New Amnesty Laws in Wake of Wayfair v. South Dakota

New Amnesty Laws in Wake of Wayfair v. South Dakota

Ever since the decisive Supreme Court ruling on the requirements of online businesses regarding sales tax, Wayfair v. South Dakota, states across the nation have been enacting new sales tax laws, while the businesses they affect have been left scrambling to keep up. In light of this, to help encourage retailers to move into compliance, several states have adopted amnesty periods to help businesses become current with the new tax code, without the accruing of penalties. In Indiana, for instance, since May 2nd  the Indiana Department of Revenue (DOR) has offered a Voluntary Disclosure Initiative (VDI) for online retailers until December 31st of this year. Through this VDI, out-of-state sellers are offered a Voluntary Disclosure Agreement (VDA) on their tax requirements, while qualifying businesses are given a look-back period of: • The full calendar year of 2017, and the current period for state sales and use tax purposes; and • The fiscal or calendar year of 2017 for state income tax purposes. In New Jersey, a potential amnesty of 100% of penalty fees and 50% interest has been passed on July 1st, 2018. In this new legislation, the New Jersey Division of Taxation must come up with an amnesty program of at least 90 days, ending no later than January 15th of next year, that applies to most state tax liabilities between February 1st, 2009 – September 1st, 2017. Alabama also had their own amnesty period that ended on September 30th, waiving interest and penalties for all taxes besides property tax, motor vehicle, and motor fuel – while also applying to those before the first of 2017. In Connecticut,...
3  Common Sales Tax Mistakes Businesses Make

3 Common Sales Tax Mistakes Businesses Make

Business owners often have a lot to think about. From weighing bright ideas and establishing systems for growth, to juggling clients, regulations, and inventory, it can be both an exciting and stressful time for small business owners. With all the many responsibilities each vying for an owner’s time and attention, it can be easy for sales tax obligations to slip through the cracks.  And yet, failing to comply to nexus standards can be a serious liability for a business, with a chance of high penalties and problems in the wake of an audit.  It’s no secret that sales tax can be complicated, so to help your business stay on the up-and-up, here are three common mistakes small businesses make and how to avoid them.     1. Neglecting Sales Tax Completely If you’re not sure if your business or the product you sell requires sales tax, don’t just ignore it altogether. Research nexus and how your business applies to the various state sales tax laws in which you operate.  Are you a brick and mortar business? Check your state to see what obligations apply. An online seller? While this Supreme Court case might be changing the rules soon, for now most online retailers use economic nexus to determine whether or not sales tax is required.  Remember, not collecting sales tax can bring some serious penalties to your business, so don’t risk it!       2. Getting the Numbers Wrong  With sales tax regulations as numerous as the states and jurisdictions who require it, keeping track of the percentages and amounts can be tricky for small businesses – not to mention...
The Sales Tax Basics for Festivals

The Sales Tax Basics for Festivals

Fall is just around the corner, and with the change in season comes harvest festivals. For many small businesses, running an event booth is a great way to sell their wares and spread the word, but festivals can be tricky when it comes to understanding and collecting the appropriate sale tax. Are you looking to open a vendor table or organize an event yourself? Brush up on your sales tax basics through this article and learn just what you need to operate as a festival seller! For Vendors If you’re a vendor selling taxable items, the first thing you should do is apply for a sales tax permit in your home state. If you already have a permit but are opening a booth in a different state, then the next step would be to check that state’s requirements on festival sales tax. In general, you’ll need to collect the combined sales tax rate of the state, county, district, and city that you are in with each purchase – information that your festival coordinator should have or can be calculated here. Additionally, some states require that you obtain a temporary sales tax permit within that event’s location, on top of your home state seller’s permit, while others like Alaska, Oregon, Delaware, Montana, and New Hampshire don’t require sales tax at all. For California vendors, whether local or visiting, a California sales tax permit is required along with an additional “sub-permit” for each event your wares are sold at. For Festival Organizers As a festival organizer, while the sales tax collection itself is up to the vendor, it’s your responsibility to...
What Retailers Should Expect for This Supreme Court Ruling

What Retailers Should Expect for This Supreme Court Ruling

Earlier in April we presented the case of South Dakota v. Wayfair in this article – a key trial that could change the law regarding sales taxes based off of the Supreme Court’s decision – and with over $13.4 billion in state revenue could have been collected from sales taxes within 2017 alone, hanging in the balance, everyone has been eagerly waiting to see what the ruling might be. Well, as of June 21st, the Supreme Court has announced its decision in favor of South Dakota, thereby granting the state permission to levy sales taxes on out-of-state sellers. For a lot of people, this ruling is sure to change the landscape for sales taxes nationwide, while retailers need to prepare themselves for the new wave of requirements about to hit them. What South Dakota’s Win Means Many states beyond simply South Dakota were eager for a ruling in favor of the challenging state – in fact, several had even gone as far as to create similar sales tax laws in anticipation of the decision, and it’s easy to see why. Now that South Dakota has won, the Supreme Court has essentially claimed that the law as it stands is enough cause for states to charge out-of-state sellers sales tax, as well as online retailers who don’t have “a physical presence” within that state. For state governments, this change will bring a windfall of new revenue, while online retailers will be tasked with the challenge of updating all their systems to collect and document sales tax from each of their customers in an efficient manner. Congress’ involvement is another eventual...
Was the Taxpayer Transparency and Fairness Act a Good Idea?

Was the Taxpayer Transparency and Fairness Act a Good Idea?

When Governor Jerry Brown signed the Taxpayer Transparency and Fairness Act into California state law on June 27th, 2017, the effective gutting of the Board of Equalization (BOE) into two separate tax agencies – the Office of Tax Appeals (OTA) and the California Department of Tax and Fee Administration (CDTFA) – garnered some mixed and apprehensive feelings from lawmakers and taxpayers alike. Today, this decision still leaves many wondering: was the Taxpayer Transparency and Fairness Act a good idea? What Is Different? Traditionally run by four elected officials, California’s BOE used to decide everything from standard tax appeal cases, to the administration of taxes statewide. And though sometimes a bit more of a sinecure, at least the officials elected often ruled more in favor of the taxpayer as a natural recourse towards reelection and securing a higher office. Today, it is the CDTFA handling sales, use, excise, and business tax administration, as well the assessment of state fees and business tax appeals, while the OTA oversees sales, use, and income tax disputes. Meanwhile, the BOE’s power has been minimized to merely managing public utility property taxes, adjusting local property tax assessments, reviewing insurance company taxes, and administrating the tax rates on alcohol and gas. Why the Change? It’s no secret that the public has been calling for changes within the BOE for a while now due to reoccurring scandals from misspending to nepotism, however, many now worry that the state Legislature’s decision to practically abolish the board – versus implementing a few audits and key policy changes – might have been potentially harmful overkill. The real reason for the...
California Sales Tax Prepayment Deadline

California Sales Tax Prepayment Deadline

After years of operating your rather successful retail business, steadily rising in profits, suddenly you receive a letter from the California Board of Equalization (BOE) (as of May 2018 now called the California Department of Tax and Fee Administration (CDTFA)) stating that your account is switched from a quarterly filer only to a monthly prepay account. First of all, congratulations, as this means that you’re making at least an average of $17,000 in taxable sales per month! Secondly, you may be wondering what a sales tax prepayment is and how to pay it. Well, worry no more! Here’s everything you need to know on prepayments and the deadlines. What is a Prepayment? While every business operating under a seller’s permit is required to pay sales taxes, as mentioned above, only businesses surpassing a threshold of $17,000 in monthly sales are required to pay through prepayments. Even then, eligible businesses should only submit prepayments if they are notified by the tax agency directly via mail. For the first, third, and fourth calendar quarters – as well as the first prepayment of the second quarter – all prepayments must be either 90% of the month’s tax liability, or 1/3 of the tax liability measure for the previous year’s quarterly period multiplied by the effective tax rate when the prepayment was made (provided you and/or your predecessor were in business during that quarter). For the second prepayment falling within the second quarter (based on sales from May 1st – June 15th), prepayments must equal either 135% of the tax liability in May, 90% of May’s liability plus 90% of the first fifteen...

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