Taxpayer Wins in Massachusetts “Cookie Nexus” Case

The Supreme Judicial Court of Massachusetts has ruled in favor of the taxpayer in the Auto Parts Network Inc. v. Commissioner case. This ruling denies the Massachusetts Commissioner of Revenue to consider the use of cookies, apps, and content delivery networks (CDNs) while deciding whether a vendor has physical nexus with the State of Massachusetts.

The Commissioner of Revenue argued that cookies, downloadable apps, and CDNs created the physical presence in Massachusetts necessary to enforce taxation laws under the Quill v. North Dakota standard.  By using this standard, the audit division of the Department of Revenue sought to require US Auto Parts to register for, collect, and remit sales tax in Massachusetts.  As additional evidence of the commissioner’s claim, they argued that the standard established by Wayfair v. South Dakota could be applied retroactively to require enforcement of 830 Mass Regs § 64H.1.7 when applied to out-of-state vendors.

After deferring to the Appellate Tax Board and then the U.S. Supreme Court, the Massachusetts High Court ruled in favor of the taxpayer.

Please let us know if you have any questions about this case or how it may affect your business.

Happy New Year!

Wishing you and yours a spectacular new year filled with health, happiness, and prosperity!  We look forward to working with you in 2023, and as always, we are just a phone call or email away!

California Proposes Certification of Regulation 1684.5, Marketplace Sales

Regulation 1684.5, an emergency regulation that was put into place by the California Department of Tax and Fee Administration (CDTFA) after the South Dakota v. Wayfair, Inc. decision was made in 2018 (138 S. Ct. 2080), is now undergoing the formal regulatory process to propose potential amendments.  The regulation was initially put in place to govern the collection of use tax from out-of-state taxpayers that sell tangible personal property using the internet.  The proposed amendments could impose extra requirements on “marketplace facilitators” and may impact additional taxpayers as well.  Written comments from interested parties will be accepted until January 3, 2023 and a public hearing will be held if requested in writing prior to December 19, 2022.

Maryland Circuit Court Strikes Down Digital Advertising Services Tax

On October 17, 2022, Circuit Court Judge Alison Asti ruled that Maryland’s Digital Advertising Services Tax (DAT) which went into effect on January 1, 2022, violates the Internet Tax Freedom Act (ITFA) which prohibits discrimination against electronic commerce, the Commerce Clause which prohibits state interference with interstate commerce, and the First Amendment of the U.S. Constitution.  The Maryland Comptroller is expected to appeal the decision, but for now, although taxpayers are subject to estimated tax provisions, they are no longer required to file a return or pay the DAT. Taxpayers who have already paid the DAT during 2022 should plan to file refund requests if the decision is not overturned by a higher court.

The Maryland DAT, which is the nation’s first tax on digital advertising, is being addressed in federal courts as well.

We’re hiring!

Great news!  We are expanding our consulting practice and are currently searching for a Sales Tax Manager with a general affinity for all things related to sales and use tax.  The Sales Tax Manager position is heavily focused on client data analysis, and the ideal candidate is someone who is familiar with researching multistate sales and use tax topics then preparing written analyses and memos based on their research.  Nexus studies, apportionment reviews, audits/reverse audits, as well as voluntary disclosure and amnesty program projects, are a major responsibility of the Sales Tax Manager.  The Sales Tax Manager will be required to prepare work plans, execute projects successfully by critical deadlines, and oversee and manage projects from start to finish.  The Sales Tax Manager will also be required to stay up to date with industry standards and developments to actively assess how they may impact our existing clients.

*Remote work is negotiable, but the candidate must reside in either the Greater Sacramento or Greater Chicago area.  

The following qualifications apply (but if you come close and just LOVE all things related to sales and use taxes, please reach out to us anyway to see if there are any other opportunities you may qualify for).

  • Bachelor’s Degree in Accounting, Business Administration, or Finance
  • Self-motivated with a desire to learn and succeed
  • Strong attention to detail and advanced analytical skills
  • Above average time management skills
  • Excellent interpersonal and communications skills (oral and written)
  • 5+ years of related experience in a Sales and Use Tax (SALT) practice (Government-Department of Revenue, corporate, or consulting)      
  • Sales Tax CMI or CPA or Big 4 accounting experience would be a plus, but not required 

Benefits include a competitive salary, health insurance, vision insurance, matching 401(K), ongoing professional development opportunities, and a generous paid time off package.

New Colorado Retail Delivery Fee Goes into Effect on July 1, 2022

 

Beginning July 1, 2022, Colorado will begin assessing a .27 retail delivery fee on purchases of tangible personal property that will be delivered by motor vehicle (USPS, Fed Ex, UPS, etc.) within the state.  If a motor vehicle is involved in shipping, in any way from the time the order is accepted until final delivery, the delivery fee will be assessed.  The purchaser is responsible for paying the fee;  however, retailers and marketplace facilitators are responsible for collection and remittance.  Regardless of how many shipments are required to complete the delivery only one fee will be assessed per purchase.  Remittance of the fee follows the same filing frequency and due date as the Colorado state sales tax return,  but the fee itself is not subject to Colorado sales tax.  *Wholesale sales are excluded unless ordered in combination with purchases subject to sales and use tax.

Both in-state and out-of-state retailers with an active sales tax account, a retailer license, and any sales tax liabilities reported after January 1, 2021, will be automatically registered for a Colorado Retail Delivery Fee account.  Retailers who are not automatically registered can create an account through the CO DOR website, by filing form DR 1786, or via the CO DOR’s Sales and Use tax System (which will be available by the end of 2022).

Kentucky Tax Amnesty Program will run from 10/1/22 through 11/29/22

The upcoming Kentucky tax amnesty program will run from October 1, 2022, through November 29, 2022, and will apply to qualified tax liabilities for taxable periods from October 1, 2011 through the end of November, 2021. 

Every amnesty-eligible taxpayer will be contacted and notified about the tax amnesty program.

Any unpaid taxes that are eligible for the amnesty program, and which remain unpaid, will accrue interest at a rate 2% higher than the set interest rate, and any taxpayer failing to file for a period that amnesty was available will be charged collection fees ranging from 25-50%.  Failure to timely file any return or pay any tax and interest due after amnesty is granted, for any period ending on or after October 1, 2011, and ending 3 years from the date that the amnesty was granted, will invalidate the amnesty.

Exclusions apply such as:

  • ad valorem taxes on real property;
  • ad valorem taxes on motor vehicles and motorboats collected by county clerks;
  • ad valorem taxes on personal property payable to local officials; and
  • any penalties imposed under the Tobacco Master Settlement Agreement Complementary Act or penalties for prohibited acts by cigarette licensees or manufacturers.

Maryland Digital Advertising Tax is due tomorrow April 15, 2022

The first estimated payment for the Maryland Digital Advertising Tax is due tomorrow, April 15, 2022.  Taxpayers generating more than $100M in global revenue annually, and who are expecting to make more than $1M in Maryland gross revenues from digital advertising services are required to submit an estimated payment utilizing Form 600D.

Alert! Oregon CAT filing dates for 2022 have changed

Taxpayers using a fiscal calendar for income tax purposes (and whose calendar year began during 2021) are required to file a 2021 short year return no later than April 15th, 2022.  Return calculations will need to be prorated accordingly.  Going forward, fiscal filers must submit their CAT returns no later than the 15th day of the fourth month after the fiscal year ends.  Taxpayers using a calendar year for federal income tax purposes will not be affected.

 

Tennessee Drop Shipment Rule Repealed

Under Sales and Use Tax Rule 96, Tennessee suppliers were required to collect sales tax on products sold to out-of-state dealers and shipped to the out-of-state dealer’s Tennessee customers unless the dealer provided a Tennessee resale certificate or Streamlined Sales Tax Exemption Certificate which included a Tennessee sales tax ID number.  As of January 10, 2022, Rule 96 was appealed, and Tennessee suppliers are now able to sell tangible personal property and taxable services to an out-of-state dealer and drop ship the products to an out-of-state dealer’s Tennessee customer without collecting sales and use tax by accepting a resale certificate from the out-of-state dealer’s state or a Streamlined Sales and Use Tax Exemption Certificate that includes the sales tax ID number issued by the out-of-state dealer’s state.

 

Upcoming Ohio Tax Amnesty Period-July 1 through August 31, 2022

H.B. 45 which was passed by the Ohio House of Representatives on December 8, 2021, allows a tax amnesty period to run from July 1, 2022 through August 31, 2022.  During this time, taxpayers will be able to pay qualifying delinquent taxes (due as of the effective date of the legislation) and receive a waiver for interest and penalties.  Taxes included are sales and use tax, corporate income tax, and more!

Nonprofit Spotlight: January – One Warm Coat

The past year has really taught us that we have so much to be grateful for. Each month we will be highlighting a nonprofit or charity that we encourage you to look into for potential donor opportunities. Every little bit counts, and we are trying to do our part to make the world a better place. This month we chose One Warm Coat.

Nonprofit Spotlight: December – Toys for Tots

The past year has really taught us that we have so much to be grateful for. Each month we will be highlighting a nonprofit or charity that we encourage you to look into for potential donor opportunities. Every little bit counts, and we are trying to do our part to make the world a better place. This month we chose Toys for Tots.

Big News on the Horizon!  The end to the “N.O.M.A.D.” states is near!

Alaska, one of only five states without a state-level sales and use tax, has introduced H.B. 4005.  If passed, the new law will create a state-level sales and use tax collection requirement that will become effective July 1, 2022. 

Upon passage, the following will apply:

  • Alaska will join the Streamlined Sales and Use Tax Agreement.
  • The sale or lease of tangible personal property or services within Alaska will be assessed a 2% state sales tax based on the sales price of the transaction. 
  • Persons using tangible personal property or services acquired outside of the state, in a transaction that would have been subject to tax if it was purchased within Alaska, will be assessed a 2% state use tax based on the sales price of the transaction. 
  • Tangible personal property that was acquired by a purchaser for a use that was exempt under AS 43.44.060, but later converted to a use that is subject to sales tax, will be assessed a 2% state use tax.  

Stay tuned for further updates!

Nonprofit Spotlight: September – The Spark Program

The past year has really taught us that we have so much to be grateful for. Each month we will be highlighting a nonprofit or charity that we encourage you to look into for potential donor opportunities. Every little bit counts, and we are trying to do our part to make the world a better place. This month we chose the Spark Program.