Online sales continue to have a negative impact on state and local tax revenue, and Georgia is the latest state to take action.
Georgia Governor Nathan Deal recently signed House Bill 61 legislation, which is an economic nexus law on internal sales and will affect certain retailers who conduct business in the state of Georgia. The law will require retailers who make sales outside of Georgia, for delivery into Georgia, to either collect and remit tax on those sales, or provide notice to purchasers that tax may be due. These retailers must send tax statements each year to purchasers who spend at least $500, and must file such statements with the Georgia Department of Revenue.
Retailers who are subject to this economic nexus include those in the previous or current calendar year who:
Have over $250,000 in gross revenue from retail sales of tangible personal property to be delivered to a location in Georgia, or
Have conducted 200 or more separate retail sales of tangible personal property to be delivered to a location in Georgia.
In late March 2018, Idaho Governor, Butch Otter officially signed into law a house bill that will require all out of state or remote retailers to collect and remit sales and use tax. This is only applicable to out of state retails that generate over $10,000 dollars through their Idaho affiliates. Idaho is one of the few states that has enacted legislation related to the establishment of nexus through a parent entity or affiliates.
Do you or any of your affiliates do business in Idaho? If yes, you might have a filing requirement. Contact our state and local tax team for more information.
California has contacted more than 2,500 out-of-state retailers to notify them that they may owe sales tax due to the presence of products in California warehouses. A remote seller owning products in a California warehouse creates a physical presence in California and therefore sales tax nexus. The most common example is holding inventory in an Amazon warehouse. If contacted by the State of California the remote seller will be required to remit sales tax on all sales into California from the time this nexus was created. Any seller who believe they are in this situation should contact Eide Bailly’s State and Local Tax Team to discuss options to minimize the tax, penalties and interest. Once the state contacts the retailer the options to mitigate the exposure are limited.
A New Jersey Tax Court recently granted summary judgment to a nonresident limited partnership. One of the partners had originally consented to being taxed in New Jersey, and later amended the returns and requested a refund of taxes paid. This was based on an assertion of no nexus. The Division responded by denying the request and assessing additional tax for the partner that had not consented to be taxed in New Jersey. Contrary to the Division’s assertion, the court held that the refund claim does not constructively revoke the nonresident partner’s election to be exempt. The denial of the refund claim is still being litigated.
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.
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.
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.