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Effective July 1, 2014, Wyoming will source sales tax on services to the location where the customer makes first use of the service after it is rendered. Currently, Wyoming sources sales tax on services to the location where the service is performed. For services performed where the customer takes possession of the service at the time and location of the service, the service will be sourced to the repair location.  If the repairer ships the repaired item to a customer, then the ship to location will be the location where the service will be sourced.  If the ship to location is outside of Wyoming, no Wyoming tax should be charged.  The change in sourcing of taxable services will bring Wyoming in line with other states that participate in the Streamlined Sales Tax Project. The change does not affect the sourcing of retail sales, leases, or rentals of tangible personal property. (Policy Statement on Sourcing of Sales Tax on Services, Wyoming Department of Revenue, January 31, 2014)

(02/24/2014)

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)

The federal Marketplace Fairness Act of 2013 was introduced in the House of Representatives and the Senate on February 14, 2013.  If passed, the bill would authorize states that meet certain requirements to require remote sellers that do not meet a "small seller exception" to collect their state and local sales and use taxes.  Under the legislation, a state would be authorized to require a remote seller to collect sales and use taxes only if the remote seller has gross annual receipts in total remote sales in the United States of more than $1 million in the preceding calendar year.

 

Member states of the Streamlined Sales and Use Tax (SST) Agreement would be authorized to require all sellers that do not qualify for the small seller exception to collect and remit sales and use taxes with respect to remote sales sourced to that member state pursuant to the provisions of the SST Agreement. The SST Agreement would have to include certain minimum simplification requirements. An SST member state could begin to exercise authority under the Act beginning 90 days after the state publishes notice of its intent to exercise such authority, but no earlier than the first day of the calendar quarter that is at least 90 days after the date of the enactment of the Act.

 

States that are not members of the SST Agreement would be authorized, notwithstanding any other provision of law, to require all sellers that do not qualify for the small seller exception to collect and remit sales and use taxes with respect to remote sales sourced to the state if the state implements certain minimum simplification requirements. The authority would begin no earlier than the first day of the calendar quarter that is at least six months after the state enacts legislation to exercise the authority granted by the Act.

 

To enforce collection requirements on remote sellers that do not meet the small seller exception, states that are not members of the SST Agreement would have to implement the minimum simplification requirements listed below. For SST member states to have collection authority, the requirements would have to be included in the SST Agreement.

 

-       A single entity within the state responsible for all state and local sales and use tax administration, return processing, and audits for remote sales sourced to the state

-       A single audit of a remote seller for all state and local taxing jurisdictions within that state

-       A single sales and use tax return to be used by remote sellers to be filed with the single entity responsible for tax administration.

-       Each state would have to provide a uniform sales and use tax base among the state and the local taxing jurisdictions within the state.

-       Each state would have to source all interstate sales in compliance with the sourcing definition outlined below.

-       Each state would have to provide information indicating the taxability of products and services along with any product and service exemptions from sales and use tax in the state and a rates and boundary database. States would have to provide free software for remote sellers that calculates sales and use taxes due on each transaction at the time the transaction is completed, that files sales and use tax returns, and that is updated to reflect state and local rate changes. States would also have to provide certification procedures for persons to be approved as certified software providers (CSPs). Such CSPs would have to be capable of calculating and filing sales and use taxes in all the states qualified under the Act.

-       Each state would have to relieve remote sellers from liability to the state or locality for incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of an error or omission made by a CSP.

-       Each state would have to relieve CSPs from liability to the state or locality for the incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of misleading or inaccurate information provided by a remote seller.

-       Each state would have to relieve remote sellers and CSPs from liability to the state or locality for incorrect collection, remittance, or noncollection of sales and use taxes, including any penalties or interest, if the liability is the result of incorrect information or software provided by the state.

-       Each state would have to provide remote sellers and CSPs with 90 days’ notice of a rate change by the state or any locality in the state and update the taxability and exemption information and rate and boundary databases, and would have to relieve any remote seller or CSP from liability for collecting sales and use taxes at the immediately preceding effective rate during the 90-day notice period if the required notice is not provided.

 

For non-SST member states, the location to which a remote sale is sourced would be the location where the item sold is received by the purchaser, based on the location indicated by instructions for delivery. When no delivery location is specified, the remote sale is sourced to the customer's address that is either known to the seller or, if not known, obtained by the seller during the transaction, including the address of the customer's payment instrument if no other address is available. If an address is unknown and a billing address cannot be obtained, the remote sale is sourced to the address of the seller from which the remote sale was made. SST member states would be required to comply with the sourcing provisions of the SST Agreement.

 

On March 22, 2013, the U.S. Senate voted 75-to-24 in favor of the concept of the Marketplace Fairness Act. The actual Marketplace Fairness Act was introduced in both chambers in February, but last week Senator Enzi, the sponsor of the Senate bill, offered an amendment to the 2014 Budget Resolution that would include insertion of the language of Marketplace Fairness in the budget. It was a largely symbolic tactic since the Budget Resolution itself will not become law, but by approving the amendment, the Senate has shown that there is broad, bipartisan support for the notion of requiring remote sellers to collect sales tax.

 

On May 6, 2013, the U.S. Senate passed the Marketplace Fairness Act with a 69-27 vote.

 

UPDATE: On September 18, 2013, Rep. Bob Goodlatte, the chairman of the House Judiciary Committee released a set of seven principles that he believes any internet sales tax bill should meet.  The seven principles outlined by Goodlatte are tax relief, tech neutrality, no regulation without representation, simplicity, tax competition, states’ rights, and privacy rights.  For more details on the principles, click here to see the House Judiciary Committee’s press release.

 

We are continuing to track the activities of these bills.  We are also involved in planning efforts involving states and businesses regarding the potential implementation consequences of passage.  Watch for updates in the Sales Tax Compass as well as through our Twitter account and LinkedIn updates. 

 

The text of the bill passed by the Senate can be viewed here.

 

For an update on this news item, visit Senate Introduces Marketplace Fairness Act of 2015.

 

(H.R. 684 and S. 336, as introduced in Congress on February 14, 2013; S.743, as passed by the U.S. Senate on May 6, 2013)

(09/20/2013)

Wyoming has revised its Streamlined Sales and Use Tax (SST) taxability matrix to show that handling, crating, packing, preparation for mailing or delivery, and similar charges for direct mail are now included in the definition of “sales price,” effective July 1, 2011. These charges were previously excluded from sales price. The taxability matrix has also been revised to show that Wyoming does not impose tax on digital audio visual works sold to users other than the end-user, digital audio visual works sold with rights of use less than permanent use, and digital audio visual works sold with rights of use conditioned on continued payment, effective July 1, 2011. These items were previously taxable. The matrix also contains updated statute/rule citations for certain computer-related products, optional computer software, and intrastate telecommunications services. (Taxability Matrix, Wyoming Department of Revenue, March 22, 2012)

(05/21/2012)

The Wyoming Department of Revenue reminds vendors and direct payers that effective with the January 2012 payment reporting period, they are allowed to take a vendor compensation credit on their Wyoming sales and use tax returns. The credit is equal to 1.95% of the first $6,250 due in taxes and 1% of any amount exceeding $6,250, with the credit not to exceed $500 total in any month regardless of the number of business licenses held by a vendor. Tax returns and payments must be postmarked or filed electronically by the 15th day of the month in which the tax is due. Any vendor returns currently due must be filed and paid in full, and the account must not have outstanding balances. If an arrangement has been made to pay past-due balances, the payment plan must be current on all payments due. If a vendor is currently under audit, the vendor’s returns may still qualify for the credit as long as the audit balance is not delinquent.

If a vendor’s return is rejected because it is miscalculated, unsigned, or unable to be processed, the vendor may still receive the credit, so long as the initial return was postmarked within the vendor compensation time period and a corrected return is filed by the new due date printed on the return rejection notice. If a vendor amends a return that originally qualified for the credit and the amendment results in additional tax due, the vendor is entitled to a credit on the additional amount due provided that the amendment is filed before the 15th of the month that the tax is due. If a return is amended after the vendor compensation time period, the vendor is not entitled to any credit on the additional tax due. If an amended return results in a reduction of tax due, the credit will be recalculated based on the new amount, regardless of when the amendment is filed. The applicable reporting forms (Forms 41 and 42) have new lines for calculating and claiming the credit, and vendors filing electronically will see a similar change. If the Department of Revenue receives a return in which a vendor qualifies for the credit but the vendor hasn’t calculated the credit, the Department will calculate the credit and notify the vendor of the credit amount on their monthly account statement. (H.B. 147, Laws 2011, Taxing Issues, Wyoming Department of Revenue, Vol. 14, Quarter 4, December 2011)

(01/17/2012)

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