29 State Tax & Business Developments You May Want to Know - August 21, 2017

The following are state tax and business developments I have curated since August 14th, and posted in the LEVERAGE SALT LinkedIn group:

  1. Resistance is not Always Futile: New Decision in Ongoing Delaware Unclaimed Property Audit Litigation

  2. MTC Voluntary Disclosure Initiative for Online Marketplace Sellers (i.e., Amazon FBA program)

  3. A State Tax Administrator's Perspective on Partnership Taxation

  4. Illinois Court Upholds Cook County’s Beverage Tax Finding It Passes Constitutional Muster and Related Developments

  5. Webinar: August 24th - Best Practices in Achieving Obsolescence Adjustments for Complex and Commercial Properties

  6. State Corporate Income Tax Rules for Sourcing of Revenue for Law Firms

  7. Nationwide Sales/Use Tax Update - September 12, 2017

  8. Credits Can No Longer Be Applied Against Oregon’s Minimum Tax

  9. Total Solar Eclipse Won’t Black Out State Taxes

  10. South Carolina going after Amazon (the marketplace facilitator) for not collecting sales tax on behalf of the businesses that use the marketplace to sell products to SC residents

  11. Summary of New York Corporation Tax Legislation Enacted after the 2016-2017 Budget

  12. New York Amendments Regarding Sales Tax Rules for Transactions between Certain Related Entities and for Purchases Made by Nonresident Businesses

  13. Technology Company State Tax Guide from Moss Adams (Very Nicely Done)

  14. Illinois Amends Rule Regarding Alternative Apportionment

  15. Amazon’s Marketplace Business Isn’t a Tax Avoidance Scheme

  16. A comparison of enterprise zone programs in Illinois, Indiana, and Wisconsin

  17. MTC National Nexus Program Adds 2 More Participating States to Online Marketplace Seller Voluntary Disclosure Initiative

  18. Rhode Island DOT Announces that it Will Accept Applications for Recently Enacted Amnesty Program Beginning December 1

  19. California FTB Issues Draft Proposed New Pass-Through Entity Withholding Regulation

  20. Minnesota Tax Court Holds that Taxpayer May Apply NOL Carryovers from an Acquired Entity to Full Extent Permitted under IRC § 382

  21. New North Carolina Law Includes Changes to Intercompany Expense Addback Statute, Added Franchise Tax Base Deduction, and Definition of Business Income

  22. Texas Court of Appeals Upholds Subcontractor Exclusion While Reversing and Remanding on Taxpayer COGS Methodology

  23. Memo Explains Recent New York Law Changes on Transactions Involving TPP Resold Between Certain Related Entities

  24. California Supreme Court Denies Rehearing in Recent Case Involving Taxation of a Transfer of Legal Entity Interests

  25. Washington DOR Reissues Emergency Amended B&O Tax Rule on Financial Institution Apportionment to Conform with MTC Changes

  26. Three Big Problems with Sales Taxes Today — and How to Fix Them

  27. Should Online Platforms Collect Sales Tax For Third-Party Sellers?

  28. The United States Of Unicorns: Every US Company Worth $1B+ In One Map

  29. Are Remote Retailers and Marketplace Providers in the 'Path of Totality'?

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LS to daily curate state tax developments relating to a specific industry, state(s), tax type and issueYou can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.

Are Remote Retailers and Marketplace Providers in the 'Path of Totality'?

Well, it's the day - solar eclipse day. A once in a lifetime event. Are you ready? Do you have your glasses? Will you see the total eclipse or partial eclipse?

According to the Washington Post, "the path of totality — the 70-mile-wide strip of America from Oregon to South Carolina in which the moon will, for a couple of minutes, block the sun — crosses the homes of an estimated 11 million people."

A total eclipse is something that happens once in a lifetime (if you are lucky; every 400 years or so). Well, today, our modern economy is converging with past sales tax law creating a sales tax 'eclipse' and is having difficulty figuring out how to look at it. We need the 'right glasses' to be able to tax remote retailers (online sellers) and marketplace platform providers. Amazon, since it is the largest marketplace provider I am aware of, has become the creator of this convergence, or sales tax 'eclipse.' 

We - state and federal governments, departments of revenue, taxpayers and tax professionals - must accept the fact that this sales tax 'eclipse' is happening. We must also work together to find the 'right glasses' or we will cause damage to our 'eyes' (economy and state revenue). 

Currently, states have imposed economic nexus standards and use tax notice and reporting requirements ALL with the intent to skirt the physical presence standard established by the Quill court case. The physical presence standard requires a retailer to have a physical presence standard in the state before the state can require the retailer to collect sales tax. 

I am all for states figuring out the best way to tax these remote retailer transactions; or first determining if they should tax it. I get that the states need revenue. What I disagree with is how states are going about trying to make it happen. Adopting economic nexus laws that fly in the face of Quill to simply get companies to challenge the economic nexus law is ridiculous. States want taxpayers to either comply or challenge the law, hoping the U.S. Supreme Court will take the case and overturn Quill

The use tax notice and reporting requirements are more burdensome and complicated than simply collecting and remitting sales tax. Again, another indirect way that states are simply trying to get companies to collect sales tax. If you can't change the law, create a law that is more complicated so companies choose the less burdensome road. I get it, but I disagree with it.

Companies want certainty. Companies don't want to focus on sales tax, they want to focus on their business. They want taxes to get out of the way or at least be something easy and clear to comply with. Companies don't want to get caught not complying and have to pay additional taxes, interest and penalties. The problem is, states are trying to force new tax collecting obligations without working together with businesses and tax professionals. They are forcing it, which is producing uncertainty and more confusion. 

State taxes already present a maze of taxing jurisdictions all competing for business and revenue with non-uniform tax laws. With this sales tax 'eclipse' staring us down, all I ask is that we work together to find the 'right glasses.' I ask the states to stop forcing damage to our eyes.

South Carolina Goes After Amazon as Marketplace Facilitator | All Internet Retailers and Marketplace Providers Under Attack

WARNING: All Internet retailers and marketplace providers should pay attention.

South Carolina is going after Amazon (the marketplace facilitator) for not collecting sales tax on behalf of the businesses that use the marketplace to sell products to SC residents (see CNBC article, "Amazon faces a tax fight in South Carolina that could change how online sellers do business").

This is a very interesting development since the Multistate Tax Commission is trying to get retailers that sell through marketplace facilitators to collect sales tax (see MTC Voluntary Disclosure initiative).

According to the CNBC article, "South Carolina is arguing that under state law, Amazon is considered the seller because the company controls a large part of the sales process for its third-party merchants."

Each state has different imposition statutes and ability to reach a conclusion that South Carolina is attempting to reach. But as the article suggests, if South Carolina is successful, other states will play the copycat game; OR perhaps South Carolina is the one playing the copycat game, since Minnesota, Washington and Rhode Island recently passed legislation to impose sales tax collection responsibilities on marketplace providers.

Minnesota and Washington laws are already under attack (see BNA articles, "Minnesota Marketplace Law Ripe for Legal Challenge" and "Washington’s Marketplace Sales Tax Law Heading for Battle"). Washington's definition of seller “includes marketplace facilitators, whether making sales in their own right or on behalf of marketplace sellers, and referrers.” Rhode Island describes marketplace providers as "retail sale facilitators." Check out Rhode Island's website for more notices and details.

All of the above is going on at the same time that states are imposing burdensome use tax notice and reporting requirements on retailers that are NOT currently collecting sales tax (because they don't have a legal obligation to do so). Consequently, states are forcing retailers to simply take the easier compliance task of collecting and remitting sales tax (versus complying with use tax notice and reporting requirements). 

It's a whole new world where states are trying to get sales tax revenue from anyone and everyone. Stay tuned.

MTC Voluntary Disclosure Initiative for Online Marketplace Sellers (i.e., Amazon FBA program)

If you sell products via Amazon, and have inventory in Amazon warehouses, please pay attention.

The Multistate Tax Commission is offering a special limited-time voluntary disclosure initiative for online marketplace sellers, in which the following states are participating:

  • Alabama
  • Arkansas
  • Colorado 
  • Connecticut
  • Florida
  • Idaho
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Nebraska 
  • New Jersey
  • Oklahoma
  • South Dakota 
  • Tennessee
  • Texas
  • Utah
  • Vermont
  • Wisconsin

The States listed above will consider applications for voluntary disclosure received by Multistate Tax Commission (MTC) staff during the time period August 17, 2017 through October 17, 2017 from taxpayers meeting the eligibility criteria.

PLEASE BE CAREFUL and READ ALL OF THE CRITERIA to AVOID UNINTENDED CONSEQUENCES.

For all the details, check out the MTC's website.

Many CPA firms and consultants have been publishing alerts regarding this matter (KPMG and Deloitte have some good summaries). The question remains - SHOULD YOU TAKE ADVANTAGE OF IT?

MOST participating states have agreed to forego any tax, penalty, and interest for prior periods in return for participating sellers beginning to collect and remit sales and use tax by December 1, 2017, and beginning to file income / franchise tax returns for the 2017 tax year. Consequently, there is no lookback period in MOST cases. This is a reason to do the program. Generally, voluntary disclosure programs require 3 to 4 year lookback periods requiring taxpayers to remit taxes and interest for the previous 3 or 4 tax years.

NOTE:

  • Colorado will waive any back tax liability for uncollected sales/use tax. However, Colorado will not waive back tax liability for income tax beyond its normal four-year lookback period. Colorado notes that it already has a small seller income tax nexus exception for sales less than $500,000 into the state. 
  • Nebraska will consider waiving back tax liability for uncollected sales/use tax and income tax. 
  • South Dakota imposes sales/use tax but does not impose income tax. ↩
  • Wisconsin will require payment of  back tax and interest for a lookback period commencing January 1, 2015 for sales/use tax, and including the prior tax years of 2015 and 2016 for income/franchise tax.

I don't care if you consult with me, BUT PLEASE consult a qualified state tax professional before utilizing this program. Good consultants to contact include: Dillon Tax Consulting, Yetter Tax Consulting, PrietoDion Consulting Partners LLC, Gable Tax Group, or Miles Consulting Group.

20 State Tax & Business Developments You May Want to Know - August 14, 2017

The following are state tax and business developments I have curated since August 9th, and posted in the LEVERAGE SALT LinkedIn group:

  1. Cook County’s Sweetened Beverage Tax effective August 2, 2017; first returns due September 20, 2017

  2. State Rundown 8/9: And Then There Were Three

  3. Are You Prepared for Oregon’s Move to Market Sourcing?

  4. Delaware releases amended draft unclaimed property regulations

  5. Foxconn Deal Will Put Wisconsin in Red for At Least 25 Years

  6. New York Broker-Dealer Tax Stance Likely to Spark Pushback

  7. Mississippi’s Sales Tax Regulatory Smorgasbord Continues—Internet Sellers and Commercial Contractors on the Menu!

  8. Dark Property Theory: A balanced review of key components used in property tax appeals

  9. When Incentives Matter, Oklahoma’s a Safe Bet

  10. Big Data, Big Moves, Big Merger

  11. Higher Taxes In a High Tax State Are Highly Problematic

  12. Oklahoma Emergency Rules Implement Upcoming Three-Month Amnesty Program that Begins September 1

  13. State conformity to federal provisions - Exploring the variances

  14. MTC National Nexus Program Now Offering Online Marketplace Seller Voluntary Disclosure Initiative

  15. New Rhode Island Law Requires Implementation of 75-Day Amnesty Program Providing for Potential 100 Percent Penalty Waiver and Reduced Interest Due

  16. District of Columbia Budget Legislation Codifies Unincorporated Business and Franchise Tax Rate Reductions

  17. Minnesota Supreme Court Affirms that Foreign Disregarded Entity Income and Apportionment Factors are Properly Included in Combined Return

  18. New York Releases New Guidance for Receipts Factor Methodology for the Owners of SMLLCs That Are Registered Broker-Dealers

  19. Pennsylvania DOR Holds that Certain Online Information Retrieval Products Constitute Taxable TPP

  20. New Rhode Island Law Contains Economic Nexus Provisions, Information Reporting and Notice Requirements

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LS to daily curate state tax developments relating to a specific industry, state(s), tax type and issueYou can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.

PROVIDE REAL VALUE. NOT NOISE.

If you've been paying attention, which I'm sure you have, I am constantly changing my website and thinking of ways to market, re-market, re-package or change the way I present my services and myself. This is the life of a solo state tax consultant. I am always thinking. Always learning. AND I can implement changes whenever I want - maybe sometimes hastily, but I would rather be innovative and try things, then to be stuck in the trap of 'that's the way we have always done it,' or changes take time to get approved by layers of bureaucracy and by the time they get approved all momentum and enthusiasm about the change is long gone.

Life is too short to be the same as everybody else, and that is exactly what we have in the public accounting and law firm world. Everybody is the same. The same boring websites. The same descriptions. The same strategic visions. The same services. The same message. The same hot topics. Every firm is trying to be the first to write about a hot topic, or the first to go in-depth about a topic. I should know. I spend my days daily reviewing state tax developments and writing about them. I also conduct research for clients and attempt to provide insight and actionable, innovative, intelligence (I just made that term up, you can feel free to use it). 

There is so much 'noise' in the world. So much knowledge and information being spewed on the internet and social media, while you are just trying to do your job. The question is - what do you need to know to do your job? How can you best help your company or your client? Are you going deep enough into the details of the law, cases, etc. to find true value? Or are you just scratching the surface, going from meeting to meeting, running around with your head cut-off, waiting for lightning to strike? 

Life is too short to be boring. Too short to not take the risk to be creative. 

BE AUTHENTIC. BE REAL. DON'T TRY TO BE SOMETHING YOUR NOT.

What is your firm good at? What are you good at? How can you be different? How ARE you different? 

Be different. Be creative. Provide REAL VALUE, NOT NOISE.