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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)

Tennessee has enacted legislation that adds a sales and use tax click-through nexus provision, effective July 1, 2015. Under the click-through nexus provision, a dealer is presumed to have a representative, agent, salesperson, canvasser, or solicitor operating in this state for the purpose of making sales and is presumed to have a substantial nexus with Tennessee if:

 

  • the dealer enters into an agreement or contract with one or more persons located in Tennessee under which the person, for a commission or other consideration, directly or indirectly refers potential customers to the dealer, whether by a link on an Internet website or any other means; and
  • the dealer’s cumulative gross receipts from retail sales made by the dealer to customers in Tennessee who are referred to the dealer by all residents with this type of an agreement with the dealer exceed $10,000 during the preceding 12 months.

 

The presumption can be rebutted by evidence that the person with whom the dealer has an agreement or contract did not conduct any activities in Tennessee that would substantially contribute to the dealer’s ability to establish and maintain a market in the state during the preceding 12 months.

 

The Tennessee Department of Revenue has provided additional guidance on the click-through nexus provision. Effective July 1, 2015, a rebuttable presumption is created that out-of-state retailers have nexus, and must collect sales and use tax from Tennessee customers, if the retailer pays an in-state party a fee or commission to route customers to the retailer. A dealer that makes sales of tangible personal property or services in Tennessee is presumed to have substantial nexus with Tennessee and is required to collect and remit sales and use tax on all of its taxable sales in Tennessee if the two conditions above are met. (H.B. 644, Laws 2015, effective as noted; Important Notice No. 15-12, Tennessee Department of Revenue, June 2015)

(06/23/2015)

Tennessee has clarified the taxability of software regardless of the method of delivery.  Effective July 1, 2015, taxable computer software includes the access and use of software that is remotely accessed by a Tennessee customer when the software remains in the possession of the seller. The state also enacted an exemption, effective July 1, 2015, for the access and use of software that remains in the possession of the dealer who provides the software or in the possession of a third party on behalf of such dealer, if the software is accessed and used solely by a person or the person’s employee exclusively for fabricating software that is both owned by that person and for that person’s own use and consumption. The exemption for the use of computer software developed and fabricated by an affiliated company is available regardless of whether the software is accessed or used remotely or delivered by other means.Per the enacted legislation, "use of computer software" means the access and use of software that remains in the possession of the dealer who provides the software or in the possession of a third party on behalf of such dealer. If the customer accesses the software from a location in Tennessee, such access will be deemed equivalent to the sale or licensing of the software and electronic delivery of the software for use in the state. If the sales price or purchase price of the software relates to users located both in Tennessee and out of state, the dealer or customer can allocate to Tennessee a percentage of the sales price or purchase price that equals the percentage of users in the state. This partial use in Tennessee exemption should be claimed on the Streamlined Exemption certificate.  Dealers that purchase computer software only for reselling access and use of it may purchase such software exempt from tax subject to the same rules that apply generally to sales of tangible personal property for resale. However, software purchased by a qualified data center for access and use by an affiliated company will be deemed to be used and consumed by the qualified data center and not resold to the affiliated company.

 

The Tennessee Department of Revenue has issued guidance regarding the legislation, which provides that the use of computer software in Tennessee that is subject to sales and use tax includes the access and use of software that remains in the possession of the seller and is remotely accessed by a customer for use in Tennessee. As a result, software remains subject to Tennessee sales and use tax regardless of a customer’s method of use.

 

Computer services such asinformation or data processing services (including the capability of the customer to analyze such information or data provided by the dealer); payment or transaction processing services; payroll processing services; billing and collection services; Internet access; the storage of data, digital codes, or computer software; or the service of converting, managing, and distributing digital products are not subject to tax even if the purchaser uses remote access to utilize or receive the service.  (H.B. 644, Laws 2015, effective as noted; Important Notice No. 15-14, Tennessee Department of Revenue, June 2015)

(06/23/2015)

Tennessee Governor Bill Haslam has signed legislation that delays the effective date of certain Streamlined Sales and Use Tax Agreement conformity provisions until July 1, 2017. The delayed SST conformity provisions include: requirements that sales delivered or shipped to the customer be sourced to the delivery or shipping destination; modifications to the single article limitation on local option sales taxes; use of a single sales and use tax return covering multiple dealer locations; and implementation of certain privilege taxes in lieu of sales tax.This provision is effective April 28, 2015.(H.B. 95, Laws 2015, effective October 1, 2015, except as otherwise noted)

(05/20/2015)

Effective July 1, 2015, Tennessee has expanded its sales and use tax exemption for industrial machinery to include machinery, apparatus, and equipment used by water and wastewater treatment authorities created by private act or pursuant to the Water and Wastewater Treatment Authority Act. The exemption also applies to purchases by contractors pursuant to a contract with a county, municipality, or water and wastewater treatment authority for use in water pollution control or sewage systems. (S.B. 1344, Laws 2015, effective July 1, 2015)

(04/27/2015)

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