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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:
The U.S. District Court of Appeals for the 10th Circuit has ruled that a lower federal court overstepped its jurisdiction when it declared unconstitutional and issued a permanent injunction against enforcement of a statute and regulations that impose notice and reporting requirements pertaining to use tax on out-of-state sellers. To view our previous news item on the injunction, click here. The lower court’s decision to impose the permanent injunction was based upon the court’s reasoning that the law placed an undue burden on interstate commerce.The U.S. Court of Appeals remanded the case to the federal district court to dismiss the plaintiff’s claims and to lift the permanent injunction. The court cited the Tax Injunction Act, which states that federal courts should not enjoin, suspend or restrain any state tax assessments or collections if the disputed matter can be resolved by lower courts. The court noted that although its decision was based on the Tax Injunction Act, the doctrine of comity also favored the state. The doctrine of comity is intended to "restrain federal courts from entertaining claims for relief that risk disrupting state tax administration." We will monitor the DMA response and Colorado’s enforcement provisions. At this point, it appears the law is valid and affected sellers should evaluate their requirements to provide the appropriate notice on each invoice due to the significant potential penalties. (Direct Marketing Association v. Brohl, U.S. Court of Appeals, Tenth Circuit, Dkt. 12-1175, August 20, 2013)
Amazon.com and Overstock.com have asked the U.S. Supreme Court to review a ruling by the New York Court of Appeals which held that they failed to demonstrate that a statutory provision that required out-of-state internet retailers with no physical presence in New York to collect New York sales and use taxes was facially unconstitutional under either the Commerce Clause or the Due Process Clause. To see our previous news item on the New York Court of Appeals ruling, click here. (Overstock.com, LLC v. New York State Department of Taxation and Finance, U.S. Supreme Court, Dkt. 13-252, petition for certiorari filed August 22, 2013; Amazon.com LLC v. New York State Department of Taxation and Finance, U.S. Supreme Court, Dkt. 13-259, petition for certiorari filed August 23, 2013)
Vermont has initiated a voluntary self-audit program– “Know What You Owe” - intended to aid taxpayers in complying with use tax remittance. From August 1, 2013 to May 1, 2014, business owners can sign up to participate in the program, conduct a self-audit, and remit the correct amount of use tax due. Under the program, participants will review their business records for the past three years to determine if use tax is owed. The state will allow participants to self-report the tax due and will waive all penalties and 50% of the interest owed for the period reviewed. The look-back period for audits under the program will be limited to three years instead of the possible seven years for businesses not currently registered. Additionally, participants will not have to work through a structured audit. Any tax owed and applicable reduced interest must be paid within 30 days of the date the participant enters the program. Additional interest will accrue if the tax is not paid in this period. Participants may be able to arrange an extended payment plan with the department.(Know What You Owe, Vermont Department of Taxes, August 2013; Publication BR-1015, Vermont Department of Taxes, August 27, 2013)
The City of Los Angeles has enacted a tax amnesty program, effective September 1, 2013 through December 2, 2013. The amnesty program applies to the following City of Los Angeles taxes: Business, Utility Users Taxes (Telephone, Electricity, Gas), Commercial Tenant's Occupancy, Transient Occupancy, and Parking Occupancy Taxes. Under the program, taxpayers that submit a tax amnesty application and pay all outstanding tax, interest, and fees during the amnesty period will have all penalties waived. Following this amnesty period, the Office of Finance will pursue a range of enforcement actions including an additional 10% negligence penalty, an expanded audit program and expanded on-site investigations, and other enforcement actions. For more details on the amnesty program, visit our Sales Tax Amnesty chart which has a link to the Office of Finance’s amnesty page. (Tax Amnesty Program, City of Los Angeles Office of Finance, September 2013)
Louisiana Governor Bobby Jindal has approved the Tax Delinquency Amnesty Act of 2013. The Act requires the Louisiana Department of Revenue (LDR) to implement a tax amnesty program applicable to all taxes administered by the LDR, except for motor fuel taxes and penalties for failure to submit information reports that are not based on an underpayment of tax. There will be three separate time periods during which taxpayers will be able to file for amnesty protection. The first period will run from September 23, 2013 and end November 22, 2013. The remaining two periods will be a period of at least one month occurring between July 1, 2014, and December 31, 2014 and a period of at least one month occurring between July 1, 2015, and December 31, 2015. These dates have not yet been announced. The LDR will be authorized to waive penalties and interest associated with the tax periods for which amnesty is applied as follows: all penalties and 50% of the interest owed if the amnesty application is approved during the 2013 amnesty period; 15% of penalties owed if the amnesty application is approved during the 2014 amnesty period; and 10% of penalties owed if the amnesty application is approved during the 2015 amnesty period. Based on this, affected taxpayers are encouraged to file for amnesty during the 2013 period.
The following taxes are eligible for amnesty: taxes due prior to January 1, 2013, for which the LDR has issued an individual or a business proposed assessment, notice of assessment, bill, notice, or demand for payment not later than May 31, 2013; taxes for taxable periods that began before January 1, 2013; or taxes for which the taxpayer and the department have entered into an agreement to interrupt and suspend the running of prescription until December 31, 2013. Special amnesty provisions apply to matters under examination and in litigation. Amnesty will be granted only for eligible taxpayers who apply for amnesty during one of the amnesty periods and who pay all of the tax, all fees and costs (if applicable), and any interest due upon filing the amnesty application. Amnesty may not be granted to taxpayers who are parties to any criminal investigation or criminal litigation in any state or federal court pending on June 21, 2013, for nonpayment, delinquency, or fraud in relation to any state tax administered by the department. Any taxpayer who delivers or discloses a false or fraudulent application, document, return, or other statement to the department in connection with an amnesty application will be ineligible for amnesty and subject to a fraud penalty or a penalty of $10,000, whichever is greater. Taxpayers that participate in the amnesty program and later fail to comply with any payment and filing provision would be subject to a negligence penalty or a $100 penalty, whichever is greater.
The application for taxpayers involved in field audits or litigation will include all issues and all eligible periods involved in the audit or litigation. All business taxpayers are required to file returns with the amnesty application. The Secretary reserves the right to require individual taxpayers to file tax returns with the amnesty application as well. (Act 421 (H.B. 456), Laws 2013, effective June 21, 2013; Revenue Information Bulletin No. 13-017, Louisiana Department of Revenue, August 1, 2013)