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NEWS & TIPS
The Sales Tax Institute reviews numerous sales tax publications to monitor state activity on various topics related to sales and use tax. By checking updates routinely, you may be alerted to an impending tax law change critical to your business.
Browse recent and archived news items by searching relevant categories, states or descriptions at right
The information listed here is high-level summary and background material intended to help you stay current in the dynamic area of sales and use tax. Sources include CCH State Tax Day, Sales and Use Tax Alert, Sales Tax Notes, Vertex, Inc. Reference Manuals, Westlaw, and other miscellaneous state tax newsletters and Department of Revenue notices.
Please note that these summaries omit many details and special rules, and cannot be regarded as legal or tax advice. For more information, be sure to contact your tax advisor.
HOT NEWS UPDATES:
On March 6, 2017, the South Dakota Sixth Judicial Court ruled that the state’s economic nexus legislation is unconstitutional. The legislation – which became effective May 1, 2016 – requires remote sellers without a physical presence in the state to collect and remit South Dakota sales and use tax on sales in the state if the retailer makes in-state sales exceeding $100,000 or makes 200 or more separate sales transactions in the previous or current calendar year. In the ruling, the state acknowledged that under Quill Corp. v. North Dakota, the State of South Dakota is prohibited from imposing the sales tax collection and remittance obligations. The state agreed that the statute was unconstitutional and agreed with the summary judgement finding. This was expected as the case progresses towards an appeal to the U.S. Supreme Court in an effort to overturn Quill. For our previous news item, see South Dakota Enacts Economic Nexus Legislation. (South Dakota v. Wayfair, Inc., S.D. Cir. Ct., No. 32 Civ. 16-000092, 3/6/17).
Wyoming has enacted economic nexus legislation pertaining to remote sellers. Effective July 1, 2017, remote sellers without a physical presence in Wyoming are required to collect and remit sales tax on sales in the state once the seller meets either of the following requirements in the current calendar year or immediately preceding calendar year:
- The seller's gross revenue from the sale of tangible personal property, admissions or services delivered into Wyoming exceeds $100,000, or
- The seller sold tangible personal property, admissions or services delivered into Wyoming in 200 or more separate transactions.
Notwithstanding other provisions of the law, the Wyoming Department of Revenue may bring an action to obtain a declaratory judgment that a seller is obligated to remit sales tax. This provision is similar to the South Dakota provisions which allows the state to initiate action against remote sellers that do not register to collect the tax. Upon the filing of an action for declaratory judgment, the court shall grant an injunction prohibiting the enforcement of the collection against any seller that is party to the action. We will monitor the courts for filing by remote sellers or the state and the impact on remote sellers. It does appear that the injunction is only against sellers that are party to the action filed. The legislation also amends the definition of "vendor" to include a remote seller. (H.B. 19, Laws 2017, effective July 1, 2017)
The Direct Marketing Association has reached a settlement agreement with the Colorado Department Revenue in regards to its lawsuit over the state’s use tax notice and reporting requirements. Pursuant to the settlement agreement, the use tax notice and reporting requirements legislation becomes effective on July 1, 2017. Per the agreement, the Department of Revenue will waive penalties for non-collecting retailers who fail to comply with the legislation prior to July 1, 2017. Non-Collecting Retailers will be required to include the required transactional notices on all invoices issued after July 1, 2017 per Sec 39-21-112(3.5)(c)(I) and 1 Colo Code Regs Section 201-1: 39-21-112.3.5(2).
The first annual summaries of customer purchases required of non-collecting retailers must be mailed to customers by January 31, 2018. The Department will waive all penalties for non-collecting retailers who do not include customer purchases made prior to July 1, 2017 in any annual summary provided to Colorado customers before the January 31, 2018 deadline. This summary must include all transactions dated after July 1, 2017 and if possible all 2017 transactions.
The first customer information reports required of non-collecting retailers must be filed with the Department by March 1, 2018. The Department will waive all penalties for non-collecting retailers who do not include customer purchases occurring prior to July 1, 2017 in their customer information report provided to the Department on or before the March 1, 2018 deadline.This information report must include all transactions dated after July 1, 2017 and if possible all 2017 transactions.
To view our previous news item on this case, click here.
Based on this settlement, all Colorado non-collecting retailers should review their marketing materials, invoices and systems to ensure they will be able to comply. Penalties for non-compliance are harsh.
(Direct Marketing. Association v. Colorado Department of Revenue, Colo. Dist. Ct., No. 13-CV-34855, settlement announced 2/23/17)
Virginia has amended its tax code regarding the nexus requirements for out-of-state businesses to collect and remit sales tax in the state. Effective July 1, 2017, the definition of dealer has been modified to include owning tangible personal property for sale that is located in the Commonwealth of Virginia. This activity will create sufficient nexus to require out-of-state businesses to collect and remit Virginia sales tax on sales to customers in Virginia. (Ch. 51 (H.B. 2058), Laws 2017, effective July 1, 2017
Virginia has enacted legislation that authorizes a tax amnesty program to take place during the period July 1, 2017 through June 30, 2018 and lasting 60-75 days. The exact dates of the program are to be determined. Under the amnesty program, civil or criminal penalties and 50% of the interest assessed or assessable which are the result of nonpayment, underpayment, nonreporting, or underreporting of tax liabilities will be waived upon receipt of the payment of tax and interest owed. The program is applicable to any tax administered or collected by the Virginia Department of Taxation. Certain restrictions apply on who will be able to participate in the tax amnesty program. (Ch. 54 (H.B. 2246), Laws 2017, effective July 1, 2017)