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 not 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.
Simplified Sales Tax
BAC Files Petition Stating Nebraska Not in Compliance With SST Agreement
In a petition filed on February 11, 2011, the Streamlined Sales and Use Tax (SST) Business Advisory Council (BAC) stated that Nebraska is not in compliance with the SST Agreement due to its taxation of electronic mailing lists. The BAC states that the SST Governing Board made an error during their 2010 certification review of Nebraska. Since Nebraska includes the sale or use of electronic mailing lists as tangible personal property and taxes accordingly, they are out of compliance with the SST Agreement. The Agreement indicates that a member state may not include any product transferred electronically (except for specific exclusions) in its definition of tangible personal property. Electronic transfers can be taxed under the Agreement by separate imposition or as a service. According to the BAC, the state’s sales tax treatment of electronic mailing lists is based on a 2002 Nebraska Supreme Court opinion that treats sales of online data as sales of tangible personal property for purposes of corporate income tax. The BAC states that that court decision doesn’t apply to sales tax. Also, the SST Agreement does not allow for grandfather provisions. As a result, the BAC states that Nebraska should have been found out of compliance with the Agreement in the 2010 review. The Issue Resolution Committee will schedule a hearing on the petition and will issue a recommendation to the board after hearing arguments. (Petition for Resolution and Reconsideration, Business Advisory Council, February 11, 2011) (12/13/2011)
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CRIC Finds States Out of Compliance with SST Agreement
On a November 10, 2011 conference call, the Streamlined Sales Tax (SST) Compliance Review and Interpretations Committee (CRIC) voted to find Minnesota, Utah, and Vermont out of compliance with the SST Agreement. South Dakota, Iowa, and Wisconsin were found “not out of compliance” with the Agreement. North Carolina’s compliance issues were discussed on the call, but a vote on their compliance was deferred. The call was part of a series of calls during which the CRIC is performing its annual recertification review of member states’ compliance with the Agreement. The CRIC’s findings will be submitted to the SST Governing Board in December 2011 for its evaluation. Minnesota was found out of compliance with the agreement because the state’s definition of “prepared food” deviates from the Agreement in regards to an exemption from the definition of prepared foods for deli meat. This exemption has been in place for many years and was only addressed this year. The vote for being out of compliance was really focused on the fact that there was a deviation from a standard product definition and the need to eliminate any exceptions to the requirement to follow the definitions. Minnesota was urged to submit a request to modify the definition if they desired to maintain the exemption. Utah was found out of compliance on the issue of effective dates for rate decreases for services. A representative for Utah said that there is a bill pending to correct the issue. Until the bill is passed which would align the effective dates, Utah is out of compliance. Vermont was found out of compliance with the Agreement on its treatment of specified digital products as defined in Agreement Section 332(D)(2) or (D)(3). The Department anticipates a legislative change.
Member states’ letters responding to issues identified by the SST staff and other meeting materials can be found on the SST Governing Board website here. (Conference call, Compliance Review and Interpretations Committee, November 10, 2011) (12/13/2011)
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Member states’ letters responding to issues identified by the SST staff and other meeting materials can be found on the SST Governing Board website here. (Conference call, Compliance Review and Interpretations Committee, November 10, 2011) (12/13/2011)
Georgia Becomes Full Member of Streamlined Sales and Use Tax Agreement
Georgia became a full member of the Streamlined Sales and Use Tax (SST) Agreement on August 1, 2011. They had been an associate member of the Agreement since January 1, 2011. As a full member state, Georgia can now vote on amendments to or interpretations of the Agreement. They can also vote on whether a petitioning state is in compliance with the Agreement. The state is also eligible to have a representative serve on the SST Compliance Review and Interpretations Committee. Click here for more details on Georgia’s path to full SST Membership.
(Streamlined Sales Tax Governing Board Website, August 1, 2011) (09/12/2011)
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(Streamlined Sales Tax Governing Board Website, August 1, 2011) (09/12/2011)
Main Street Fairness Act Introduced in Congress
Both houses of Congress introduced legislation on July 29, 2011 that would give member states of the Streamlined Sales and Use Tax (SST) Agreement to collect sales tax from remote sellers that do not qualify for the small-seller exception although this is not defined in the bill. The legislation is referred to as the Main Street Fairness Act. Similar legislation was introduced previously but did not pass. Several provisions that appeared in previous versions of the bill have been eliminated. These include the requirement that the minimum SST simplifications include a single sales and use tax rate per taxing jurisdiction (the SST Agreement currently includes this requirement), a path to SST membership for federally recognized Indian tribes that comply with the Agreement, and a mandate that the minimum simplification requirements in the Agreement apply to sales and use tax on communications services. The new versions of the bill expand on previous versions’ requirement for reasonable vendor compensation by finding that the SST Agreement’s currently mandated compensation satisfies the minimum requirement. There are limitations on the impact of collection of tax under this bill and the creation of nexus for other taxes. The new bills would provide for judicial review of SST Governing Board actions by the U.S. Court of Federal Claims (S. 1452 and H.R. 2701, introduced in both houses of Congress on July 29, 2011)
(08/19/2011)
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(08/19/2011)
Nebraska Enacts Legislation to Conform to SST Agreement
Nebraska has enacted legislation to conform its sales and use tax laws to the Streamlined Sales and Use Tax (SST) Agreement. The sales and use tax applied to lease and rental payments of motor vehicles is now sourced to the primary property location associated with the lease payment. Lease payments were previously taxed based on the rate in effect when the vehicle was delivered to the lessee. For sourcing purposes, “advertising and promotional direct mail” is now distinguished from “other direct mail.” The former term means direct mail that has the primary purpose of attracting attention to a product, person, business, or organization or attempting to sell or secure financial support for one of the above. The default sourcing option for “advertising and promotional direct mail” remains the shipping point. If a purchaser fails to provide a direct pay permit or a list of jurisdictions for delivery, “other direct mail” will be sourced to the purchaser’s address. To conform to the Agreement, the terms “prepared food” and “food and food ingredients” now replace “meals” and “food products” for exemptions provided to certain schools, churches, hospitals, and government organizations. The amendment doesn’t change the taxation of food items. (L.B. 211, Laws 2011, effective October 1, 2011)
(08/19/2011)
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(08/19/2011)
Massachusetts Introduces SST Conformity Legislation
Massachusetts has introduced legislation that would conform its laws to the Streamlined Sales and Use Tax (SST) Agreement. The legislation would be effective on the first day of the twelfth month following passage. As of April 7, 2011, the bill was heard in the Joint Committee on Revenue and is eligible for the Executive Session. (H.B. 1695, as introduced in the Massachusetts House of Representatives on January 19, 2011)
(04/13/2011)
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(04/13/2011)
Georgia to Become Associate Member of Streamlined Sales and Use Tax Agreement
Effective January 1, 2011, Georgia will become an associate member of the Streamlined Sales and Use Tax (SST) Agreement, subject to the state’s completion of the required technology requirements by that date. Associate members are those that achieve substantial compliance with the Agreement, but not with all of its provisions. The state will become a full member only when it’s found in compliance with the Agreement and the necessary changes bringing it into compliance are in effect. Georgia’s representatives have said that the remaining changes needed for the state to be granted full membership will be introduced during the next legislative session. They are hoping to have the changes enacted and in effect by July 1, 2011. Sellers registered with SST can register with Georgia on January 1, 2011 but aren’t required to do so due to the state’s associate member status.
Under the rules of the Agreement, Georgia is required to grant an amnesty beginning January 1, 2011 until 12 months after it becomes a full member. The amnesty will apply to uncollected or unpaid sales and use tax for sellers that register to pay or collect sales or use tax on sales made to purchasers in Georgia in accordance with the Agreement’s terms. To be eligible, the seller must not have been registered in Georgia in the 12 months before the effective date of the state’s membership in the Agreement.
For an update to this information please see Georgia Becomes Full Member of Streamlined Sales and Use Tax Agreement. (Streamlined Sales Tax Governing Board Conference Call, November 1, 2010; Streamlined Sales and Use Tax Agreement, amended August 17, 2010). (01/08/2011)
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Under the rules of the Agreement, Georgia is required to grant an amnesty beginning January 1, 2011 until 12 months after it becomes a full member. The amnesty will apply to uncollected or unpaid sales and use tax for sellers that register to pay or collect sales or use tax on sales made to purchasers in Georgia in accordance with the Agreement’s terms. To be eligible, the seller must not have been registered in Georgia in the 12 months before the effective date of the state’s membership in the Agreement.
For an update to this information please see Georgia Becomes Full Member of Streamlined Sales and Use Tax Agreement. (Streamlined Sales Tax Governing Board Conference Call, November 1, 2010; Streamlined Sales and Use Tax Agreement, amended August 17, 2010). (01/08/2011)
Mainstreet Fairness Act introduced in Federal Congress
On July 1, 2010, HR 5660 was introduced by Rep DeLaHunt from Massachusetts which would impose a sales and use tax collection responsibility on remote sales made into states that are full members of the Streamlined Sales Tax Agreement (SSUTA). The bill references the SSUTA and incorporates many of the key provisions. It includes a provision for vendor compensation and a small business exception but does not provide any specifics in regards to these provisions. It also includes in its definition of state, Puerto Rico and the US Territories. It did not specifically address how digital goods should be taxed but did include a provision that each Member States should work with other Member States to prevent double taxation in situations where a foreign country has imposed a transaction tax on a digital good or service. The legislation is supported by the National Retail Federation, Retail Industry Leaders of America, International Council of Shopping Centers, Real Estate Investment Trusts Association, National Governors Association, U.S. Conference of Mayors, the National Conference of State Legislatures, National Association of Counties, and National League of Cities, and over 50 state-level retail associations and chambers of commerce. For a copy of the bill visit http://delahunt.house.gov/mainstreetfairnessact.pdf (H.R. 5660, July 1, 2010) (08/01/2010)
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Kansas Legislation Conforms to SST Agreement changes
Senate Bill 430, effective upon publication in the Kansas Register, conforms Kansas provisions with the recent changes to the Streamlined Sales and Use Tax (SST) Agreement. Specifically, the legislation replaces provisions governing direct mail sourcing with and without a direct pay permit with provisions governing advertising and promotional direct mail and other direct mail. S.B. 430 defines advertising and promotional direct mail as printed material that meets the definition of direct mail for which the primary purpose is to attract public attention to a product, person, business or organization, or to attempt to sell, popularize, or secure financial support for a product, person, business, or organization. A purchaser of advertising or promotional direct mail can provide the seller with 1) a direct pay permit; 2) an exemption certificate or other statement approved, authorized, or accepted by the secretary claiming direct mail; or 3) information showing the jurisdiction to which the advertising and promotional direct mail is to be delivered to recipients. Other direct mail has also been updated by S.B. 430 to be defined as any direct mail that is not advertising and promotional direct mail, regardless of whether such advertising and promotional direct mail is included in the same mailing. A purchaser of other direct mail may provide the seller with 1) a direct pay permit, or 2) an exemption certificate, or other statement approved, authorized, or accepted by the secretary claiming direct mail.
The legislation has also made amendments to various other provisions, including exemption certificates and rate changes. Specifically, if a seller obtains an exemption certificate, the certificate must claim an exemption that was authorized pursuant to Kansas law on the date of the transaction in the jurisdiction where the transaction is legally sourced, must be applicable to the item being purchased, and must be reasonable for the purchaser’s type of business. For rate change provisions, S.B. 430 includes that whenever there is less than 30 days between the effective date of any retailer’s sales tax or compensating use tax rate change and the date that the rate change takes effect, a seller is relieved from liability for failing to collect tax at the changed rate if 1) the seller collected tax at the immediately proceeding rate; and 2) if the seller’s failure to collect at the new rate does not extend beyond the 30 days after the effective date of the rate change. Additional rules and regulations apply. (S.B. 430, Laws 2010, effective upon publication in the Kansas Register) (06/01/2010)
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The legislation has also made amendments to various other provisions, including exemption certificates and rate changes. Specifically, if a seller obtains an exemption certificate, the certificate must claim an exemption that was authorized pursuant to Kansas law on the date of the transaction in the jurisdiction where the transaction is legally sourced, must be applicable to the item being purchased, and must be reasonable for the purchaser’s type of business. For rate change provisions, S.B. 430 includes that whenever there is less than 30 days between the effective date of any retailer’s sales tax or compensating use tax rate change and the date that the rate change takes effect, a seller is relieved from liability for failing to collect tax at the changed rate if 1) the seller collected tax at the immediately proceeding rate; and 2) if the seller’s failure to collect at the new rate does not extend beyond the 30 days after the effective date of the rate change. Additional rules and regulations apply. (S.B. 430, Laws 2010, effective upon publication in the Kansas Register) (06/01/2010)
Washington Commercial Printer Must Follow Destination-Based Sourcing
As Washington follows the Streamlined Sales and Use Tax Agreement’s destination-based sourcing rules, a commercial printer that performs bid distribution and other printing jobs was required to source its print jobs and sales of paper and supplies to the location where the customer takes receipt of those items. The taxpayer did not qualify for the direct mail sourcing rule because it delivers its own products and does not deliver its printed material by U.S. mail or other delivery service to a mass audience. (Tax Determination No. 09-0203, Washington Department of Revenue, July 31, 2009, released April 30, 2010) (05/18/2010)
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