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Virginia Governor Terry McAuliffe signed the biennial budget bill which contains retail sales and use tax provisions regarding accelerated sales tax payments and dealer discounts. Any dealer or direct payment permit holder with taxable sales and purchases of $1 million or more for a 12-month period beginning July 1 and ending June 30 of the immediately preceding calendar year is required to make a payment equal to 90% of the sales and use tax liability for the previous June. The payment must be made on or before June 30th if payment is made by electronic funds transfer (EFT). Payment must be made on or before June 25th if payment is made by means other than EFT. Beginning with the tax payment that would be remitted on or before June 25, 2018 (if payments are made by other than EFT) or by June 30, 2018 (if payments are made by EFT), the accelerated sales tax payment provisions will apply only to those dealers or permit holders with taxable sales and purchases of $25 million or greater for the 12-month period beginning July 1 and ending June 30 of the immediately preceding calendar year. 

 

Beginning with the return for June 2010 that is due July 2010, dealer discounts will not be available to any dealer required to remit retail sales and use tax by EFT. The compensation available to all other dealers will be limited to the following percentages of the first 3% of the sales and use tax levied:

 

  • 1.6% for monthly taxable sales of $0 to $62,500
  • 1.2% for monthly taxable sales of $62,501 to $208,000
  • 0.8% for monthly taxable sales of $208,001 and greater

 

Also beginning with the June 2010 return that is due July 2010, the bill suspends provisions that allow compensation to retailers liable for the tire recycling fee, the communications sales and use tax, the tobacco products tax, and the tax for enhanced E-911 service. Beginning with the return for June 2011, due July 2011, the compensation allowed for the tobacco products tax under Va. Code §58.1-1021.03 is reinstated. (Ch. 780 (H.B. 30), Laws 2016, effective July 1, 2016, except as noted)

(11/16/2016)

Beginning October 1, 2016, pursuant to an agreement with the Vermont Department of Taxes, Airbnb will collect and remit meals and rooms tax on payments for lodging offered by its hosts. Airbnb hosts are not responsible for any back taxes they have failed to collect. For Airbnb hosts who have registered to collect the tax, the October 25, 2016 return is the last return they have to file unless they also rent their property using other platforms. Hosts using other platforms should continue to collect and remit tax on those rentals.The department is also offering an amnesty program for hosts using other short-term rental platforms. Until November 1, 2016, a host who voluntarily registers with the department to collect and remit meals and rooms tax going forward will not be liable for any back meals and rooms taxes owed. Vermont Department of Taxes is reaching out to other short term rental platforms in an attempt to enter into a similar agreement.  Until that time, the hosts are responsible for collecting and remitting taxes directly.(Press Release, Vermont Department of Taxes, September 15, 2016; Short-Term Rentals, Vermont Department of Taxes, September 2016)

(10/28/2016)

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)

Vermont Gov. Peter Shumlin has signed legislation containing sales and use tax notice and reporting requirements and economic nexus provisions. The notice and reporting requirements are more stringent than the provisions enacted in 2011 which only required posting information on order sites and information.  The new legislation requires non-collecting vendors making sales into Vermont to notify purchasers that sales or use tax is due on nonexempt purchases they make from the vendor and that Vermont requires the purchaser to file a sales or use tax return. "Noncollecting vendor" is defined as a vendor that sells tangible personal property to purchasers who are not exempt from Vermont sales tax and that does not collect the tax. The notice must be provided by January 31 of each year to Vermont purchasers who have made purchases amounting to $500 or more from the vendor in the previous calendar year. The notice must include the total amount paid by the purchaser for Vermont purchases made from the vendor in the previous calendar year. The notice must also state that Vermont requires a sales or use tax return to be filed and tax to be paid on nonexempt purchases made by the purchaser from the vendor. The notice must be sent separately to all Vermont purchasers by first-class mail or email and must not be included with any other shipments. The notice must include the words "Important Tax Document Enclosed" on the mailer and must include the name of the vendor. Failure to send the notice will subject the vendor to a $10 penalty for each such failure, unless the vendor shows reasonable cause for the failure. These notice and reporting requirements provision is effective on the earlier of July 1, 2017, or beginning on the first day of the first quarter after the sales and use tax reporting requirements challenged in Direct Marketing Assoc. v. Brohl are implemented by the state of Colorado. For more information on the Colorado case, see our news item U.S. Court of Appeals Upholds Colorado’s Use Tax Reporting Requirements.

 

In addition to the click through nexus legislation that was originally passed in 2011 and effective December 1, 2015, economic nexus legislation has now also been enacted.  Per the enacted legislation, a remote seller making sales of tangible personal property from outside Vermont to a destination in Vermont, who does not maintain a place of business or other physical presence in Vermont, meets the definition of "vendor" required to collect and remit Vermont sales or use tax if the person:

  • engages in regular, systematic, or seasonal solicitation of sales of tangible personal property in Vermont through various means of communication, and
  • has made sales from outside Vermont to destinations in Vermont of at least $100,000 or totaling at least 200 individual sales transactions during any 12-month period preceding the monthly period at issue. Previously, the threshold was sales from outside Vermont to destinations in Vermont of at least $50,000 during any 12-month period preceding the monthly or quarterly period at issue.

 

The changes to the economic nexus thresholds are effective on the later of July 1, 2017, or beginning on the first day of the first quarter after a controlling court decision or federal legislation abrogates the physical presence requirement of Quill Corp. v. North Dakota, 504 U.S. 298 (1992). (H.B. 873, Laws 2016, effective May 25, 2016, except as noted)

 

For an update on this news item, see Vermont Enacts Additional Notice Requirement for Noncollecting Vendors.

(06/06/2016)

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