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Contact one
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Tax Tips – August 2011
State Amnesty Programs At-a-Glance
| State |
Amnesty Period |
Benefits |
| Arizona |
Sept. 1 to Oct. 1, 2011 |
Penalties waived |
| Colorado |
Oct. 1 to Nov. 15, 2011 |
½ Interest & Penalties waived |
| Ohio |
May 1 to June 15, 2012 |
½ Interest & Penalties waived |
Arizona's Tax Recovery program starts September 1st. Taxpayers should note that all tax returns must be accompanied by the Tax Recovery Application form and must be filed or postmarked and paid in full by October 1st in order to qualify for the Tax Recovery Program benefits listed above.
Nexus News
CA
According to a recent news release by the California Board of Equalization (NR 84-11-H), the new law requiring certain out-of-state retailers (e.g., internet companies) that make sales to California consumers to register with the BOE and collect use tax, does not require these retailers to collect district use taxes, unless they are engaged in business in the taxing districts. For example, an internet company makes an internet sale to a California resident and ships the merchandise from outside of California to the customer’s residence in the City of Inglewood via common carrier. As long as the internet company is not "engaged in business" in the districts where the customer’s residence is located (the City of Inglewood and the County of Los Angeles), then internet company is not required to collect district tax from the customer and only has to collect state use tax rate of 7.25% on the sale.
This is a small victory for internet companies who faced the daunting task of collecting and administering use tax for the over 100 tax districts (i.e., cities, counties, towns and communities with special taxing jurisdictions) in California. Out-of-state companies will only have to worry about applying a single use tax rate for all California sales, as long as they are not engaged in business in any of the districts they are shipping products to. This also gives the internet companies a slight competitive advantage over traditional brick-and-mortar sellers in the state who have to collect both state and district taxes on their sales.
DC
Washington, D.C. Mayor Vincent Gray recently signed the Fiscal Year 2012 Budget Support Act of 2011, which includes numerous sales tax provisions. One of which requires a seller that is a "remote-vendor" to collect and remit "remote sales taxes" to the District. “Remote sales taxes” are sales & use taxes applied to property or services sold by a vendor via the Internet to a purchaser located in the District. A "remote-vendor" is a seller, whether or not it has a physical presence or other nexus within the District, selling property or rendering a service via the Internet to a purchaser in the District. A seller will not be required to collect remote sales taxes and will be considered a "exempted vendor" if it has a specified level of gross receipts from Internet sales to purchasers in the District. The specified level of gross receipts is to be determined by the District. These provisions do not go into effect anytime soon, as the District is required to meet a number of conditions before it can require collection. Additionally, these provisions must be enacted by the United States Congress.
Starting October 1, 2011 though, internet sales of tangible personal property or services by a "nexus-vendor" will be subject to tax. A "nexus-vendor" is a vendor that has a physical presence within the District, such as property or retail outlets, who is selling property or rendering services (via the Internet) to a purchaser in the District.
TX
Governor Rick Perry has signed an omnibus fiscal matters bill (S.B. 1) that includes changes to sales & use tax nexus laws. Effective January 1, 2012, the following retailers will be considered to be engaged in business in Texas for use tax collection purposes:
(1) A retailer that holds a substantial ownership interest in (i.e., at least 50%), or is owned in whole or in substantial part by, a person who maintains a business location in Texas, provided certain conditions are met; and (2) A retailer that holds a substantial ownership interest in, or is owned in whole or in substantial part by, a person who maintains a distribution center, warehouse, or similar location in Texas and who delivers property sold by the retailer to consumers.
The signing of this bill by Gov. Perry is interesting considering he vetoed a budget bill earlier this year that contained these same affiliate nexus provisions. The governor cited “serious concerns about the impact and appropriateness of the bill, believing that it risked significant unintended consequences”, when he vetoed it in May. Why the governor changed his mind on this legislation, other than noting that the State had passed a balanced budget without raising new taxes and cutting essential services, is unclear.
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