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The Streamlined Sales and Use Tax (SST) Governing Board has  issued a best practices matrix which provides answers to whether the state follows the best practices set forth in the SST Agreement regarding deal-of-the-day vouchers. All SST Member states are to complete and publish their position on the best practices.  The matrix outlines if the “best practiceas approved by the Streamlined Sales Tax Governing Board (SSTGB) for each of the products, procedures, services, or transactions identified in the chartis followed by the specific state. The following best practice descriptions are listed in the matrix along with whether the state follows the best practice:

 

1.       The member state administers the difference between the value of a voucher allowed by the seller and the amount the purchaser paid for the voucher as a discount that is not included in the sales price (i.e., same treatment as a seller’s in-store coupon), provided the seller is not reimbursed by a third party, in money or otherwise, for some or all of that difference.

2.       The member state provides that when the discount on a voucher will be fully reimbursed by a third party the seller is to use the face value of the voucher (i.e., same as the treatment of a manufacturer's coupon) and not the price paid by the purchaser as the measure (sales price) that is subject to tax.

3.       The member state provides that costs and expenses of the seller are not deductible from the sales price and are included in the measure (sales price) that is subject to tax. Further, reductions in the amount of consideration received by the seller from the third party that issued, marketed, or distributed the vouchers, such as advertising or marketing expenses, are costs or expenses of the seller.

 

Unless otherwise listed below, the SST member states have published the Best Practices Matrix and follow the three best practices listed above.

 

The following SST member states have issued the matrix but don’t follow some or all of the best practices listed above as of April 2014: Georgia, Kansas, Nebraska, New Jersey, and Ohio.

 

The following SST member states have not yet issued the matrix as of April 2014: Tennessee, Utah, Vermont, and Wyoming.  Copies of the matrix can be found on each specific state information page on the SST Web page at http://www.streamlinedsalestax.org/index.php?page=state-info.

(05/06/2014)

The Minnesota Department of Revenue has issued a clarification regarding the sales and use tax treatment of repair and maintenance labor. The department also noted that refunds may be available to some taxpayers who collected tax on such labor. The department clarified that labor to repair real property is construction labor which is not taxable. Therefore, labor to repair and maintain electronic and precision equipment that is installed into real property is not subject to tax. This includes the repair and maintenance of heating, ventilation, and air conditioning systems; sprinkler systems; and light fixtures. The department’s interpretation of the law is effective retroactively to July 1, 2013. Taxpayers who collected sales tax from their customers on such labor to repair real property and remitted the tax to the department may file an amended return to receive a refund on the tax. The refunded tax must be returned to the customers who paid the tax. An amended return can be filed up to three and a half years from the date the return was due. Taxpayers must keep all supporting documents for any amended return in their records. (Sales Tax Fact Sheet No. 152A, Minnesota Department of Revenue, December 2013; Sales Tax Fact Sheet No. 152B, Minnesota Department of Revenue, December 2013; Repair and Maintenance Labor Clarifications, Minnesota Department of Revenue, January 2, 2014)

(04/11/2014)

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)

The Minnesota Tax Court dismissed a taxpayer’s appeal of a sales and use tax assessment because the appeal was not filed within 90 days of the Commissioner of Revenue’s order assessing additional tax.  An appeal is considered to be filed only when it is actually received by the court.  In this case, the appeal was postmarked 90 days after the commissioner’s order, but it had not been received by the court within 90 days after the commissioner’s order.  The postmark does not count as the filing date.  As a result, the taxpayer’s appeal was dismissed as it was not timely received. This decision points out the importance of understanding the due date rules not only by state but also for different purposes. (Minnesota Computers Corp. v. Commissionerof Revenue, Minnesota Tax Court, No. 8561-R, August 1, 2013)

(10/30/2013)

Minnesota Gov. Mark Dayton has signed an omnibus tax bill that includes a click-through nexus provision for sales and use tax. Under the enacted legislation, a retailer is presumed to have a solicitor in Minnesota if it enters into an agreement with a resident under which the resident, for a commission or other consideration, directly or indirectly refers potential customers, whether by a link on an Internet website or otherwise, to the seller. The click-through nexus provision which is effective for sales and purchases made after June 30, 2013, applies only if total gross receipts from sales to customers who are Minnesota residents who were referred to the retailer by all residents with this type of agreement is at least $10,000 in the 12-month period ending on the last day of the most recent calendar quarter before the calendar quarter in which the sale is made. For purposes of this provision, the term "resident" includes an individual who is a Minnesota resident or a business that owns tangible personal property located in Minnesota or has one or more employees providing services for the business in Minnesota. The presumption may be rebutted by proof that the resident with whom the seller has an agreement did not engage in any solicitation in Minnesota on behalf of the retailer that would satisfy the nexus requirement of the U.S. Constitution during the 12-month period in question. The click-through nexus provision does not apply to income or franchise taxes and does not expand or contract the jurisdiction to tax a trade or business under the income and franchise tax laws. The legislation also clarifies that remote sellers making sales to customers in Minnesota must collect and remit Minnesota sales and use tax in accordance with any federal remote seller law, effective May 24, 2013. (Ch. 143 (H.F. 677), Laws 2013)

(07/22/2013)

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