Watch Out: Colorado Sourcing Rule Modified

Most accounting professionals are aware that sourcing rules can vary state to state. Colorado recently announced that starting August 8, 2018, effective for tax years beginning after 2018, companies will be required to allot certain revenue based on market instead of cost of performance. This means that revenue from sales, rentals, leases, or services from customers in Colorado will now be subject to their Corporate tax. Contact Eide Bailly’s State and Local Tax team with questions to learn more.

Georgia Passes New Nexus Law

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.

If you have any questions about this or similar legislation, contact your state and local tax professional.

New York Revamps Tax Code

The first state to significantly revamp its tax code in response to federal tax reform is New York. To learn more about NY budget bill S. 7509 that was signed by Governor Cuomo on April 12, join the SALT team on April 27 for the New York state presentation. Other states like California may follow New York’s lead to counteract the federal cap on state and local tax deductions. NY established a new payroll tax and charitable funds as workarounds to federal tax reform.

Many other states are working on their tax code as well; contact our state and local tax team to learn more.

Internet Does Not Equal No Tax

An online subscription services provider requested the South Carolina Department of Revenue to rule on the taxability of internet-based platforms on which their customers stream videos, listen to music, and play online games. The taxpayer offers subscription services at a standard monthly fee depending on usage amounts and type of package. South Carolina rules that because the subscriptions or services were online activities they are still subject to tax under the communication business class.

Sales tax rules for online transactions and internet-based companies can be confusing. Contact our state and local tax team to make sure you remain in compliance.