Supreme Court Rules Against Wayfair – For Sales Tax on Internet Sales
Jul 13,2018
In a landmark decision by the U.S. Supreme Court on June 21, 2018, the gates to the collection of sales tax on internet sales were flung wide open, revealing the promise of significant new revenue for 45 states. Background In brief, the overall issue at the court’s feet in South Dakota vs. Wayfair was whether states have a right to collect tax on sales made in their state by remote sellers, regardless of whether the seller has a physical presence in the taxing State. According to the Court’s opinion, the estimated sales tax revenues being lost each year because of the nexus rule range from $8 to $33 billion. In previous cases of Quill and Bella Hess (links below), the Court had ruled against states’ authority to collect sales tax without substantial nexus under multiple facets, the most significant being the physical presence test levied under the Quill decision. Ultimately...
Internet Sales Tax Alert – U.S. Supreme Court Decision Imminent
Apr 05,2018
If you sell your products online in a state in which you do not have a physical presence, a decision expected to be rendered by the US Supreme Court in the coming months may dramatically change your business. Since 1992, the rule of the land has been that if you do not have a physical presence in a state that you sell products to (nexus), you do not have to charge or collect sales tax from your customers. With the explosion of internet sales, states across the country have been missing out on significant revenue from such sales tax collections. The fight that will decide this issue for the future is now before the Supreme Court (South Dakota vs. Wayfair).  We fully expect the Supreme Court to rule in favor of South Dakota, with several Justices indicating concerns about the original decision (Quill) that established the nexus rule. Justice Kennedy...
Sales Tax Alert for Online Retailers
Dec 19,2016
On Monday, December 12, 2016 the Supreme Court refused to hear a case challenging a Colorado law that requires online retailers without a physical presence in the state to turn over customer purchase data to state tax officials. While the Colorado law spurred the case, the ramifications of the Supreme Court’s refusal to hear the challenge will affect individuals and businesses in states across the U.S.BackgroundMany online retailers can sell to consumers without charging state sales tax on purchases; this is the result of a 1992 Supreme Court decision which held that retailers must have a physical presence (nexus) in a state before officials can make them collect sales tax. In essence the consumer has been liable for paying sales tax all along under the guise of a state “use” tax, but that rule has been widely and effectively ignored.In 2010, Colorado passed a law that required out of state...
Georgia Sales Tax Holiday Starts July 30
Jul 26,2016
Georgians awaiting a sales tax holiday for savings on school supplies, computers or software or even clothing, can begin to set their clocks, as the next holiday begins at 12:01 a.m. on July 30. It will conclude at midnight on July 31, 2016. The July sales tax holiday provides exemption from sales tax on the following items:Clothing and footwear with a sales price of $100.00 or less per itemComputers, computer components, and prewritten computer software purchased for noncommercial home or personal use with a sales price of $1,000.00 or less per itemSchool supplies, school art supplies, school computer supplies, and school instructional materials purchased for noncommercial use with a sales price of $20.00 or less per item. The exemption does not apply to: Cell phonesBelt buckles sold separately; costume masks sold separately; patches and emblems sold separately; sewing equipment and supplies, including but not limited to knitting needles, patterns, pins, scissors, sewing machines,...
Sales Tax Refund Opportunities for Manufacturers
Apr 28,2016
Manufacturing Exemptions – Items Used and Consumed in ManufacturingMost manufacturers understand that they are exempt from paying sales tax on items that become incorporated into the product that is eventually sold to a customer. However, what about the sales tax paid on the purchase of machinery and equipment that is used within a facility – directly or indirectly on a product for resale – and necessary to their manufacturing process? Changes to sales tax exemptions over the past several years have left some murky interpretations and guidance as to exactly what activities and materials are exempt in the manufacturing process.Sales tax refund opportunities for manufacturers are one of the best ways for both small and large businesses to reduce up-front costs on business purchases and maintain a healthy product inventory. Many types of machinery and equipment are exempt from both state and local sales taxes. Together, the exemptions can amount...
How the Latest Internet Sales Tax Proposals May Impact Your Business
Apr 08,2015
OverviewAs consumers we’re all familiar with the concept of paying sales tax for the goods we purchase. Forty-four states and the District of Columbia impose sales taxes on transactions, and retailers must charge the amount prescribed by the rules of their jurisdiction. Yet, for retailers, it’s not always so clear-cut.Currently, online retailers are only required to collect sales tax in states where they have a physical presence of property or employees. As Internet sales through companies like Amazon and eBay continue to soar, this model is constantly under pressure resulting from the disparity in tax treatment between online sales and brick-and-mortar sales. For years, states have pushed for legislation that clarifies how taxes should be collected on Internet purchases so they can get their fair share of the taxes owed on these transactions. In the last few years, two prominent proposals have emerged with differing consequences on business activities.For purposes of...
Construction Sales Tax Liabilities: Purchasing Items for Use in the Contract
Dec 25,2014
Contractors are at risk in three general areas: managing the contract, invoicing customers, and purchasing items for use in the contract.In this article, we focus on the third area: what firms need to know about sales and use tax and purchasing items for use during the contract execution period. (Click here to read the first article in this series, on managing the contract. Click here to read the second article in the series, on invoicing customers.) Make Sure You Are Paying Tax in the Right “State” of MindIf a contracting firm is located in one state and performing work in another, the jurisdiction to which you owe tax and the amount of that tax could change dramatically.  Most states treat contractors as the end consumer of materials used for a project and will typically require the contractor to pay sales tax on these items at the time of purchase, or accrue and...
Construction Sales Tax Liabilities: Invoicing Customers
Dec 25,2014
Contractors are at risk in three general areas: managing the contract, invoicing customers, and purchasing items for use in the contract. In this article, we focus on the second area: what firms need to know about invoicing customers. (Click here to read the first article in this series, on managing the contract.) Determining If a Service Is Taxable Before you even create an invoice for a customer, some basic facts need to be obtained and understood about how you should itemize the invoice, and if tax will be charged.  Whether or not you’re required to charge your customers tax depends on the answers to a few questions: Are you considered a retailer/installer or a contractor? What are the differences between these designations? It’s not as cut-and-dried as you might think. In some states there may be even a hybrid version of retailer/installer and contractor designations.  Mostly it will depend on the type of service...
Construction Sales Tax Liabilities: Managing the Contract
Dec 24,2014
Contractors are at risk in three general areas of sales tax liability: managing the contract, purchasing items for use in the contract, and the invoicing of customers. In this first article in a series by Tim Howe, we focus on what firms need to know about drawing up contracts. When it Comes to Sales Tax, Form Does Not Always Trump Substance It’s a common misunderstanding that an “iron-clad” contract will protect a construction or contracting company from sales or use tax liability. In many cases and depending on the jurisdiction, contract law may not supersede tax law. Contracts are supposed to be written according to state laws and legal guidance, but these requirements can be missed, and sales tax liability and language that may be proven to be “unreasonable” at the time of contract execution should it be challenged in a court of law. Entering into an agreement that has...

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