when state tax laws change, tax pros & taxpayers respond like my cats

Like several parts of the country, this week we got abnormally cold temperatures and about 6 to 7 inches of snow in Nashville. We live on a hill on 16 acres. We don't normally get this much snow and definitely not this cold (zero or negative temps). Oh, did I mention we live on a hill.

So, when this level of 'winter' occurs, we basically don't go anywhere and just wait for it to melt. I do a little shoveling where I can. Actually, I did shovel my road on my hill so I could attempt to get out if I wanted to. Most people would have just played the waiting game. Not me. (Let's attempt to hurt my back for the sake of a clean road.)

My family calls this week - "snow week." A time where work pauses and my wife gets to play games, do art, and fun stuff with our daughters. In other words, a time where everyone is trapped at home.

While I continue to work from home as if nothing has happened.

THE CATS

We have three outdoor cats that we gathered up and put in our heated garage to protect them from the extreme cold. When I go in the garage every morning, one cat is content and just wants to be left alone, one cat is a little confused, but then immediately starts to eat and seems relaxed, and the last cat follows me around, wanting petted non-stop, looking like he wants to jump on my head (he's the anxious one). He keeps acting like he wants out of the garage. Our garage doors are glass. He will sit at our garage doors and just look outside and whine.

Sidenote - when he is outside and winter comes (starts to get colder), he will often come to our windows or doors and look in - like he wants to be inside. In other words, you can't make him happy. He always wants the opposite of what he has (sound familiar?). He thinks he wants out of the garage so he can play in the snow and cold, but he would immediately want back in.

Why do I share all of this in a newsletter about state taxes?

Well, I think life has a lot of great analogies for state taxes (or it's just because that's my profession).

JANUARY IS "SNOW MONTH" FOR THE TAX PROFESSION

We are in the middle of January and it is the calm before the storm for most tax practitioners. In the state and local tax (SALT) profession, there really isn't any off-season. It's busy season year-round. With that said, we do experience "higher call-volumes" during tax 'busy season.'

In addition to tax 'busy season' getting ready to kick-off, state government legislative season or sessions will be starting soon. Governors and others are already making their proposals or ideas known. Every year, states change their tax laws via these sessions. These changes can be unique to the state or they can be related to conforming or not conforming with federal tax legislation. These changes are in addition to the daily non-legislative changes that occur due to new interpretations of current law, court decisions, private letter rulings, audit adjustments related to grey areas of tax law that taxpayers did not expect to be interpreted in a certain way.

Some state tax policy organizations that are great resources for monitoring law changes or being involved in impacting policy changes are:

• The Tax Foundation

• Council on State Taxation (COST)

• Multistate Tax Commission (MTC)

• National Conference of State Legislatures

• Federation of Tax Administrators

The Tax Foundation published an article about State Tax Changes taking effect January 1, 2024.

COST has a lot of great resources that only members can obtain, but they also provide some great FREE resources such as their Policy Position Statements, Amicus Briefs, other studies and reports, etc.

The MTC has a number of uniformity working groups that you can participate in or attend that can be enlightening.

WHEN STATE TAX LAWS CHANGE, TAX PROS AND TAXPAYERS RESPOND LIKE MY CATS

Just like my cats, tax pros and taxpayers respond differently to tax law changes and this time of year.

Some tax pros and taxpayers will greet tax law changes like its no big deal, not realizing the impact or the reason why they should care.

Some tax pros and taxpayers will understand what is going on and be cautious and take a 'wait and see' approach, calmly waiting for guidance so they can make informed decisions and move on.

Some tax pros and taxpayers will be anxious, will want guidance immediately, even if the tax law change has just been proposed and not enacted. They will pace and want to know what to do (even if the law change never happens).

Regardless of what cat you feel most like, this is an annual, recurring event where state tax law changes can feel like an 'avalanche' of snow.

An effective state tax pro, daily monitors state tax law changes in addition to the annual state legislative sessions.

A state tax pro looks for risks and opportunities to taxpayers.

A state tax pro provides technical and cost-effective practical guidance. Identifying the grey areas. Explaining the issues and options. Providing navigation. A compass. A roadmap. Direction.

In the context of thinking of state tax law changes as snow, a state tax pro provides a 'shovel' or 'snow plow.'

CONCLUSION

Regardless of how you feel about state tax law changes or snow, winter comes every year. I hope you don't get trapped at home for too long when winter comes. I also hope you find your shovel or snow plow to move forward when the avalanche of state tax law changes occur.

Here's to spring.

STATE TAX KNOWLEDGE UPDATE (54 ITEMS) - APRIL 11, 2018

The following are state tax and business developments I have curated since March 13th, and posted in the LEVERAGE SALT LinkedIn group:

Some of the items may be on the same state/issue/topic, but they are from different sources which may give you a broader perspective to help your company or client.

1. Idaho Enacts Tax Reform Legislation

2. Washington Revises Nexus Rules

3. California Issues Notice Regarding Processing Docketed Protests

4. Vermont Gives Income Tax Nexus Examples

5. Wyoming Exempts Cryptocurrencies

6. New Idaho Law Generally Updates State Conformity to IRC and Selectively Updates Conformity to Some Federal Tax Code Provisions and Decouples from Others

7. Idaho State Tax Commission Grants Taxpayer Request for Use of Alternative Apportionment Method on Gain from Sale of LLC Interest

8. North Carolina DOR Explains Classification as a Holding Company for Franchise Tax Purposes and Qualifying for 150K USD Tax Liability Cap

9. Receipts from Service Contracts Must be Sourced In-State for CAT Purposes Because Underlying Property Tied to Services is Located in Ohio

10. Vermont Department of Taxes Issues Nexus Bulletin Including List of Nexus-Creating Activities

11. Case Challenging Economic Presence Administrative Rule is On Hold Pending the Outcome of US Supreme Court Litigation Involving Quill Physical Presence Standard in Tennessee

12. Washington DOR Issues Regulatory Amendments Reflecting 2017 Legislation that Expands Business and Occupation Tax Economic Nexus Provisions

13. State Tax Reform Opportunities and Challenges: The STAR Partnership

14. Business Income Tax Collections FF(3.19.2018)

15. Emergency Regulations Adopted for Appeals From CDTFA

16. Preliminary CA Report on IRC Conformity Revised

17. New York Allows Withdrawal of Group Election in Some Cases

18. California Releases Summary of 2017 Federal Legislation

19. Utah Enacts Tax Rate Cuts, Single Sales Factor Apportionment

20. Florida Enacts IRC Conformity, Rate Reduction

21. Virginia Court Confirms “Subject to Tax” Exception Decision

22. Individual Income Insights: Highlights of the ABA and IPT Advanced Income Tax Conference in New Orleans

23. Extras on Excise: U.S. Supreme Court to Decide Whether to Review Loudoun County BPOL Case, Possibly Adding a Second Major State Tax Case to its Docket

24. New York allows withdrawal of certain combined elections by June 1

25. Florida updates conformity to IRC; rate reduction possible

26. New Florida Law Updates State Conformity to IRC, Extends Bonus Depreciation Decoupling, and Includes Contingent Corporate Income Tax Rate Reductions

27. New Georgia Law Decouples from 2017 Tax Reform Act’s GILTI Provisions

28. New Idaho Law Generally Updates State Conformity to Federal Bipartisan Budget Act of 2018

29. Illinois DOR Discusses Recently Enacted Federal Tax Reforms - Specifically State Reporting Requirements Involving the New Foreign Income Deemed Repatriation Transition Tax

30. New Jersey Tax Court Reaffirms that Tech Company Foreign Source Income that is Not Taxable for Federal Purposes is Not Taxable under CBT

31. Memo Explains Limited-Time Withdrawal Procedure from Some Commonly Owned Group Elections in New York

32. Utah New Law Permits Corporations to Pay Tax on IRC Sec 965 Deferred Foreign Income in Installments, Lowers Corporate Tax Rate, and Expands Mandated Single Sales Factor Apportionment

33. Virginia Supreme Court Holds that Intercompany Royalty Payments Must be Taxed in Another State to Qualify for Subject-to-Tax Addback Exception Once More

34. New Idaho Law Imposes Remote Seller Click-Through Nexus Provisions

35. Indiana New Law Provides that Remote Access Software is Not Subject to Tax

36. Louisiana Trial Court Holds that Online Marketplace Facilitator Must Collect Local Sales and Use Taxes on Third-Party Retailer Online Sales

37. Arizona Changes Multistate Service Provider Apportionment Rules

38. Illinois Proposes Addition Adjustment for FDII and GILTI

39. Alabama Changes Income Tax Filing Thresholds

40. Oklahoma Caps Personal Itemized Deductions

41. Florida Enacts Tax Rate Reductions and Modifications

42. COST: Tennessee Testimony on Federal Tax Reform Conformity

43. New Hampshire’s Internet Sales Tax Fight Continues

44. New Wisconsin Law Updates State Conformity to IRC and Couples and Decouples from Various Provisions of the 2017 Federal Tax Reform Act

45. New Utah Law Revises Certain Single Sales Factor Apportionment Method Provisions

46. New Ohio Law Updates State Conformity to IRC

47. New York City Memo Explains Limited-Time Withdrawal Procedure from Some Commonly Owned Group Elections

48. New Arizona Law Includes Sales from Intangibles in Defining Multistate Service Providers that May Elect Use of Special Sales Factor Sourcing Provisions

49. Louisiana: Online marketplace provider required to collect sales tax

50. Legislative Session Review: Wisconsin

51. Wisconsin Tackles IRC Conformity

52. Arizona Updates IRC Conformity

53. Kentucky Governor Vetoes Major Tax Legislation

54. Corporate Close-Up: Alabama Pass-Through Entity Owners, Rejoice! Why You May be Entitled to a Refund for The 2013 Through 2017 Tax Years

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 LEVERAGE SALT to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You 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.

STATE TAX KNOWLEDGE UPDATE (70 ITEMS) - MARCH 13, 2018

The following are state tax and business developments I have curated since February 7th, and posted in the LEVERAGE SALT LinkedIn group:

Some of the items may be on the same state/issue/topic, but they are from different sources which may give you a broader perspective to help your company or client.

1. Sweeping New Iowa Tax Policy Unveiled

2. Idaho Enacts New IRC Conformity Date

3. Georgia Introduce IRC Conformity Bill

4. West Virginia Passes Federal Conformity Bill

5. Sales Subject to Indiana Throwback Rule

6. Idaho Sends IRC Conformity Legislation to Governor

7. Kansas Might Repeal Multistate Tax Compact Provisions

8. Corporate Close Up: D.C. Denies Big Oil Summary Judgment on Multimillion-dollar Chainbridge Transfer Pricing Case

9. Tax Reform Friday: High Income Tax States Strike Back Against Limitation of State Tax Deduction

10. Individual Income Insights: Many States Mulling Conformity to “Fit In”

11. Extras on Excise: States are Smitten for Fuel Tax Revenue

12. Sales Tax Slice: Sourcing Online Purchases from Physical Stores

13. Effective NOL Planning in Light of Tax Reform | Tax Executive

14. Pennsylvania DOR Issues Non-Participation Penalty Assessments to Delinquent Taxpayers that Failed to Partake in 2017 Tax Amnesty Program

15. The Empire State is Open for Business – Overview of Select New York Credits and Incentives

16. Nexus Considerations: Navigating the "Kill Quill" Revolt

17. District of Columbia Confounds Opposition to Its Transfer Pricing Strategy

18. Implications to Illinois Repeal and Replacement of Its Unclaimed Property Act

19. Louisiana Governor Calls Special Session to Address Fiscal Cliff

20. COST: State-by-State Scorecard Summaries and State Legislative Targets

21. 2018 State Tax Amnesty Programs

22. 2017 State Tax Amnesty Programs (in case you missed it)

23. COST’s Opposition to House Bill 2489, Retroactive Repeal of Multistate Tax Compact Provisions

24. COST’s Opposition to Senate Bill 227, Mandatory Unitary Combined Reporting

25. California Issues Out-of-State Voluntary Disclosure Application

26. Idaho Enacts New IRC Conformity Date

27. Tax Reform Friday: Idaho and West Virginia Take Differing Approaches to I.R.C. Conformity Post-Pub. L. No. 115-97

28. West Virginia IRC Conformity Date Updated

29. Virginia Enacts IRC Conformity Legislation

30. Corporate Close-Up: California Holds LLC Member Responsible for Entitys Tax Liabilities

31. Extras on Excise: By Taxing Uber and Other TNCs, Alabama Joins the Club

32. Corporate Close-Up: New York City Tribunal Rules on Sourcing of Services from Subscription-Based Consulting

33. Property Tax Post: Payment in Lieu of Tax Already a Success?

34. Individual Income Insights: Many States Mulling Conformity to “Fit In”

35. Court or Congress? State Online Sales Tax Power Set for Change

36. Update: Companies Face Setback in Challenge to District of Columbia’s Use of Chainbridge Transfer Pricing Method

37. Congress Extends Tax Incentives for Energy Production and Conservation

38. 2018 STATE LEGISLATIVE SESSION CALENDAR

39. MTC Files Brief in Support of South Dakota’s Petition in Wayfair Case

40. Could States Fix The SALT Deduction Cap By Taxing Pass-Throughs and Giving Their Owners A Credit?

41. Ohio Department of Taxation Reissues Release on Nexus Standards and Filing Safe Harbors for Pass-Through Entities

42. Partnership Not Liable for Nonresident Partner’s NJ Tax

43. Michigan Explains Apportionment of Industrial Processing Exemption

44. Federal Tax Reform—Multistate Tax Considerations and Conformity

45. Colorado DOR Holds that Alternative Apportionment is Warranted Under Taxpayer Provided Facts

46. District of Columbia CFO Addresses How Recently Enacted Federal Tax Reforms May Affect Some Taxation in the District

47. New Idaho Law Specifies 120-Day Timeframe to Report Federal Tax Audit Adjustments

48. New Virginia Law Updates State Conformity to IRC and Decouples from Some Provisions of the 2017 Federal Tax Reform Act

49. New West Virginia Law Updates State Conformity to IRC

50. US Supreme Court Schedules Oral Arguments in Case Challenging the Constitutionality of Remote Seller Economic Nexus Law for April 17

51. Colorado DOR Issues General Information Letter Addressing Certain Remote Seller Notice and Reporting Requirements

52. South Carolina DOR Announces Acceptance of Retail Sales Tax Applications from Third-Party Suppliers of Products Sold via Online Marketplace Provider Website to In-State Purchaser

53. Could Colorado actually simplify its sales tax system? Let's hope so.

54. Tax Reform Friday: More Tax Reform Bills and Proposals; Texas v. ACA–Round 2

55. Corporate Close-Up: ‘Kill Quill’—What the End of Quill Would Mean for Corporate Income Taxpayers

56. Georgia Enacts IRC Conformity Update, Rate Cut

57. Michigan Keeps Personal Exemptions

58. Oregon Tax Bill Includes IRC Conformity

59. Illinois Introduces Marketplace Fairness Act

60. Alabama Tax Amnesty Program Enacted

61. New Alabama Law Requires 2018 Amnesty Program Providing for Potential Waiver of Interest and Penalties

62. Michigan Department of Treasury Explains New Law Permitting Alternate Method of Dispute Settlement and Resolution for Certain Tax Liabilities

63. California FTB Explains Refund Claim Procedures Pursuant to 2017 Appellate Court Ruling

64. New Georgia Law Updates State Conformity to IRC

65. Illinois DOR Addresses How Recently Enacted Federal Tax Reforms May Affect Some State Income Taxation

66. New Michigan Law Generally Updates State Conformity to IRC and Permits Taxpayer Election to Conform to IRC in Effect for Tax Year

67. Partnership Not Liable for Out-of-State Limited Partner CBT in New Jersey

68. Connecticut DOR Services Sends Use Tax Notices to Online Customers Based on Information Provided by Online Retailers

69. Chart of States with and without State Tax Tribunals (as of 2/3/16)

70. Florida Reaches Agreement on IRC Conformity, Other Tax Issues

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 LEVERAGE SALT to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You 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.

State Tax Knowledge Update (59 items) - February 7, 2018

The following are state tax and business developments I have curated since January 6th, and posted in the LEVERAGE SALT LinkedIn group:

Some of the items may be on the same state/issue/topic, but they are from different sources which may give you a broader perspective to help your company or client.

1. Online Travel Company Liable for Maryland Sales Tax

2. Corporate Close-Up: The Texas Comptroller Ruled that Wireless Voice and Data Services are Performed in Texas when a Customer Accesses Those Services in Texas--Is It Market-Based Sourcing?

3. Many State Tax Incentives Are Now Taxable Due to Federal Tax Reform

4. California Proposes Bill to Counter Federal Limit on SALT Deduction

5. Remote Retailers Must Notify Online Purchasers of Louisiana Use Tax

6. Pennsylvania Requires Addback for Federal Bonus Depreciation

7. Fourth quarter 2017 state and local tax developments

8. State implications of federal tax reform - international business

9. Twenty-Five States Face Revenue Shortfalls in 2018

10. FEDERAL TAX REFORM AND THE STATES - great resource from the National Conference of State Legislatures

11. 2017 State Policy Review: Taxation

12. THE SKINNY ON THE 2017 MTC SALES TAX AMNESTY PROGRAM AND HOW IT AFFECTS AMAZON FBA SELLERS - this is an interesting video to watch (even now).

13. Top Tax Strategies for California Businesses in 2018

14. U.S. Supreme Court to Review Bid to Collect Internet Sales Tax

15. New Hampshire Department of Revenue Administration Announces Business Tax Rate Reductions

16. Michigan Department of Treasury Discusses New Law Permitting Alternate Method of Dispute Settlement and Resolution for Certain Tax Liabilities

17. Ohio Department of Taxation Launches Amnesty Program that Runs through February 15 and Permits Potential Waiver of 100 Percent Penalties and 50 Percent Interest

18. Pennsylvania DOR Announces that Non-Participation Penalty Assessments from 2017 Amnesty Program are Coming Soon

19. Alabama DOR Issues Proposed Amended Rules on NOL Carryforwards, Federal Conformity, and Revised Filing Due Dates

20. Florida DOR Issues Administrative Rule Changes Reflecting 2017 Law on Return Filing and Payment Due Dates

21. US Supreme Court Denies Taxpayer Request to Review Florida Supreme Court Holding

22. Louisiana DOR Reminds that Certain Remote Retailers Must Issue Annual Information Notices and File Statements

23. Washington DOR Issues CPI-Adjusted Substantial Nexus Bright Line Nexus Thresholds for Business and Occupation Tax Purposes

24. Remote Businesses Might Become Subject to Hawaii Tax

25. New Jersey Enacts Corporate HQ Credit

26. Illinois Proposes Tax on Investment Management Service Businesses

27. Federal Tax Act Affects Minnesota Taxpayers

28. Illinois Responds to SALT Deduction Limit

29. Alaska Governor Seeks Support For Payroll Tax

30. Missouri Governor’s Plan for Tax Reform

31. Tax Law Prompts S Corps to Examine Their Structures: A Primer

32. Idaho State Tax Commission Discusses How Recently Enacted Federal Tax Reforms May Affect State Income Taxation

33. Michigan Court of Appeals Holds that Receipts from Law Firm Services are Sourced on a Market-Based Methodology for City of Detroit Income Tax Purposes

34. Colorado DOR Issues Updated Compliance Guidance on Some Remote Seller Notice and Reporting Requirements

35. Texas Comptroller Revises Administrative Rule 3.308 Computers – Hardware, Software, Services, and Sales

36. Washington DOR Issues Proposed Expedited Regulatory Amendments Reflecting 2017 Legislation that Expands B&O Economic Nexus

37. Multistate Tax Considerations of the Federal Tax Reform International Tax Provisions

38. What the Tax Cuts and Jobs Act Means for States – A Guide to Impacts and Options

39. Key Lessons for States as They Determine Responses to the Federal Tax Bill

40. 2018 Tax policy outlook

41. NYC Receipts Allocation Reflects Employees and Consultants

42. State Tax Conformity: Revenue Effects

43. Tax Reform Moves to the States: State Revenue Implications and Reform Opportunities Following Federal Tax Reform

44. January Tax Retrospective: Congress Acts, States React

45. Tax reform provides federal and state credits and incentives opportunities

46. New York releases FY 18-19 budget proposal

47. California Competes tax credit program - More than $55 million in tax credits available

48. You’re Invited: COST, Bloomberg Tax and McDermott Will & Emery to Host Post-Oral Argument Roundtable Discussion

49. Oregon DOR Issues Final Market-Based Sourcing Rule

50. Pennsylvania DOR Discusses New Law that Imposes Information Reporting and Notice Requirements on Some Remote Sellers Including Marketplace Facilitators

51. South Carolina: ALJ Denies DOR Motion for Injunction – Holds that Online Marketplace Provider is Not Required to Collect Tax on Third-Party Sales During Pendency of Case

52. Pennsylvania DOR Announces Immediate Effectiveness of 2017 Legislative Amendments Involving NOL Limitations

53. Montana DOR Discusses How Recently Enacted Federal Tax Reforms May Affect Some State Income Taxation

54. Minnesota DOR Discusses How Recently Enacted Federal Tax Reforms May Affect Some State Income Taxation

55. South Dakota Updates IRC Conformity Date

56. New Hampshire Joins Internet Sales Tax Fight

57. Ohio Amnesty Program Ends February 15

58. Oklahoma Governor Proposes Budget with Numerous Tax Changes

59. Tax Reform Friday: From Coast to Coast, Federal Tax Reform Involves State Taxation Policy

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 LEVERAGE SALT to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You 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.

17 State Tax and Business Developments You May Want to Know - Sept 5, 2017

The following are state tax and business developments I have curated since August 26th, and posted in the LEVERAGE SALT LinkedIn group:

1. NC market discount income from US govt bonds is not interest

2. CORPORATE CLOSE-UP: THE FTB’S SMALL CAP SOLUTION TO ALLEGED FINANCIAL AND NON-FINANCIAL COMBINED REPORTING APPORTIONMENT DISTORTION

3. COST, EY & State Tax Research Institute Study: Total State and Local Business Taxes (fy16)

4. Oregon revenue online educational services sourced faculty costs

5. State Rundown 8/31: Modernizing Taxes is Sometimes a Sprint, Sometimes a Marathon

6. Oral Arguments Heard in South Dakota’s Challenge to Quill

7. Net Operating Loss Carryforward & Carryback Provisions by State

8. Indiana Files Lawsuit to Defend Out-Of-State Sales Tax Law

9. Amended Colorado Regulations Address Combined and Consolidated Filing and Apportionment

10. Massachusetts DOR Issues Technical Information Release on Policy Change Regarding Treaty-Exempt Income

11. Oregon Tax Court Explains that Only Direct Costs are Relevant in Determining Where Greater Proportion of Costs of Performance Was Incurred

12. Indiana Attorney General Responds to Suit Filed by Trade Groups Regarding Enforcement of New Remote Seller Economic Nexus Law

13. Limited-Time Voluntary Disclosure Program for Out-of-State Sellers Having Click-Through Nexus Runs through November 21 in New Jersey

14. Rhode Island Division of Taxation Explains New Information Reporting and Notice Requirements on Some Remote Sellers - Including Marketplace Facilitators

15. Seattle high-income resident income tax enacted

16. Texas appellate court upholds subcontractor exclusion while reversing and remanding on COGS methodology

17. VA Supreme Ct rules subject to tax exception post apportionment

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 issue. You 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.