MFA 2014

The backers of the Marketplace Fairness Act (MFA) are apparently planning on re-doubling their efforts to pass the legislation. According to an article from Internetretailer.com, a letter In support of the MFA, written to U.S. Rep. Robert Goodlatte (R, VA), lists “more than 300 signatories, including 174 trade associations and dozens of retailers among 137 individual companies.” The MFA would allow states to require remote sellers to collect sales tax on items that were sold within the state.

Read More:
Backers renew their push for online sales tax legislation

MO Church Coffee–Taxable?

According to an article from taxrates.com, coffee sold in a church (in Missouri) is exempt from sales tax if it is sold during a church service; however, it is taxable if it is sold during a non-church service function, such as weddings, receptions, or birthday parties.

Church Coffee in Missouri—Exempt or Taxable?- By Gail Coe

Same Sex Tax Guidence

The Tax Foundation has come out with a comprehensive summary on state guidance for same-sex couples  who are filing joint federal tax returns for 2013.
The summary can be found here:

States Provide Income Tax Filing Guidance to Same-Sex Couples

U.S. Supreme Court May Consider “Piggyback Tax” Case

According to the Washington Post, the U.S. Supreme Court may hear a case against Maryland’s “piggyback tax.” In Maryland, tax paid in other states is deductible for state taxes but not for city and local jurisdictional taxes. The Maryland Court of Appeals found the law unconstitutional, citing that it violates the commerce clause. Maryland has appealed the case to the U.S. Supreme Court, and recently the Court requested the Obama administration’s views on the matter.

Maryland appeals income tax case to Supreme Court

CO Department of Revenue Releases Draft Report on Uniform Sales and Use Tax Base:

The following is from the Colorado Association of Industry and Commerce regarding the CO Department of revenue’s report on adopting a Uniform Sales and Use Tax Base.

Summary of CO Department of Revenue’s Uniform Sales & Use Tax Report

 

As you may recall, during the 2013 Legislative Session, House Bill 1288 was adopted that directed the Colorado Department of Revenue to prepare a report that included recommendations on ways to achieve a revenue neutral uniform sales and use tax base in Colorado.  A draft of that report has been released, and includes the following:

 

  • A uniform list of items that are exempt from taxation      by the State and local taxing jurisdictions;
  • Uniform definitions of the tax exempt items;
  • Rate changes, including consideration of rates of zero      percent that would be necessary to achieve revenue neutrality for the      State and local jurisdictions;
  • A uniform definition of tangible personal property;
  • Other recommendations by the DOR to establish a revenue      neutral sales & use tax base.

 

Summary of the Recommendations*

 

Uniform Sales & Use Tax Base -DOR was tasked with identifying which items are currently taxed or exempted by home rule cities and assess how the home rule cities and the State’s base differed.  Their research determined that food for home consumption and residential power provide a large amount of revenue to home rule cities [See chart – pg. 10].  In order to achieve revenue neutrality without large rate increases, the State would need to adopt a broader base and lower its overall rate. 

 

  • Recommendation:  Based on TABOR limitations on      rate increases, a determination was made that the only way to align the      tax bases without rate increases would be to eliminate 35 current sales      & use tax exemptions.  [See Appendix F – pg. 65]. 

 

Rate Changes to Achieve Revenue Neutrality

Based on the broader rate base recommended above that would increase revenues, DOR determined that rate changes would be needed to achieve revenue neutrality.

 

  • Recommendation:  Lower State’s sales and use      tax rate to 2.4%.  Cities & counties would also have to lower      their rates with exemption of a few home rule cities whose tax base would      not change with the implementation of the uniform sales & use tax      base.

 

Uniform Definitions of Tax Exempt Items – Based on the political challenges of adopting a uniform base, much of the report is focused on the creation of uniform sales & use tax definitions which is more likely to be adopted in the General Assembly.

 

  • Recommendation:   DOR developed a list of      streamlined sales & use tax definitions while relying on the      Streamlined Sales & Use Tax Agreement.  If no Streamline      definition existed, the DOR sought uniformity between the State and local      tax jurisdictions.  [See Streamlined Definitions in Appendix H –      pg. 77]. 

 

 

Uniform Set of Exemptions – Based on the requirement to create uniform definitions, it was clear that a uniform set of exemptions was necessary as well.

 

  • Recommendations:  A list of revenue neutral,      uniform exemptions have been developed and can be applied to any taxing      jurisdiction in Colorado.  [See Appendix I – pg. 90].

 

Uniform Definition of Tangible Personal Property – The report includes the definition of Tangible Personal Property as:  personal property that can be seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to the senses. It includes electricity, water, gas, steam and prewritten computer software.

 

Creation of a Sales & Use Tax Advisory Board – The DOR is recommending that in order to ensure uniform interpretation of the definitions and exemptions, that a Sales & Use Tax Advisory Board be established.

 

  • Recommendation:  Create a Sales & Use Tax      Advisory Board that is a quasi-legislative, quasi-judicial body that will      ensure uniformity by promulgating and modifying standard definitions,      clarifying language through rules, and issuing tax guidance relating to      definitions.

State and Local Tax Amnesty Programs for 2014

Now that 2013 has come to a close, a large number of state and local tax amnesty program have expired; however, a couple still remain in effect. Vermont, Delaware, Louisiana, and to a lesser degree California, Tennessee, and Ohio still have programs in place to waive certain penalties and interests. The Sales and Use Tax Institute and the Council on State Taxation both keep pretty good tabs on amnesty programs as they become active. To make sure that you are up-to-date on new and upcoming amnesty programs keep a close eye on these two sites.

Minnesota Sales and Use Tax Changes

The following changes are from the Minnesota Department of Revenue and went into effect January 1, 2014:

Local Government Exemption
Starting Jan. 1, 2014, cities and counties are exempt from sales and use tax on purchases used to provide certain government services. Please refer to Fact Sheet 176 for more information.
We have updated Form ST-3, Certificate of Exemption, to include “local government” as a reason for exemption under “B-specific government exemption.”

New Local Taxes
Starting Jan. 1, 2014, Olmsted County and Rice County will each have a transit sales and use tax. Please refer to the Olmsted County General Notice and Rice County General Notice for more information.

Rochester Lodging Tax Rate
Starting Jan. 1, 2014, Rochester Lodging Sales tax increases to 7%. (The previous rate was 4%.) Please refer to the Rochester Lodging General Notice for more information.

e911/TAM Fee
Starting Jan. 1, 2014, the Minnesota Department of Revenue will administer the e911/TAM fee collected by retailers who sell prepaid wireless phones, air time, or calling cards. Please refer to Fact Sheet 179 for more information.