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On September 30, 2015 the U.S. House of Representative passed H.R. 719, which includes a provision that would extend the Internet Tax Freedom Act (ITFA) through December 11, 2015. The ITFA was scheduled to expire on October 1, 2015. The bill will now go to President Obama for signature.

 

To see our previous news item on the ITFA, visit Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.

 

To see an update on this news item, visit Internet Tax Freedom Act Extended Through October 1, 2016,

 

(H.R. 719)

(10/26/2015)

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)

 

UPDATE: This bill failed to pass during the 114th Congressional Session running from January 3, 2015 to January 3, 2017.  Therefore, this bill has died and would need to be reintroduced to be considered and voted on.

(09/08/2015)

Colorado has issued a general information letter regarding whether a plumbing contractor was liable to pay sales tax on tangible personal property purchased for lump-sum and time and materials contracts. For lump-sum contracts, the contractor must pay sales tax on the property purchased to complete the contract and cannot charge and collect sales tax from its customers. For time and materials contracts, the contractor must be registered to collect sales tax and should collect sales tax on the amount charged to customers for the materials. The materials should be purchased exempt from tax under a resale exemption.  Since the contractor didn’t have a Colorado sales tax license to collect and remit sales tax, the Department stated that the contractor must bill all its contracts on a lump-sum basis and not on a time and materials basis. If the contractor obtains a Colorado sales tax license, it can enter into time and materials contracts and charge sales tax accordingly. If the contractor did not mark up the price of the materials purchased, the contractor is not permitted to pay sales tax on the materials if customers are billed on a time and materials basis. The Department stated that the purpose of the rule is to deal with situations where there is a mark-up of the materials and that the rule does not make a distinction between contractors that mark up and those that do not. As a result, all contractors are required to follow the rule. The contractor regulation is under review by the Department and they may consider whether to accommodate this situation by regulation. (GIL 15-015, Colorado Department of Revenue, June 8, 2015, released August 2015)

(08/24/2015)

Colorado has issued a general information letter discussing whether audio-visual equipment was classified as construction building materials for sales and use tax and contractor exemption purposes. The equipment provided by the audio-visual systems retailer included video monitors, speakers, amplifiers, wireless microphone systems, video cameras, projectors, racking hardware, antennas, conductors, and cabling. Building materials are generally materials that are incorporated into the structure to such an extent that they cannot be removed without substantial damage to the structure. The Department stated that the VDA and HDMI input plates appeared to be the only material that can be treated as building materials if they are permanently attached to the structure. The retailer did not perform the traditional work of an electrician. The Department was reluctant to classify installers of audio-visual equipment, entertainment systems, burglar alarms and similar equipment as construction contractors because the equipment was not considered building materials and was generally not fixtures of real property. As a result, the Department treats the company as a retailer and not a contractor. As a result, the materials are not eligible for the contractor sales and use tax exemption. The audio visual company is deemed a retailer and should charge sales tax on the selling price of the equipment.  If the sale is made to a contractor, since the equipment is not classified as building material, the contractor is deemed a retailer when selling it to its customer.  It will be required to be registered to collect sales tax and should issue a resale certificate to the audio visual company on its purchases. (GIL 15-011, Colorado Department of Revenue, July 22, 2015)

(08/21/2015)

Colorado has enacted a sales and use tax refund for tangible personal property used for research and development by a qualified medical technology or clean technology taxpayer. From January 1, 2015 through December 31, 2017, a qualified medical technology or clean technology taxpayer can claim a refund up to $50,000 per calendar year for state sales and use tax paid by qualified taxpayers for tangible personal property used in Colorado directly and predominately in research and development of medical technology or clean technology. To claim the refund, the taxpayer must submit a refund application to the DOR no earlier than January 1 and no later than April 1 of the calendar year following the year in which the tax was paid. The taxpayer must provide proof of the taxes paid and any other additional information required by the DOR.(H.B. 1180, Laws 2015, effective 91 days after final adjournment of the General Assembly)

(06/23/2015)

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