic nexus standard. However, the newly defined economic nexus standard has been questioned by various courts. The states are hoping the courts will reverse their position on these new economic nexus standards, thereby allowing their use. In allowing the use of the new economic nexus standard, the courts would need to recognize that many of the sales and use tax laws were created and interpreted before the development of readily available sales tax software and before the eCommerce marketplace exploded. As you can see, nexus can be tricky to navigate!
Retailers and service providers are especially affected by nexus rules, but buyers of property and taxable services should have a good understanding as well. A recent Tax Executive article provides a thorough look into the current state of nexus law, as well as explains what businesses need to consider and do to remain in compliance.
The Tax Foundation has recently published their 2017 State Business Tax Climate Index. This is a great tool for businesses and taxpayers to compare how well their state’s tax structures stack up against other states. The number one state in this year’s index is Wyoming, and the worst-ranked state is New Jersey. Click here to learn more and see how your state ranks.
The final leg of our Midwest SALT Tour through Mankato, Sioux Falls, and Fargo will take place November 8, 9, and 10. This Sales Tax Update will discuss current legislation and the ways in which taxes impact your business, as well as what you can do to limit your exposure and potential liabilities. For more information and to register for one of these sessions, visit www.eidebailly.com/SALTtour.
The State of Washington has carved out a nexus safe-harbor for out-of-state representatives attending qualifying trade shows/conventions.
Effective July 1, 2016, for purposes of Washington’s Sales and Use Tax, and also the Business and Occupation (B&O) Tax, the Washington Department of Revenue may not make a determination of nexus based solely on the attendance or participation of one or more representatives at a single trade convention per year in Washington.
So, what does this mean for businesses? Without more, businesses that attend/exhibit (but not sell) at only one trade convention, not marketed to the general public, per year, will not be deemed to have a registration and a tax reporting requirement for purposes of Washington Sales and Use, and B&O tax.
Click here to read Washington’s Special Notice.
Or, click here to view Eide Bailly’s “Understanding Nexus” video.
As a result of a $900 million budget shortfall, Louisiana lawmakers have passed the following tax measures aimed at bridging the revenue gap. Some of the more important changes are as follows:
Income/Franchise Tax Changes (effective 1/1/2017):
- Expansion of franchise tax:
- “Domestic Corporation” now includes partnerships, joint ventures, and LLCs electing to be taxed as C Corporations for federal income tax purposes.
- Expansion of franchise tax nexus for out of state taxpayers – nexus for corporations that own interest in partnerships with Louisiana operations.
- Net Operating Loss (NOL) Reduction – NOL deduction cannot exceed 72% of Louisiana taxable income.
- NOL Carryover ordering – must use loss carryovers starting with the loss for the most recent taxable year. Older NOLs may expire since taxpayers would have to first use newer NOLs.
- Modification of corporation income tax rate to flat rate of 6.5% (contingent).
- Addback of intercompany interest, intangible expenses and management fees unless certain exceptions are met.
- Modification of federal income tax deduction (contingent).
Sale/Use Tax Changes:
- Effective 4/1/16 through 6/30/2018, the legislation increases the sales tax rate by 1% (bringing the rate to 5%). Referred to as the “Clean Penny” Legislation, the legislation includes its own set of exclusions and exemptions apart from the exclusions and exemptions that apply to the original 4% sales tax rate (referred to as “Old Penny”).
- Old Pennies (the original 4% sales tax) – law modifies the list of exclusions and exemptions, specifically as they relate to the 2% basic rate (sub component of the 4% tax). It is important to note the inconsistencies between the exclusions and exemptions offered under the Clean Penny and Old Penny laws.
- Affiliate Nexus provisions – the legislations drastically expands the definition of a “dealer.”
For additional background regarding the legislation, please visit the tax foundation website.
Did you know that there is an easy way to verify your North Dakota sales tax rate? The ND.gov website has just been revamped to include easy navigation to calculate the sales tax rate for a specific location. Eide Bailly has put together a handy step-by-step guide on how to successfully identify your sales tax obligation.