A taxpayer that performed solid waste removal was recently assessed for sales tax not collected on that taxable service. The assessment was upheld by an Arkansas Administrative Judge who opined that lack of constructive knowledge of the tax levy or that other similar entities were not collecting the tax was not an adequate defense. Additionally, the Department of Finance and Administration was not estopped from enforcing the tax law because there was no evidence that its employee’s had made statements that the service was not subject to sales tax.
Sales tax can be tricky to navigate, but we’re here to help. Contact an Eide Bailly SALT professional today.
The Colorado Department of Revenue is revising its sales tax rules for documenting wholesale transactions. The revised rules seeks to change the amount of due diligence required for accepting resale certificates in lieu of collecting sales tax. Under the old rule, the wholesale vendor was relieved of the liability to collect sales tax when the vendor accepted in “good faith” a resale exemption certificate. Under the proposed rule the vendor is required to either verify the sales tax license number of the purchaser with the Department or collect a physical copy of the license.
The Department has until June to adopt the new rule or terminate the proceeding. This gives Colorado vendors time to review the documentation they have on file for their retail customers and if needed start collecting the proper documentation.
An Arkansas Administrative Law Court recently upheld an assessment for sales tax that was collected and not remitted. The taxpayer collected the tax for a service that he later learned was exempt from tax. After accounting errors resulted in the under-billing of his customer, the taxpayer used the tax proceeds to offset his accounting error. In addition to the assessment, the penalty for failure-to-file was upheld.
If you run into sales tax confusion in any state, or if you are facing penalties, contact your Eide Bailly state and local tax professional. We’re here to help!
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.
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.
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.