U.S. Senate Approves Legislation Authorizing States to Collect Sales and Use Taxes From Out-of-State Sellers

U.S. Senate Approves Legislation Authorizing States to Collect Sales and Use Taxes From Out-of-State Sellers

The U.S. Senate on May 6 approved legislation that generally would make it easier for a state to collect sales and use taxes from sales made by out-of-state or "remote" sellers (such as catalogue or online retailers) that do not have an in-state physical presence. The Marketplace Fairness Act of 2013 (S.743) cleared the chamber by a vote of 69-27 and now heads to the House of Representatives for consideration.

Marketplace Fairness Act

The Marketplace Fairness Act generally provides a state that is a member of the Streamlined Sales and Use Tax Agreement with the authority to enact laws requiring remote sellers to collect and remit sales and use taxes to the state with respect to "remote sales" sourced to that state. 　If a state is not a member of the Streamlined Sales and Use Tax Agreement, the state may exercise such authority if the state adopts certain "minimum simplification requirements" relating to the administration of the tax, including a single audit for all state and local taxing jurisdictions within the state, a single sales and use tax return, and uniformity of the tax base. A non-member state must also provide remote sellers with free software for the purposes of calculating sales and use taxes due on each transaction at the time the transaction is completed and for purposes of filing state sales and use tax returns. Small businesses are exempt under the Act if their annual gross receipts from remote sales in the U.S. do not exceed $1 million.

Next Steps

The measure now heads to the House of Representatives, where it most likely will be routed to the Judiciary Committee. House leaders have not indicated whether or when they intend to move the Senate-passed bill or a similar measure (H.R. 684) introduced in February by Reps. Steve Womack, R-Ark., and Jackie Speier, D-Calif. For its part, the White House on April 22 released a statement of Administration Policy ("SAP") supporting the provisions in the Senate bill. The SAP notes the legislation "would eliminate the unfair advantage currently enjoyed by big out-of-state online companies over local neighborhood-based small businesses."

 

In the meantime remote sellers and buyers alike may want to consider whether their billing systems, purchasing systems, sales tax policies, and compliance procedures are current and adaptable in the event of a possible federal law that requires remote sellers to collect tax. Such considerations may include review of the taxability of their revenue streams and purchases, potential for automation of sales tax billed or use tax calculated, and potential for outsourcing of sales tax compliance.

The problem is that more than 15,000 taxing jurisdictions across the nation are in a constant state of flux. In one month alone last year, taxing authorities in 26 states made 257 changes to their sales tax rates and rules. All this has grown to make sales tax compliance which is a tough job, even harder.

BPB helps clients manage these challenges. 

Florida Manufacturing Machinery and Equipment Exemption Approved

 

Florida expands Manufacturing Machinery and Equipment Exemption

House Bill 391 was approved by the Economic Development and Tourism Subcommittee to expand the sales tax exemption for the purchase of machinery and equipment. The exemption would apply to all manufactuer' machinery and equipment purchases not just machinery and equipment for new business or companies who can show new equipment increased produciton by five percent. 

 

Urgent: Fiscal Cliff Provides 15 Month WOTC Credit Look Back (April 29, 2013 Deadline)

A very important note regarding the Work Opportunity tax credit. If you are not already claiming these credits, you have time to claim them in arrears through the end of April!

Have you claimed  “WOTC” (Work Opportunity Tax Credits) for 2012?” 

Normally, employers have merely 28 days to claim their credits for recently hired qualified employees. 

Due to the recent ”fiscal cliff” deal by Congress and the President, however, the IRS is now providing a 15-month look back opportunity to claim these credits. 

WOTC can reduce an employer’s federal income tax liability by as much as $9,600 per employee hired.

Additionally, there is no limit on the number of individuals an employer can hire to qualify to claim the tax credit.

Even tax-exempt organizations can take advantage of WOTC by hiring eligible veterans and receiving a credit against the employer’s share of Social Security taxes.  

Eligible employees include:

Veterans

• Disabled persons
• Food stamp recipients
• Long-term Temporary Assistance for Needy Family Recipient
• Short-Term Temporary Assistance for Needy Family Recipient
• Designated Community Resident
• Ex-felon
• Supplemental Security Income Recipient
• Summer Youth Employee

Employers may receive from $1,200 to $9,600. per eligible employee, depending on the target group of the new employee.     

The Work Opportunity Tax Credit (“WOTC”) is a federal income tax credit incentive program that was created to promote the hiring of individuals who face significant barriers to employment.  This program was on a prolonged hiatus in 2012 and has affected employer’s hiring and tax planning. 

 How to Apply - we will help you complete federal and state forms to obtain tax credit and we will deal with federal and state agencies to ensure that your company receives federal income tax credit that You Are Entitled To for all of your eligible employees.

Time is running out!  The deadline to submit claim requests is this coming April 29, 2013.
Please contact me at 305.960.1202 for more information on how we can assist you with meeting this deadline.

 

Florida - Reminder Estmated Payment Due June 28, 2013

The accelerated income tax estimated payment due on June 30, 2013 must be paid by June 28 2013. HB 5701 (signed Apr. 20, 2012

Nebraska: Update on Pending Tax Legislation

Nebraska Governor Heineman recently announced proposals to overhaul the Nebraska tax structure.
The proposals generally focused on reducing or eliminating the corporate and personal income taxes as well as eliminating certain sales tax exemptions. The proposals were formalized in two bills introduced in the Nebraska legislature in late January, LB 405 and LB 406.

On Saturday, February 16, 2013, Governor Heineman held a press conference where he stated that he has asked the tax policy committee to kill both bills so as to start a new and more inclusive discussion regarding Nebraska tax reform.

Florida: Auto Repair Provided Under Car Manufacturer's Warranty Not Taxable

 

Dep't of Revenue v. General Motors LLC, Fla. Dist. Ct. App. (12/5/12).

 

A Florida Court of Appeal recently held that an auto manufacturer was not subject to state sales/use tax on vehicle parts/repairs made pursuant to its customer warranty because the right to participate in the warranty progam and to receive repairs was part of the consideration that its customers received in exchange for the purchase price of the vehicles.

 

The Court affirmed that the trial court did not err in concluding that the tax due for such repairs was paid as part of the original sales transaction, and that to impose a second round of tax on the transaction would amount to double taxation or “pyramiding of tax” prohibited under Florida law.

The Florida Department of Revenue unsuccessfully argued that the discretionary nature of repairs provided under the Case-By-Case program by dealers distinguished it as taxable relative to the nontaxable repairs provided under the manufacturer’s base warranty program. The Court explained that the substantial repair costs associated with the warranty program furthered the position that such repairs were factored into the original vehicle sales price.

California Mandatory Single Sales Factor Apportionment for Most

California votes cast their ballots in favor or mandatory single sales factor apportioment for most multistate taxpayers. Propostion 39 requires most mulistate taxpayers to use a sales factor-only apportionment formula, combined with market-based sales sourcing for sales other than sales of tangible personal property. The new law is effective for tax years beginning on or after January 1, 2013. California's rules regarding market-based sorucing of sales of other than tangible personal property had previously been applicable only to taxpayers electing to apportion on a sales factor-only basis. The recent change in California's laws to single sales factor apportionment combined with market based sales sourcing for sales other than sales of tangible personal property may have an significant impact on the amount of tax that your company or your client's pay to the State of California.