Stay up to date with sales tax: Join our mailing list!


On August 25, 2016, House Judiciary Committee Chairman Robert Goodlatte released a discussion draft of the Online Sales Simplification Act of 2016. The legislation would implement a “hybrid origin” approach for remote sales. Under the legislation, states could impose sales tax on remote sales if the origin state participates in a clearinghouse.In this case, the tax is based on the origin state’s baseand taxability rules. The rate would be the origin state rate, unless the destination state participates. In that case, the rate used would be a single state-wide rate determined by each participating destination state. A remote seller would only remit sales tax to its origin state for all remote sales. Only the origin state would be able to audit a seller for remote sales. Non-participating states would not be able to receive distributions from the clearinghouse. Sellers would be required to provide reporting for remotes sales into participating states to the Clearinghouse so it can distribute the tax to the destination state. We will continue to monitor activity and update when the official bill is introduced.  (Discussion draft of Online Sales Simplification Act of 2016)

(09/08/2016)

On July 14, 2016, Rep. Jim Sensenbrenner (R-WI) introduced the No Regulation Without Representation Act of 2016.  Taking the opposite approach of the Marketplace Fairness Act and Remote Transactions Parity Act, this proposed bill would limit the ability of states to require remote sellers to collect use tax. If enacted, the Act would codify the physical presence requirement established by the US Supreme Court in Quill Corp v. North Dakota.  The bill would define physical presence and create a de minimis threshold. If enacted, the bill would preempt click-through nexus, affiliate nexus, reporting requirements and marketplace nexus legislation. The bill would be effective as of January 1, 2017. The bill defines “seller” and provides that states and localities may not:

 

  • Obligate a person to collect a sales, use or similar tax; 
  • Obligate a person to report sales; 
  • Assess a tax on a person; or 
  • Treat the person as doing business in a state or locality for purposes of such tax unless the person has a physical presence in the jurisdiction during the calendar quarter that the obligation or assessment is imposed.

 

Persons would be considered to have a physical presence only if during the calendar year the person: 

 

  • Owns or leases real or tangible personal property in the state; 
  • Has one or more employees, agents or independent contractors in the state specifically soliciting product or service orders from customers in the state or providing design, installation or repair services there; or 
  • Maintains an office in-state with three or more employees for any purpose.

 

Physical presence would not include: 

 

  • Click-through referral agreements with in-state persons who receive commissions for referring customers to the seller; 
  • Presence for less than 15 days in a taxable year; 
  • Product delivery provided by a common carrier; or 
  • Internet advertising services not exclusively directed towards, or exclusively soliciting in-state customers.

 

The bill defines seller to exclude marketplace providers; referrers; third-party delivery services in which the seller does not have an ownership interest; and credit card issuers, transaction or billing processors or financial intermediaries.Marketplace Providers are defined as any person other than the seller who facilitates a sale which includes listing or advertising the items or services for sale and either directly or indirectly collects gross receipts from the customer and transmits the amounts to the marketplace seller. (No Regulation Without Representation Act of 2016 (H.R. 5893))

 

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.

(08/23/2016)

A company’s provision of reception services wasexempt from New York sales tax. The company was primarily involved in providing security services to clients, including security guards, but also provided reception services, such as greeting, screening, and processing people requesting access to a site, checking identification, preparing and issuing visitor passes, and refusing entry as needed. The security guard services were clearly subject to tax, but the issue was whether the reception services constituted protective or detective services under the applicable statute. The tax law doesn’t provide a definition of protective or detective services. The Tax Appeals Tribunal held that the language of the applicable tax law was not intended to reach the type of hybrid reception services at issue. The Tax Appeals Tribunal held that the reception services are exempt.  Separately, charges for security services sold to companies claiming to be agents of exempt organizations were found to be taxable since the taxpayer had the burden to prove that the security services weresold to exemptentities. The company’s receipt of an improper exemption certificatefrom its customer - which wasnot properly completed noron the proper form - denied it of the benefit of the presumption of its entitlement to the exemption.(Alliedbarton Security Services LLC, New York Division of Tax Appeals, Tax Appeals Tribunal, DTA Nos. 825169, 825690, 825691, 825692, and 825693, February 16, 2016)

(05/05/2016)

New York has issued guidance outlining the method to use when determining the delivery location of credit rating services for purposes of the New York City sales tax. New York City imposes a local sales tax on credit rating services. The best method to determine the delivery location of a credit rating service subject to New York City’s local sales tax is to use the address to which the invoice for the service is sent. A credit rating service that is invoiced to an address within New York City is subject to the City’s 4.5% local sales tax. No sales tax is due to either the State or New York City if the credit rating service is invoiced to an address outside of New York City. The rule outlined in the memorandum applies to all taxable sales of credit rating services originally invoiced to an address within New York City on or after September 1, 2015. The rule supersedes the conclusion in TSB-A-13(27)S that delivery of a credit rating service occurs at the location of the representative of a client who signs an engagement letter, but that advisory opinion remains valid in all other respects. Credit rating agencies that have not previously been put on notice by the New York Department of Taxation and Finance to begin collecting tax on these services will not be penalized for under collecting tax or using a different method of sourcing prior to September 1, 2015. However, any sales tax that has been collected must be remitted to the department.(TSB-M-15(4)S, New York Department of Taxation and Finance, July 24, 2015, effective September 1, 2015)

(05/05/2016)

A company’s sale of three service packages that deliver real-time web analytics data regarding website performance to the website owners is an information service that is not subject to New York sales and use taxas it is considered personal or individual in nature.  In the three different service packages, the company embeds software on the customer's website which it uses to gather information about visitors to the website. The company then makes the information available to the customers on the company’s online dashboard portal.Two of the service packages also provide the customer with aggregated anonymized data gathered from various websites to use as benchmark information. The benchmark information represents only a small portion of the information provided to the customer. All three service packages constitute an information service. However, since the information provided in all three service packages is personal or individual in nature and may not be substantially incorporated in reports furnished to other persons, the three service packages qualify for the "personal or individual" exemption from tax in Tax Law §1105(c)(1). The provision of incidental bench-marking statistics to customers for two of the packages, at no additional charge, does not make the information service taxable since the benchmark information is a de minimis part of the overall information provided to the customer, and the company does not provide customers with the raw data underlying the bench-marking information. The dashboard portal software that the company provides to its customers to view the information is incidental to the information service and is therefore not taxable.(TSB-A-16(3)S, New York Commissioner of Taxation and Finance, February 22, 2016)

(03/24/2016)

Pages

Scroll to Top