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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:
Louisiana Gov. Bobby Jindal has signed legislation that amends the Tax Delinquency Amnesty Act of 2013, which requires the Louisiana Department of Revenue (LDR) to develop and implement a tax amnesty program for taxes administered by the LDR. Dates for the 2014 and 2015 Amnesty have not yet been announced. Louisiana had an amnesty program in 2013 from September 23, 2013 to November 22, 2013. The new legislation expands the scope of the amnesty program to include:
- taxes for taxable periods that began before 2014 (previously, before 2013);
- taxes for which the LDR and the taxpayer have entered into an agreement to toll the statute of limitations until the end of 2014 (previously, until the end of 2013);
- for the 2014 amnesty program, taxes due prior to 2014 for which the LDR has issued a proposed assessment, notice of assessment, bill, notice, or demand for payment not later than May 31, 2014; and
- for the 2015 amnesty program, taxes due prior to 2015 for which the LDR has issued a proposed assessment, notice of assessment, bill, notice, or demand for payment not later than May 31, 2015.
The new legislation permits 100% of penalties and 50% of interest to be waived during the 2014 amnesty period (previously, 15% of penalties and no interest). For the 2015 amnesty period, 33% of penalties and 17% of interest may be waived (previously, 10% of penalties and no interest). A taxpayer will be subject to double penalties if there is a final judgment rendered against the taxpayer by a court or if the taxpayer has exhausted all rights to protest taxes owed to the state 90 days prior to either the 2014 or the 2015 amnesty period, and the taxpayer then fails to submit an amnesty application before the end of the applicable amnesty period 90 days prior to which the final judgment was rendered or 90 days prior to which the taxpayer’s rights to protest taxes have been exhausted. A taxpayer who disputes a portion of the delinquent tax assessed by the LDR may now be eligible to apply for amnesty if the taxpayer remits a complete one-time payment of the portion of the tax that is not in dispute, plus applicable interest and penalties, to the LDR prior to the end of the applicable amnesty period. This payment is referred to as a "compromise amount." The LDR will then have 30 days to determine if the taxpayer should be granted amnesty based on the compromise amount paid. If the LDR approves the compromise amount paid by the taxpayer, the taxpayer will be granted amnesty. If the LDR rejects the compromise amount, amnesty will not be granted and the taxpayer will be responsible for the full amount of the delinquent tax, penalties, interest, and fees prior to the application for amnesty. The legislation authorizes the use of six-month installment payment agreements. Taxpayers who apply for amnesty by opting to pay in installments remain eligible to participate in the amnesty program only by making complete and timely payment of the entire amount due under the installment agreement. Taxpayers involved in field audits or litigation are not eligible for installment agreements under the amnesty program. All installment agreements must require the taxpayer to provide a down payment of no less than 20% of the total amount of delinquent tax, penalty, interest, and fees owed. Taxpayers who cannot enter into an agreement to make automated electronic payments are not eligible for an installment agreement. Additionally, under the new legislation, the LDR is prohibited from accepting tax credits as payment of any tax, interest, penalty, or fee paid as a result of participation in the amnesty program. The legislation also states that, after 2015, no new LDR amnesty programs are allowed before January 1, 2025. (Act 822 (H.B. 663) Laws 2014, effective August 1, 2014)
Puerto Rico Governor Garcia Padilla signed legislation re-establishing the 6% sales and use tax rate, effective February 1, 2014. A reduction in the tax rate from 6% to 5.5% was originally approved to go into effect on December 1, 2013 and was postponed until February 1, 2014. (Proyecto de la Cámara 1591)
The U.S. Supreme Court has denied requests by Amazon.com and Overstock.com to review a New York Court of Appeals ruling which held that the online retailers failed to demonstrate that a statutory provision that required out-of-state Internet retailers with no physical presence in New York to collect sales and use taxes was facially unconstitutional under either the Commerce Clause or the Due Process Clause. The click-through nexus law created a rebuttable presumption that a retailer solicits business in New York if any in-state entity was compensated for directly or indirectly referring customers to the retailer, whether by a website link or otherwise, and the cumulative gross receipts from these and other New York affiliate referrals exceeded $10,000. Click here to view our previous news item on this ruling. (Overstock.com, LLC v. New York State Department of Taxation and Finance, U.S. Supreme Court, Dkt. 13-252, petition for certiorari denied December 2, 2013; Amazon.com LLC v. New York State Department of Taxation and Finance, U.S. Supreme Court, Dkt. 13-259, petition for certiorari denied December 2, 2013)
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.
UPDATE: On December 13, 2013, a federal district court judge issued an order dissolving the permanent injunction entered against the Colorado Department of Revenue regarding notice and reporting requirements pertaining to use tax on out-of-state sellers. The Colorado Department of Revenue has issued a notice stating that it will not enforce any penalties for failure to comply during the period the injunction was in place. The Department also will not assess penalties for a retailer’s failure to comply with the January 31, 2014 deadline to provide annual purchase summaries to their customers or the March 1, 2014 deadline to provide the annual report to the Department for their 2013 purchases. (Direct Marketing Association v. Brohl, U.S. Court of Appeals, Tenth Circuit, Dkt. 12-1175, August 20, 2013, The Direct Marketing Association v. Huber, U.S. District Court for the District of Colorado, Dkt. No. 10-cv-01546-REB-DBS, December 10, 2013)
UPDATE: A Denver district court judge has granted Direct Marketing Association's motion for a preliminary injunction against Colorado imposing notice and reporting requirements on remote sellers. The court found that the law discriminated against remote sellers who were required to collect sales tax or required to notify customers of use tax obligations. According to the Colorado Department of Revenue, retailers are not required to comply with the remote vendor reporting requirements at this time. However, the court’s decision does not affect a Colorado consumer’s liability for tax on any purchase on which sales tax was not collected. Customers are still required to file a Consumer Use Tax Return and pay the tax due.(Direct Marketing Association v. Department of Revenue, Denver District Court, No. 13CV34855, February 18, 2014, and Release - Internet Sales/Non-Collecting Retailers, Colorado Department of Revenue, February 19, 2014)
UPDATE: The U.S. Supreme Court has been asked to review the decision by the U.S. District Court of Appeals for the 10th Circuit which held that the federal Tax Injunction Act barred the exercise of federal court jurisdiction over the lawsuit challenging the constitutionality of the Colorado law. (Direct Marketing Association v. Brohl, U.S. Supreme Court, Dkt. 13-1032, petition for certiorari filed February 25, 2014)
UPDATE: The U.S. Supreme Court has agreed to review the decision of the U.S. District Court of Appeals for the 10th Circuit. (Direct Marketing Association v. Brohl, U.S. Supreme Court, Dkt. 13-1032, petition for certiorari granted July 1, 2014)
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)