The Solar Eclipse and Tax Permits – What You Need to Know

You might think it’s just a one-time thing, surely no tax would be due, but the Idaho Tax Commission reminded taxpayers about the importance of tax permits after seeing online ads and roadside signs offering Idaho eclipse visitors rooms and homes to rent for lodging and camping. Residents who rent out their properties for these activities are required to collect sales and lodging taxes from guests. In addition, people making money selling souvenirs, food and other items need to collect sales tax. Hopefully, Idaho residents who capitalized on the increased traffic of eclipse watchers earlier today, properly registered with and received a tax permit from the State of Idaho. Learn more here. Contact your Eide Bailly professional or a member of our State and Local Tax team with questions.


SD Supreme Court will hear South Dakota Sales Tax Case

It looks like the SD Supreme Court will hear the Wayfair, Overstock, and Newegg case on August 29, 2017. Read more about the case and how it may impact multistate businesses in a recent Tax News & Views.

The Aberdeen News, a newspaper in Aberdeen, SD, recently published an article on the topic as well, South Dakota hopes for a quick loss in internet case, in the hopes of appealing to the U.S. Supreme Court.

Oklahoma Amnesty Program Update

The Oklahoma Tax Commission has created an Oklahoma Amnesty Program for certain taxes not paid as of August 1, 2017.  This can be a great benefit for qualified taxpayers as the program waives penalties and interest on the qualified outstanding taxes. But before entering into any amnesty program, consult with a tax professional to understand the details of the program and how they will work in your particular situation.

Key Highlights from the OK Amnesty Program:

  •  The application period runs from September 1, 2017 – November 30, 2017.
  • The taxpayer must remain tax compliant for one year after approval for the program, or interest and penalties will be restored.
  • Nearly every tax type is eligible
  • Eligible taxpayers must have:
    • No other outstanding tax liabilities, other than those pursued for the program
    • Not been contacted by the Tax Commission or third party acting on behalf of the Commission
    • Not collected taxes from others (for example sales tax – but there is a remedy)
    • Not entered into a voluntary disclosure agreement for the tax type being pursued within the past 3 years.
  • Three year lookback period
  • A payment plan can be requested

In addition, there is another amnesty program for remote online sellers (selling through Amazon, etc.) being offered through the Multistate Tax Commission that could also provide benefit for the resolution of Oklahoma and 15 other participating states past due or unfiled tax issues which is scheduled to start on August 17, 2017, click here for more information.

Please contact your Eide Bailly professional or a member of our State and Local Tax team to learn more.

Read more about other current amnesty programs here.


2017 Mid-Year Sales Tax Changes

Dealing with change is standard operating procedure for many companies: employees leave and are hired; new products are introduced and old ones phased out; there are booms, and there are busts. On top of all that, companies need to account for sales and use tax changes. Significant changes in rates, regulations, and product taxability often take effect July 1, which is the start of a new fiscal year in all but a few states.

At the end of 2016, we shared many of the sales tax changes set to occur January 1, 2017. These included state sales tax rate changes in California and New Jersey, the expansion of sales tax to certain services in North Carolina, the prohibition of taxing more services in Missouri, and a bevy of recently enacted soda taxes and tampon tax exemptions. At mid-year, we’re seeing a few propositions that signify a dramatic shift in online sales tax revenue.

States want to collect more tax revenue from remote sales

Perhaps the most notable trend of 2017 is states’ push to obtain tax revenue from remote sales. This isn’t new. States have been working to tax out-of-state sellers for years, but their efforts have been hampered by Quill Corp. v. North Dakota, 504 U.S. 298 (1992) — the landmark Supreme Court ruling that a state can only tax businesses physically located within its borders.

In recent years, states have found creative ways to work around the physical presence precedent upheld by Quill. They’re taxing businesses with ties to in-state affiliates and those that generate a certain amount of business through links on in-state websites (commonly known as click-through nexus). Increasingly, they’re also taxing companies with a certain amount of economic activity in the state (economic nexus). Unfortunately for states in need of additional sales tax revenue, these affiliate, click-through, and economic nexus laws are difficult for states to enforce.

Therefore, many states are looking to different and more aggressive approaches. Two methods in particular have been gaining steam this year: use tax notification and reporting requirements, and taxes on online marketplace providers such as Amazon and eBay.

Use tax notification and reporting requirements

Colorado paved the way for states to impose use tax notification and reporting requirements on non-collecting out-of-state sellers. After spending years stuck in court, its policy takes effect July 1 — the same date a similar policy starts in Puerto Rico. Vermont recently passed one and made it effective retroactively, on January 1, 2017. Other states, including Pennsylvania and Texas, are considering use tax notification and reporting measures.

Sending annual reports of consumer purchase activity to consumers and state tax authorities is more work for remote retailers, and Colorado and the other states could be using their policies as a back-door approach to getting out-of-state companies to register and collect. Even if companies choose to not take that route, use tax reporting should help states increase their use tax collections.

Taxing online marketplaces

Minnesota is the first state to enact a tax on marketplace providers. HF 1 will take effect at the earlier of July 1, 2019, or when the Supreme Court modifies its decision in Quill — though the effective date could change if Congress passes legislation allowing states to tax remote sales.

North Carolina, Texas, Washington, and a number of other states are also interested in taxing marketplace providers, and their efforts are likely to continue or resume as 2017 wanes. But not all agree it’s a good idea: New York lawmakers blocked Governor Andrew Cuomo’s attempt to tax them earlier this year.

Congress could tackle online sales tax

Federal lawmakers are much preoccupied with tax reform and repealing or revamping the Affordable Care Act. Allowing states to tax remote sales transactions, or definitively preventing them from doing so, seems to be low on their list of priorities. However, we’ve learned to expect the unexpected from Washington, so a federal solution to the problem of untaxed remote sales should not be entirely ruled out.

Two bills have been introduced that would authorize states to tax certain interstate sales: the Marketplace Fairness Act of 2017 and the Remote Transactions Parity Act of 2017.

A bill that would codify the physical presence standard set by Quill and further limit states’ ability to tax interstate sales has also been introduced: the No Representation Without Representation Act of 2017.

Other sales tax changes

Many of the trends seen at the start of the year are continuing as 2017 progresses. Florida has enacted a tampon tax exemption, Seattle a soda tax. Tennessee is lowering the state sales tax rate on food and food ingredients, there are calls to add a statewide sales tax in Alaska, and although he failed to achieve it this session, Governor Jim Justice has been pushing to raise the state sales tax rate in West Virginia. The taxation of services — including online music and movie streaming services — remains a hot and hotly contested topic. And, as always, a plethora of local sales tax rate changes take effect at the start of each new quarter.

Don’t be lulled into complacency during the dog days of summer: There’s a lot happening in the world of sales tax right now. Staying on top of these and other changes will allow you to prepare for them. Download Avalara’s 2017 Sales Tax Changes Mid-Year Update to learn more.


 Repost from Avalara