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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 February 5, 2014, North Carolina launched the Trust Tax Recovery Program, which offers amnesty to qualifying companies owing collected but unpaid trust taxes. The North Carolina Department of Revenue describes trust taxes as those taxes paid by a customer to a seller or withheld from an employee, and held in trust by the business until filed and paid to the Department. The program will offer penalty and fee waivers, as well as payment plans to companies that have liabilities for sales, withholding and other trust taxes. Businesses that file and pay all outstanding taxes within the payment plan terms may have their penalties and collection fees waived. If program participants fail to file or pay future taxes as required, fees and penalties may be reinstated. Participants in the program must not be facing criminal charges or be the subject of a criminal investigation at the time of application. Taxpayers may not receive the benefits of the program for tax periods associated with a prior criminal conviction. Taxpayers may not participate in the program if they have defaulted on payments or received penalty waivers while participating in the Small Business Taxpayer Recovery Program or the Small Business Counseling Program. Click here for more information.
Massachusetts has enacted legislation creating a tax amnesty program, which will take place during September and October 2014. Under the program, penalties will be waived for taxpayers who pay their outstanding taxes and interest in full. Unlike most other amnesty programs, this program only applies to assessments that were issued prior to July 1, 2014. On September 2, 2014, tax amnesty notices showing the tax and interest due, along with the penalties to be waived, will be mailed to taxpayers who qualify for the program. If taxpayers pay the tax and interest shown on the bill on or before October 31, 2014, the state will waive the unpaid penalties for the period. In addition to sales and use taxes, the additional tax types that are eligible for the amnesty period include boat and recreational vehicle sales taxes; cigarette, cigar, and smoking tobacco excise taxes; convention center financing fees on rooms, parking and certain tours; club alcoholic beverage excise taxes; gasoline excise taxes; individual income taxes; material man sales taxes; meals taxes, including local option taxes; room occupancy excise taxes, including local option taxes; special fuels excise taxes; and withholding taxes. (H.B. 4001, Laws 2014, effective retroactively to July 1, 2014; What You Need to Know About the Tax Amnesty Program, Massachusetts Department of Revenue, July 21, 2014)
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)