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On December 18, 2015, President Barack Obama signed H.R. 2029 – Consolidated Appropriations Act, 2016. The Act extends the Internet Tax Freedom Act (ITFA) through October 1, 2016. Prior provisions that grandfather taxes that existed prior to October 1, 1998 are also extended through October 1, 2016. For our previous news item on this topic, see Internet Tax Freedom Act Extended Until December 11, 2015. (H.R. 2029 – Consolidated Appropriations Act, 2016)

(01/18/2016)

On September 30, 2015 the U.S. House of Representative passed H.R. 719, which includes a provision that would extend the Internet Tax Freedom Act (ITFA) through December 11, 2015. The ITFA was scheduled to expire on October 1, 2015. The bill will now go to President Obama for signature.

 

To see our previous news item on the ITFA, visit Internet Tax Freedom Act Extended Until October 1, 2015, Permanent Extension Introduced.

 

To see an update on this news item, visit Internet Tax Freedom Act Extended Through October 1, 2016,

 

(H.R. 719)

(10/26/2015)

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)

An out-of-state vendor correctly collected Virginia sales tax on a Virginia lessee’s unfulfilled portion of a lease agreement. The lessee entered into a lease agreement with the out-of-state vendor and returned the leased tangible personal property to the vendor after one year into a four-year lease. Upon the return of the property, the vendor billed the taxpayer for the cumulative total of the remaining lease payments, plus applicable sales taxes and fees. Virginia tax code provides that a lessor of tangible personal property whose place of business is outside Virginia and who leases to Virginia customers is required to register as a dealer in Virginia and collect and pay the tax on the gross proceeds. The lease agreement provided that it is a non-cancellable lease for the term indicated in the lease and that lease payments will be due despite dissatisfaction with the equipment for any reason. Due to Virginia’s regulatory requirements and the specific terms of the lease agreement, the vendor correctly collected the Virginia sales tax on the lessee's unfulfilled portion of the lease agreement. The vendor is required by Virginia tax law to collect the sales tax on the gross proceeds of the lease, regardless of the fact that the lessee voluntarily returned the equipment to the vendor before the terms of the lease were complete.(Ruling of Commissioner, P.D. 14-127, Virginia Department of Taxation, August 7, 2014)

(05/14/2015)

A taxpayer’s purchases of items used in its waste collection and disposal services – including residential bins, front-end load bins, trucks, and related equipment -  do not qualify for the Virginia industrial manufacturing and processing sales tax exemption. The taxpayer’s waste collection and disposal services do not qualify as industrial manufacturing or processing activities. As the provider of a waste disposal service to customers, the taxpayer is the taxable user and consumer of all tangible personal property used in providing the services and is required to pay sales tax on its purchases. The taxpayer is subject to tax on residential bins purchased for use by residential customers and the front-end load bins purchased for use by commercial customers. Trucks and related equipment used to collect and transport residential and commercial waste are also subject to tax. If a vendor does not charge and collect the sales or use tax on purchases used for waste collection and transportation, the taxpayer must remit consumer use tax on the purchases. The taxpayer’s recycling operation also does not qualify for the industrial manufacturing or processing exemption. It didn’t appear that the recycled materials undergo any type of treatment to make the product more marketable for the taxpayer or useful for the customer. The grade or category of paper or metal that goes into the recycling process is the same grade of paper or metal that is baled and ready for sale. As a result, the recycling operation does not qualify for the exemption.If the taxpayer can provide additional information demonstrating that the recycled material undergoes some process that makes it more marketable for the taxpayer or useful to the customer, the issue will be revisited.(Ruling of Commissioner, P.D. 14-153, Virginia Department of Taxation, August 28, 2014)

(05/14/2015)

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