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NEWS & TIPS
The Sales Tax Institute reviews numerous sales tax publications to monitor state activity on various topics related to sales and use tax. By checking updates routinely, you may be alerted to an impending tax law change critical to your business.
Browse recent and archived news items by searching relevant categories, states or descriptions at right
The information listed here is high-level summary and background material intended to help you stay current in the dynamic area of sales and use tax. Sources include CCH State Tax Day, Sales and Use Tax Alert, Sales Tax Notes, Vertex, Inc. Reference Manuals, Westlaw, and other miscellaneous state tax newsletters and Department of Revenue notices.
Please note that these summaries omit many details and special rules, and cannot be regarded as legal or tax advice. For more information, be sure to contact your tax advisor.
HOT NEWS UPDATES:
On June 15, 2015, Representative Jason Chaffetz (R-UT) introduced the Remote Transactions Parity Act (RTPA) of 2015 in the U.S. House of Representatives. The bill – similar to the Marketplace Fairness Act (MFA) of 2015 – pertains to sales and use taxcollection obligations for remote sellers, but the RTPA contains some differences and several additional provisions. Unlike the MFA’s $1 million small seller exception, the RTPA’s small seller exception is as follows: first year: $10 million; second year: $5 million; third year: $1 million. The exception goes away in the fourth year. Furthermore, under the RTPA sellers utilizing an electronic marketplace are not considered small sellers and are not entitled to the exception, no matter the year. Under the RTPA, sellers would not be audited by states where they don’t have a physical presence. There would be a three year statute of limitations for assessments on remote sellers. The bill would enable remote sellers to refund over-collected tax to customers. The RTPA also specifies that a state would not be authorized to impose a sales and use tax collection requirement on remote sellers until it has certified multiple software providers that are certified in all states seeking to impose authorization requirements. The RTPA would also allow customers to pursue refunds of over-collected tax from remote sellers. However, RTPA does not preempt states from imposing sales and use taxes on remote sellers that do not have physical presence under this definition. It merely authorizes states to impose sales and use tax on remote sellers without a physical presence. Under the RTPA, if a seller has nexus under existing law, including Quill v. North Dakota, then the state may still impose a sales and use tax collection requirement. The bill is assigned to the Judiciary Committee just like the MFA. On July 1, 2015 it was referred to the Subcommittee on Regulatory Reform, Commercial And Antitrust Law. (H.R. 2775, the Remote Transactions Parity Act of 2015)
Massachusetts Gov. Charlie Baker has signed the Massachusetts fiscal year 2016 budget, which authorizes a tax amnesty program to be established for a period of 60 days as determined by the Commissioner of Revenue. The scope of the program, including the tax types and periods covered as well as the look-back period for unfiled returns (for a period not to exceed three years) will be determined by the Commissioner. It is unclear from the legislation how the 3 year lookback will apply. Under the amnesty program, penalties will be waived for qualifying taxpayers who have failed to timely file any proper return for any tax types and for any tax periods, timely pay any tax liability, or pay the proper amount of any required estimated payment toward a tax liability. Penalties will be waived without the need for any showing by the taxpayer of reasonable cause or the absence of willful neglect. The amnesty program will not apply to penalties for underpayment of tax or inconsistent reporting of taxable income, with regard to returns filed pursuant to the amnesty. The waiver of penalties will not apply to any period for which the taxpayer does not file such proper returns.
Participating taxpayers must voluntarily file proper returns and pay the full amount of tax on the returns, or the amount due upon the Commissioner’s assessments, plus all interest due. All required payments must be made by June 30, 2016. The amnesty will not apply to a tax liability of any tax type for a period commencing on or after January 1, 2014. The amnesty will not apply to taxpayers who have been the subject of a tax-related criminal investigation or prosecution or to taxpayers who have delivered or disclosed any false or fraudulent application, document, return, or other statement. The Commissioner is also required to establish administrative procedures and methods to prevent any taxpayer who participates in the amnesty program from utilizing any future tax amnesty programs for the next consecutive 10 years, beginning in calendar year 2015. (Press Release, Office of Gov. Charlie Baker, July 17, 2015)
Indiana Governor Mike Pence has signed the State Biennial Budget Bill, which requires the Indiana Department of Revenue to establish a tax amnesty program for taxpayers having an unpaid tax liability for a listed tax that was due and payable for a tax period ending before January 1, 2013. The amnesty program will take place from September 15 through November 16, 2015 and will apply to all tax types managed by the Department. Penalties, interest and collection fees on unpaid tax liabilities will be waived for qualified participants in the amnesty program. The Department will not seek civil or criminal prosecution and shall not issue or will withdraw an assessment or notice previously issued. The Department will release tax liens that have been imposed on existing liabilities. Any additional taxes due under the amnesty must be paid or a payment plan entered into before the conclusion of the amnesty program. Any taxpayer who participated inthe 2005 prior amnesty is barred from the 2015 amnesty. Any participant in the 2015 amnesty will be barred from participating in any future amnesty. Taxpayers who benefited from the Streamlined Sales Tax Amnesty program are also ineligible. If eligible taxpayers do not participate in the amnesty and additional taxes are deemed due, additional penalties will apply.
The Indiana Department of Revenue has issued emergency rules regarding the tax amnesty program. The emergency rules list the eligibility requirements and restrictions for participating in the tax amnesty program. Taxpayers with unpaid income tax, sales tax, withholding tax, inheritance tax, estate tax and generation-skipping transfer tax liabilities are eligible to participate in the amnesty program. Taxpayers who are known to be eligible will receive notice by September 15, 2015. Per the rules, an eligible taxpayer who fails to participate may be subject to a doubling of penalties owed on unpaid tax liabilities. Taxpayers can pay tax liabilities in a lump-sum payment or through an amnesty payment plan agreement. An amnesty payment plan agreement requires that the base tax due be paid in full to the department by June 15, 2016. A taxpayer who fully complies with the terms of an amnesty agreement is eligible to have his or her tax warrant(s) expunged, at the discretion of the department. The department will not expunge a warrant if it finds that the warrant was issued based on the taxpayer’s fraudulent, intentional or reckless conduct. To have a warrant expunged, a taxpayer must submit to the department an amnesty expungement request form.
For more information, you can visit the state's amnesty program web page.
(H.B. 1001, Laws 2015, effective July 1, 2015; Governor Pence Announces Tax Amnesty to Be Conducted in Fall 2015, Indiana Gov. Mike Pence, June 29, 2015; LSA Document #15-240(E), Indiana Department of Revenue, July 27, 2015)
Kansas has enacted a tax amnesty tax program that will take place from September 1, 2015 to October 15, 2015. Penalties and interest will be waived for taxpayers who pay delinquent taxes in full. The amnesty program applies to the following taxes: privilege, income, estate, cigarette, tobacco products, liquor enforcement, liquor drink, mineral severance, state sales and use, and local sales and use taxes. The amnesty program applies only to penalties and interest on liabilities associated with tax periods ending on or before December 31, 2013. The amnesty program does not apply to any matter for which, on or after September 1, 2015, taxpayers have received notices of assessment or for which an audit had previously been initiated. Fraud or intentional misrepresentation in connection with an amnesty application voids the application and waiver of any penalties and interest.
For more information, you can visit the state's amnesty program web page.
(H.B. 2109 and S.B. 270, Laws 2015, effective July 1, 2015, and applicable as noted)
South Carolina has enacted a bill authorizing the Department of Revenue (DOR) to create a tax amnesty period during which penalties and interest, or a portion of them, will be waived for taxpayers that voluntarily file and pay all taxes owed. Amnesty will be granted to taxpayers who:
- request an amnesty form and voluntarily file all delinquent tax returns and pay in full all taxes due;
- voluntarily file an amended tax return to correct an incorrect or insufficient original return and pay all taxes due; or
- voluntarily pay in full all previously assessed tax liabilities due within an extended amnesty period as determined by the department. The department may set up installment agreements so long as all taxes are paid within this period.
A taxpayer who has an appeal pending with respect to an assessment will be able to participate in the amnesty program if the taxpayer pays all taxes owed. A taxpayer who is the subject of a state tax-related criminal investigation or criminal prosecution will not be eligible to participate in the program. If the DOR establishes an amnesty period, it must notify the South Carolina General Assembly of the amnesty period at least 60 days before the start of the amnesty period. An administrative fee of 5% must be reimbursed to the department on the total amount collected under amnesty. Any overdue tax debt, as defined in Section 12-55-30, remaining unpaid may have imposed on it at the department's discretion an additional ten percent collection assistance fee. This collection assistance fee initially may be imposed on any overdue tax debt at the close of the extended amnesty period as prescribed by the department. This additional collection assistance fee only may be imposed for a period of one year after the close of the extended amnesty period. (S.B. 526, Laws 2015, effective June 8, 2015)