Friend of the court brief filed regarding New York’s Internet Sales Tax Law.

On September 23rd the Tax Foundation and the National Taxpayer’s Union filed a friend-of-the-court brief imploring the U.S. Supreme Court to hear an appeal regarding New York’s internet sales tax law.

The law attempts to skirt around the constitutional requirement that a state can only impose sales tax collection if the taxpayer has a physical presence in that state. It accomplishes this by claiming that an out-of-state taxpayer has a presence if they have an in-state affiliate that solicits sales in New York. This could apply to any company that simply advertises in New York.

The brief claims that the law gives New York and overextended taxing authority from what is constitutionally permissible.

To read the brief visit:
http://taxfoundation.org/article/urging-us-supreme-court-address-state-efforts-tax-internet-sales

Major Issues with Colorado’s MFA Compliance

In the event that the Marketplace Fairness Act (MFA) passes, many states must first make some changes to their tax codes before they can collect sales tax from internet retailers. These changes mainly deal with either complying with the streamline sales and use tax agreement, or making specific changes to their tax code that includes establishing a uniform sales and use tax base, and uniform tax definitions. In anticipation of the MFA passing, Colorado passed House Bill 13-1288 that requires the Colorado Department of Revenue (DOR) to work with municipalities and counties in order to create a uniform sales and use tax base as well as uniform tax definitions. Based on a stake holder meeting held by the DOR the following issues will be brought up in their report:

1)      The tax on food for home consumption and residential power account for a majority of the local jurisdictions’ revenue;

2)      In order for local jurisdictions to remain solvent and revenue neutral without experiencing huge tax increases, the State would have to remove the exemption for food for home consumption and residential power;

3)      The State currently taxes cigarettes while local jurisdictions do not.  By taxing cigarettes at the local level, this would bring an offset of additional revenue to the local jurisdictions (approx. $30.5 mill);

4)      Certain items that are currently taxed by the locals would need to be exempted.  The DOR preliminarily identified the following few items:

  • a.       Industrial energy;
  • b.      Agricultural compounds & bull semen;
  • c.       Pesticides;
  • d.      Corrective eyeglasses, hearing aids;
  • e.      Wireless Telecomm Equipment.

5)      The report will also make recommendations for creating uniform tax definitions for all items taxed or exempted and would use a majority of the definitions found in the Streamlined Sales Tax agreement (SST) www.streamlinedsalestax.org;

This information was provided by the Colorado Association of Commerce and Industry.

 

Tax Relief For Colorado Flood Victems

Both the IRS and the State of Colorado are offering an extension on filing deadlines for taxpayers affected by the floods. For deadlines falling on or after September 11th the deadline has been pushed back to December 2nd.

For details on the federal program visit:
http://judiciary.house.gov/news/2013/09182013.html?goback=%2Egde_797027_member_274772552#%21
For details on the state program:
http://www.colorado.gov/cs/Satellite/Revenue/REVX/1251646219089

Federal Principles Regarding Internet Sales Tax

On September 18th the House Judiciary committee laid out the following principles regarding remote sales tax:

Basic Principles on Remote Sales Tax

1. Tax Relief – Using the Internet should not create new or discriminatory taxes not faced in the offline world. Nor should any fresh precedent be created for other areas of interstate taxation by States.

2. Tech Neutrality – Brick & Mortar, Exclusively Online, and Brick & Click businesses should all be on equal footing. The sales tax compliance burden on online Internet sellers should not be less, but neither should it be greater than that on similarly situated offline businesses.

3. No Regulation Without Representation – Those who would bear state taxation, regulation and compliance burdens should have direct recourse to protest unfair, unwise or discriminatory rates and enforcement.

4. Simplicity – Governments should not stifle businesses by shifting onerous compliance requirements onto them; laws should be so simple and compliance so inexpensive and reliable as to render a small business exemption unnecessary.

5. Tax Competition – Governments should be encouraged to compete with one another to keep tax rates low and American businesses should not be disadvantaged vis-a-vis their foreign competitors.

6. States’ Rights – States should be sovereign within their physical boundaries. In addition, the federal government should not mandate that States impose any sales tax compliance burdens.

7. Privacy Rights – Sensitive customer data must be protected.

http://judiciary.house.gov/news/2013/09182013.html?goback=%2Egde_797027_member_274772552#%21

Sales Tax Holidays

An article from the tax foundation takes a look at the effectiveness of tax holidays. Tax holidays are specially designated periods of time where the state government forgives sales tax on certain items. Items can include clothing, back to school supplies, hurricane preparedness items, etc. These holidays have a certain political appeal, but as the article points out, they are actually riddled with problems. They do not promote economic growth but simply change the timing of when they are purchased; they create complex tax codes; many businesses raise prices during the holidays; the cost of complying is often more than the benefit that a business receives–the list goes on.

To read more visit:

http://taxfoundation.org/article/sales-tax-holidays-politically-expedient-poor-tax-policy-2013