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Representative Lamar Smith (Republican, Texas) has introduced a bill to bar multiple taxes on digital goods and services.  Smith had proposed an earlier bill which failed to pass.  This bill is a revised version of the earlier bill. The proposed bill – called the Digital Goods and Services Tax Fairness Act of 2013 – would only allow a state to tax sales of digital goods and services to customers with a tax address within that state. Additionally, states would be barred from imposing multiple taxes on digital goods. The bill defines digital goods as sounds, images, data and facts maintained in digital form. Internet access service is not included as a digital good in the bill. (H.R. 3724)

(01/28/2014)

Louisiana has issued a reminder that the vendor’s compensation rate for the timely filing of a sales and use tax return is reduced from 1.1% to 0.935%, effective July 1, 2013. The rate change is effective with the July sales tax return due August 20, 2013. Note that the compensation is allowed only on returns that are timely filed and paid.  (Tax Topics Weblog, Louisiana Department of Revenue, August 19, 2013)

(09/16/2013)

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)

(08/26/2013)

Louisiana has reduced the vendor’s compensation rate on timely filed Louisiana state sales tax returns from 1.1% to 0.935%, effective July 1, 2013. The change becomes effective with the July 2013 sales tax return, which is due August 20, 2013. The compensation (dealer discount) is only allowed on returns that are timely filed and paid. (Revenue Information Bulletin No. 13-012, Louisiana Department of Revenue, July 1, 2013)

(07/22/2013)

The federal Marketplace Fairness Act of 2013 was introduced in the House of Representatives and the Senate on February 14, 2013.  If passed, the bill would authorize states that meet certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes.  Under the legislation, a state would be authorized to require a remote seller to collect sales and use taxes only if the remote seller has gross annual receipts in total remote sales in the United States of more than $1 million in the preceding calendar year.

 

Member states of the Streamlined Sales and Use Tax (SST) Agreement would be authorized to require all sellers that do not qualify for the small seller exception to collect and remit sales and use taxes with respect to remote sales sourced to that member state pursuant to the provisions of the SST Agreement. The SST Agreement would have to include certain minimum simplification requirements. An SST member state could begin to exercise authority under the Act beginning 90 days after the state publishes notice of its intent to exercise such authority, but no earlier than the first day of the calendar quarter that is at least 90 days after the date of the enactment of the Act.

 

States that are not members of the SST Agreement would be authorized, notwithstanding any other provision of law, to require all sellers that do not qualify for the small seller exception to collect and remit sales and use taxes with respect to remote sales sourced to the state if the state implements certain minimum simplification requirements. The authority would begin no earlier than the first day of the calendar quarter that is at least six months after the state enacts legislation to exercise the authority granted by the Act.

 

To enforce collection requirements on remote sellers that do not meet the small seller exception, states that are not members of the SST Agreement would have to implement the minimum simplification requirements listed below. For SST member states to have collection authority, the requirements would have to be included in the SST Agreement.

 

-       A single entity within the state responsible for all state and local sales and use tax administration, return processing, and audits for remote sales sourced to the state

-       A single audit of a remote seller for all state and local taxing jurisdictions within that state

-       A single sales and use tax return to be used by remote sellers to be filed with the single entity responsible for tax administration.

-       Each state would have to provide a uniform sales and use tax base among the state and the local taxing jurisdictions within the state.

-       Each state would have to source all interstate sales in compliance with the sourcing definition outlined below.

-       Each state would have to provide information indicating the taxability of products and services along with any product and service exemptions from sales and use tax in the state and a rates and boundary database. States would have to provide free software for remote sellers that calculates sales and use taxes due on each transaction at the time the transaction is completed, that files sales and use tax returns, and that is updated to reflect state and local rate changes. States would also have to provide certification procedures for persons to be approved as certified software providers (CSPs). Such CSPs would have to be capable of calculating and filing sales and use taxes in all the states qualified under the Act.

-       Each state would have to relieve remote sellers from liability to the state or locality for incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of an error or omission made by a CSP.

-       Each state would have to relieve CSPs from liability to the state or locality for the incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of misleading or inaccurate information provided by a remote seller.

-       Each state would have to relieve remote sellers and CSPs from liability to the state or locality for incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of incorrect information or software provided by the state.

-       Each state would have to provide remote sellers and CSPs with 90 days’ notice of a rate change by the state or any locality in the state and update the taxability and exemption information and rate and boundary databases, and would have to relieve any remote seller or CSP from liability for collecting sales and use taxes at the immediately preceding effective rate during the 90-day notice period if the required notice is not provided.

 

For non-SST member states, the location to which a remote sale is sourced would be the location where the item sold is received by the purchaser, based on the location indicated by instructions for delivery. When no delivery location is specified, the remote sale is sourced to the customer's address that is either known to the seller or, if not known, obtained by the seller during the transaction, including the address of the customer's payment instrument if no other address is available. If an address is unknown and a billing address cannot be obtained, the remote sale is sourced to the address of the seller from which the remote sale was made. SST member states would be required to comply with the sourcing provisions of the SST Agreement.

 

On March 22, 2013, the U.S. Senate voted 75-to-24 in favor of the concept of the Marketplace Fairness Act. The actual Marketplace Fairness Act was introduced in both chambers in February, but last week Senator Enzi, the sponsor of the Senate bill, offered an amendment to the 2014 Budget Resolution that would include insertion of the language of Marketplace Fairness in the budget. It was a largely symbolic tactic since the Budget Resolution itself will not become law, but by approving the amendment, the Senate has shown that there is broad, bipartisan support for the notion of requiring remote sellers to collect sales tax.

 

On May 6, 2013, the U.S. Senate passed the Marketplace Fairness Act with a 69-27 vote.

 

UPDATE: On September 18, 2013, Rep. Bob Goodlatte, the chairman of the House Judiciary Committee released a set of seven principles that he believes any internet sales tax bill should meet.  The seven principles outlined by Goodlatte are tax relief, tech neutrality, no regulation without representation, simplicity, tax competition, states’ rights, and privacy rights.  For more details on the principles, click here to see the House Judiciary Committee’s press release.

 

We are continuing to track the activities of these bills.  We are also involved in planning efforts involving states and businesses regarding the potential implementation consequences of passage.  Watch for updates in the Sales Tax Compass as well as through our Twitter account and LinkedIn updates. 

 

The text of the bill passed by the Senate can be viewed here.

 

For an update on this news item, visit Senate Introduces Marketplace Fairness Act of 2015.

 

(H.R. 684 and S. 336, as introduced in Congress on February 14, 2013; S.743, as passed by the U.S. Senate on May 6, 2013)

(09/20/2013)

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