Exploring what's new, relevant and upcoming in the ever-changing world of sales tax.
Mar 07, 2013 Sales Tax DataLINK
Most sales tax rules don’t make sense to the average person but there are some sales tax rules that don’t make sense to anyone, even a seasoned tax professional. Take candy. Candy has been moved by many states into the taxable category-- but it's not that simple. If you buy Twix in package of six in New York, it's a nontaxable cookie. Buy a package of two, and it's taxable candy. In both Kentucky and Missouri, candy with flour in it is not taxable. If you’re craving chocolate covered cherries, you’ll pay sales tax. But if you’ve got chocolate covered pretzels in your basket, you won’t. The reasoning behind it probably has to do with protecting wheat producers from reduced market share due to sales tax increasing the overall price of the product. But in any case, figuring out the rules and filing your sales and use tax can be pretty complicated when you take into account rules with such specific restraints. Read More
Mar 05, 2013 Sales Tax DataLINK
Internet retailers don't always have to collect sales tax, but purchasers are always supposed to pay the sales tax. If your company makes an online purchase from a retailer which doesn't collect sales tax, you are required to pay it as use tax to your state. While some states, like Michigan, base use tax on annual income and automatically charge it to taxpayers, others use voluntary systems where taxpayers are supposed to pay on items purchased. Use tax is levied on purchases that will be used, stored, or otherwise consumed in a state regardless of where the purchase took place. Say your company buys inventory tax-free with a resale certificate. Normally, the only sales tax transaction that occurs is when you collect sales tax from the customer when the inventory walks out the door and won’t be resold by another company. Read More
Mar 02, 2013 Sales Tax DataLINK
So what exactly constitutes a physical presence in a state? We’ve noted before that not all online sales require the seller to collect sales tax,but it can get pretty complex to determine when and what you need to collect from the customer. A thing known as “nexus” in legal terms determines physical presence. The word "nexus" means "connection" but for sales tax purposes there are specific requirements to determine a nexus with a certain state. A historic Supreme Court case in 1992 put the concept into law when North Dakota attempted to collect sales taxes from Quill Corporation, a mail-order retailer. North Dakota argued that the floppy disks that held the inventory information were enough of a connection, or nexus, to create a physical presence in the state that warranted sales tax collection. However, the Supreme Court ruled for Quill Corporation and created specific regulations on when sales tax needs to be collected. If your business has any of the following connections to a state, you need to collect sales tax: Read More
Feb 28, 2013 Sales Tax DataLINK