Transcript Slide 1

© 2011 Financial Operations Networks LLC
Understanding and Complying
with Sales & Use Tax
Diane L. Yetter
YETTER – tax meets technology
Wednesday, April 13, 2011
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Nexus Legislation
• “Amazon” legislation
― Passed in NY, NC, RI
― Litigation in NY
― Requires tax collection if affiliates refer business and
receive compensation
― Proposed legislation in many states in 2011
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Reporting Legislation
• Reporting legislation
―Passed in CO and OK
―Restraining order in CO
―Requires sellers who do not collect tax to notify sellers of
use tax obligation
―CO requires “1099” type notices
―Proposed legislation
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Streamlined
Sales Tax
• “Standardization” of definitions
• Simplification on administrative functions
― Registration
― Compliance
― Rates/boundaries/tax matrices
― Exemption documentation
• Compliance options
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Streamlined
Sales Tax (Cont’d.)
• Current full member states:
Arkansas
Indiana
Iowa
Kansas
Kentucky
Michigan
Minnesota
Nebraska
Nevada
New Jersey
North Carolina
North Dakota
Oklahoma
Rhode Island
South Dakota
Vermont
Washington
West Virginia
Wisconsin
Wyoming
• Current contingent member states:
Georgia
Ohio
Tennessee
Utah
• Laws apply to all taxpayers in the state not just if
registered under SST
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Streamlined
Sales Tax (Cont’d.)
• S.34, The Sales Tax Fairness and Simplification Act
— This would grant the consent of Congress to the
Streamlined Sales and Use Tax Agreement providing
sufficient simplification and uniformity to warrant federal
authorizations to member states
• H. Res. 95, introduced Feb 2011
― Resolution opposing any legislation that would grant state
governments the authority to impose any sales tax
collecting requirements on out-of-state small businesses
that partake in online commerce
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Amnesty
• WA: 2/1/11-4/30/11; waives all interest and penalties
for taxes due before 11/25/10
• OK: Retailer & Consumer Use Tax; register prior to
7/1/11; waive all prior taxes, penalty, interest if collect
for 36 months
• MI: 5/15/11-6/30/11; waives penalties for taxes
prior to 1/1/10; 20% additional penalty if not filed
under amnesty
• SSTP Amnesty: GA, UT, TN, OH – all taxes
waived if filed under SSTP; valid until 12 months
after full member
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Use Tax Responsibility
• Purchases from non-registered vendors
• Applies to purchases regardless of order type (mail,
phone, internet)
• Generally applies to tangible personal property
• States starting to tax more services
• Unclear rules in many states on digital goods
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Contracting Concerns
• Sellers with nexus can’t “assign” their tax
collection responsibility
• Supplier contract terms can’t dictate sales/use
tax responsibility
• State can usually assess against either seller or buyer
except in certain states and types of transactions
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Tax Considerations
• Separated versus lump sum
• Combining taxable and exempt items
• Appropriate descriptions on purchasing contracts
• Vendor location and rate impact
• Temporary storage planning
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State Enforcement
• Almost all states in severe budget crisis
• More aggressive audit activity
• More responsibility placed on taxpayers
• Less involvement on review prior to issuance
of assessment
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Next Steps
• Determine where you have nexus
• Evaluate any past liabilities
• Evaluate options such as amnesty or voluntary
disclosure
• Coordinate with vendors
• Train staff
• Establish compliance process & procedures
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© 2011 Financial Operations Networks LLC
Thank You!
If you have further questions:
Diane L. Yetter
President
Yetter – tax meets technology
(312) 701-1800 x2
[email protected]