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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)

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)

Vermont has initiated a voluntary self-audit program– “Know What You Owe” - intended to aid taxpayers in complying with use tax remittance.  From August 1, 2013 to May 1, 2014, business owners can sign up to participate in the program, conduct a self-audit, and remit the correct amount of use tax due. Under the program, participants will review their business records for the past three years to determine if use tax is owed. The state will allow participants to self-report the tax due and will waive all penalties and 50% of the interest owed for the period reviewed. The look-back period for audits under the program will be limited to three years instead of the possible seven years for businesses not currently registered.  Additionally, participants will not have to work through a structured audit. Any tax owed and applicable reduced interest must be paid within 30 days of the date the participant enters the program. Additional interest will accrue if the tax is not paid in this period. Participants may be able to arrange an extended payment plan with the department.(Know What You Owe, Vermont Department of Taxes, August 2013; Publication BR-1015, Vermont Department of Taxes, August 27, 2013)

(09/16/2013)

Vermont has issued a fact sheet discussing cloud computing and advising taxpayers that the legislative moratorium on the Vermont Department of Taxation’s collection of sales tax on prewritten software accessed remotely has not been extended and expires on June 30, 2013. Purchases of prewritten software accessed remotely made before July 1, 2013 are not taxable. Liability for the tax will be incurred beginning July 1, 2013.  Vermont businesses are encouraged to finalize any purchases prior to June 30, 2013 to minimize the tax consequences.  The department has withdrawn Technical Bulletin TB-54 regarding the treatment of computer software and services and intends to publish regulations to guide taxation in this area. The fact sheet states that prewritten software is taxable regardless of whether it is bought or leased for the customer’s use on a disk or as a download, or accessed on a remote server. A transaction that solely involves custom software, a personal service, or professional service is not taxable. If a vendor has made the same or similar product available on a disk or for download, it remains software subject to sales tax if offered for remote access with essentially the same functionality. The mere addition of help-desk functionality likely would not change the classification from software. For products that are available only by remote access, further factors noted in the fact sheet must be considered to determine the taxability.  To view the fact sheet, click here. (Fact Sheet—The Sales and Use Tax Treatment of Cloud Computing, Vermont Department of Taxes, June 2013)

(06/25/2013)

Vermont has enacted legislation that temporarily prohibits the Vermont Department of Taxes from assessing sales and use tax on charges for remotely accessed software made after December 31, 2006 and before July 1, 2013.  Taxes on such charges shall be refunded upon request, if made within the statute of limitations and properly documented.  “Charges for remotely accessed software” means charges for the right to access and use prewritten software run on underlying infrastructure that is not managed or controlled by the consumer or a related company.  The sales and use tax imposed on purchases of specified digital products are not affected by this provision. (H.B. 782)

(06/03/2013)

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