March 10, 2010
UPDATE March 10, 2010 – As covered by the NewYork Times, the Idaho House of Representives’ Revenue and Taxation Committee today voted 10 (in favor) to 8 (opposed) to introduce their own version of SB 1295, bringing Idaho one step closer to becoming a full Member State under the Streamlined Sales and Use Tax Agreement. Way to go Idaho!
UPDATE March 2, 2010 – Idaho Senate has voted unanimously in support SB 1295! Now the bill is off to be reviewed by the Idaho House of Representatives’ Revenue and Taxation Committee (see update above).
(Originally published 2/3) Last week (on January 27th) Idaho Senator Mike Jorgensen (R-Hayden Lake) proposed Idaho Senate Bill 1295 (Here’s the complete SB 1295 and the related Statement of Purpose and Fiscal Notes to have Idaho join the Streamlined Sales and Use Tax Agreement!
Local Idaho journalist Sharon Fisher for the award-winning online news source NewWest.Net wrote about it first earlier today.
Go Idaho!
Here’s hoping those other states considering affiliate taxes tax note.
UPDATE: Business Week just picked up an article by John Miller of the Associated Press: “Tax cheats, others shorting Idaho $250 million.”
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Posted by Fed-Tax.net
March 7, 2010
Last Wednesday (March 3rd, 2010) the Hawaii Senate approved SB 2405, and sent it to the Hawaii House of Representatives for consideration.
SB 2405 adopts changes to the Hawaii General Excise Tax system to allow Hawaii to participate in the national Streamlined Sales and Use Tax Agreement.
After the Hawaii congress had passed a similar measure last yer (SB 1678), Gov. Lingle Vetoed the bill, then the Hawaii Senate voted to override the veto, but the House of Reps. did not.
This year, hopefully Gov. Lingle will allow SB 2405 to become law – now that Hawaii anticipates a $500,000,000+ budget gap. SB 2405 could allow Hawaii to collect on at least $47,000,000 in sales tax currently due, but logistically un-collectable. Admittedly SB 2405 may only be able to recover about 10% of Hawaii’s anticipated budget shortfall. Fortunately however, SB2405 does not require any new taxes, or any further painful budget cuts.
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Posted by Fed-Tax.net
March 2, 2010
The Florida Senate has formally introduced legislation in support of the Streamlined Sales and Use Tax Agreement! Senate Memorial 0254 (which is nearly identical to the Florida House of Representatives House Memorial 157 introduced last fall) , sponsored by Senator Ring, urges members of the Florida congressional delegation to co-sponsor the Main Street Fairness Act and to support its adoption by the Congress of the United States.
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Posted by Fed-Tax.net
March 2, 2010
Colorado HB 1193 (which we wrote about a few weeks ago) is now the law in the State of Colorado.
Basic details are provided in Emergency Regulation 39-21-112.3.5. Complete details are in the bill which became law on February 24 (less than one week before it became effective).
If your company sells to any Colorado purchaser as of yesterday, your company must either voluntarily collect Colorado Sales Tax, or you must:
- Include the following notice on each invoice and receipt (failure to do so will subject your business to a $5 penalty, per invoice) :
Although we, as the seller, are not obligated to collect Colorado sales tax, this purchase is subject to Colorado sales tax unless it is specifically exempt from taxation. This purchase is not exempt merely because it is made over the Internet or by other remote means. The State of Colorado requires that you file a sales/use tax return at the end of the year reporting all of your purchases that were not taxed and pay tax on those purchases. Retailers that do not collect Colorado sales tax, including ourselves, will provide you an end-of-year summary of your purchases to assist you in filing that report. Details of how to file this return may be found at the Colorado Department of Revenue’s website, www.taxcolorado.com. Please note that we are required by law to provide the Colorado Department of Revenue with a report of the total amount of all of your purchases from us at the end of the year.
- Your business must also send an end-of-year statement to all Colorado purchasers detailing that purchaser’s transactions over the past year, and reminding the purchaser of their obligation to report and remit all sales and/or use taxes to the Colorado Department of Revenue.
- Your business must also file an annual statement with the Colorado Department of Revenue detailing all the transactions of each Colorado purchaser.
Note: There is a time allowance for implementation to occur - so long as your business has made the changes to your invoices by April 30, 2010, any accrued per-invoice penalties (from 3/1/2010 through 4/30/2010) will be waived.
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Posted by Fed-Tax.net
February 22, 2010
Virginia news organization newsleader.com published an editorial today entitled “Equalize Internet sales with tax.”
This article, and the editorial intent behind it are flawless – and the piece is well written and to the point. It illustrates cleanly and clearly why sales taxes should be collected on all Internet transaction with Virginia residents.
Unfortunately, it seems to be referring to Virginia Senate Bill 660, the Virginia legislature’s version of another Amazon Tax. The National Retail Federation estimates SB 660 could produce up to $18M in revenue for Virginia next year – but only if affected Internet retailers do not suspend affiliate marketing programs in Virgina. As was demonstrated in North Carolina and Rhode Island last year, such an assumption could prove disastrous. When those states passed similar legislation, the Internet retailers simply suspended all affiliate relationships in those states yielding zero revenue growth and adding lost jobs and business closures instead.
This is unfortunate on several levels, but perhaps most frustrating for Virginians is that SB 660 seems to be passing while less than 1 week earlier a better and more appropriate legislation, Virginia Senate Bill 340, was delayed for consideration until 2011.
Under Virginia SB 340, Virginia could be able to collect $156.6M in additional sales tax revenue in 2010 (almost 9 times more revenue than targeted by SB 660).
Naturally, we posted a response directly on the newsleader.com site.
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Posted by Fed-Tax.net
February 22, 2010
The LA Times ran an article this weekend about California ABX8 (the emergency amazon tax) – unfortunately, the LA Times does not offer a web-forum for comments/responses. The Article incorrectly states in the subtitle and in the article that the effect of this bill could result in $150 million per year in new revenue for the State of California. The fact-checker seems to have been asleep-at-the-wheel, because the actual Senate Analyses (available here) projected the revenue effect of this bill would be $107 million. Don’t get me wrong, $107 million is a lot of money, but when your state has a 14.6% budget gap, perhaps everyone should start double-checking their numbers and actually doing math. Substantially more revenue is “still left on the table” by all the other out-of-state sellers that are not collecting sales tax (hard to imagine sometimes, but there actually are other companies making sales online – about 3.5 million of them).
California should simply become a Full Member State of the Streamlined Sales and Use Tax Agreement (or SSUTA). The California Legislature already passed related legislation last fall. California now should take the remaining steps to become a full Member State under the SSUTA – a collective effort of 44 states (including California) which has been developing for the last 10 years to simplify and standardize sales tax laws to enable congressional action at the federal level to resolve this matter once and for all.
In anticipation of California’s likely ultimate adoption of SSUTA provisions, at Fed-Tax.net we have already prepared our TaxCloud systems to provide real-time calculation of accurate local sales tax for every jurisdiction in California. Take a moment to try it out at http://myrate.taxcloud.net/. Once California becomes a full Member State under the SSUTA we will be happy (and honored) to help merchants all over the country accurately calculate local sales tax for California residents. We will do this at absolutely zero cost to merchants or consumers (we are paid by the states to perform remote merchants’ sales tax management, reporting, and remittance obligations).
We know nobody likes paying sales tax, but the fact remains that this tax is still due, and when merchants do not collect at the time of sale (as they do in all physical stores), then the consumer is obligated to report and pay these taxes on their own. Since few people do, these taxes go unpaid resulting in massive budget shortfalls as California is now enduring. We think it is terrible that through lack of federal action to-date on this matter an entire generation of consumers on the Internet have grown up feeling that not being charged sales tax on Internet purchases is their constitutional right – and are frequently shocked to learn that they are committing tax fraud when they willfully or at least negligently fail to report and pay these taxes. It is time for California to tell all Internet merchants (not just those with affiliate marketing practices) that it is time for them to respect the budget decisions made by the California voters and their elected officials and to stop pretending it is too difficult, too complicated, or too costly to calculate local sales tax. Our TaxCloud service demonstrates these arguments are without merit, and these merchants are simply avoiding collection as a way to bully local merchants (who must collect sales tax) out of consumer price-competition.
| California’s Projected 2010 Budget Shortfall: |
$ |
14,400,000,000 |
1 |
| AXB8 Projected Revenue: |
$ |
107,000,000 |
2 |
| Difference: |
$ |
14,293,000,000 |
3 |
|
Total Sales Tax due by California consumers based on purchases from out-of-state Internet retailers |
| Uncollected Sales Tax (from remote sellers) |
$ |
1,441,100,000 |
4 |
Admittedly, becoming a full SSUTA Member State will not solve all of California’s budget deficit, but at least it can cover 10% – and it is not a new tax, and no budget cuts are required.
1-Source: Center on Budget and Policy Priorities – http://www.cbpp.org/cms/index.cfm?fa=view&id=711
2 – Source: State of California Senate Analysis – http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_0001-0050/abx8_8_cfa_20100219_175402_asm_floor.html
3-Source: Simple Math
4-Source: The University of Tennessee 2009 Study: State and Local Government Sales Tax Revenue Losses from Electronic Commerce
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Posted by Fed-Tax.net
February 19, 2010
Even though it was vetoed last year by Gov. Schwarzenegger, the bill is back – only this time embedded within an emergency “Tax Enforcement” Bill.
In Assembly Bill No. 8 of the 8th extraordinary session, the California legislature has expanded the definition of a “Retailer engaged in business in this state” to include:
Any retailer entering into an agreement or agreements under which a person or persons in this state, for a commission or other consideration, directly or indirectly refers potential purchasers of tangible personal property to the retailer, whether by a link or an Internet Web site or otherwise, provided that the total cumulative sales price from all of the retailer’s sales of tangible personal property to purchasers in this state that are referred pursuant to all of those agreements with a person or persons in this state, within the preceding 12 months, is in excess of ten thousand dollars ($10,000).
They also included a clarification:
An agreement under which a retailer purchases advertisements from a person or persons in this state, to be delivered on television, radio, in print, on the Internet, or by any other medium, is not an agreement described [above], unless the advertisement revenue paid to the person or persons in this state consists of commissions or other consideration that is based upon sales of tangible personal property.
Repeating: The California Senate yesterday (February 18, 2010) passed Assembly Bill No. 8. Stand by for official notice of termination by Amazon, Overstock, and others of all affiliate relationships in the state of California.
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Posted by Fed-Tax.net
February 19, 2010
Jewelers of America has launched a campaign calling on Congress to reintroduce, and pass, legislation that would close the Internet sales tax loophole that is hurting traditional jewelry businesses.
They even have a nice little “spam congress” email letter writer powered by the omnipresent political action whizzes at Capitol Advantage
I guess the JA’s leadership and members are tired of Blue Nile not charging sales tax – as well they should be.
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Posted by Fed-Tax.net
February 18, 2010
Originally posted 1/22/2010 – UPDATED 2/18/2010 – Wow, there has been a lot of activity in individual States over the last few weeks after the State of New York reported generating $53 million in new sales and use tax revenue from the 30 companies ensnared by their Complex Nexus legislation (often referred to as the “Amazon” Tax – as we have written about before). While Rhode Island and North Carolina passed similar legislation last year, they have not reported how successful their efforts have been. Amazon.com ceased all affiliate operations in RI & NC based upon their adoption of these laws. Amazon has not ceased affiliate operations in New York, but has been engaged in an ugly court battle to challenging the validity and constitutionality of the law. California and Hawaii also considered (but did not pass) similar legislation late last year.
41 States have already identified significant budget shortfalls, projecting the worst budget shortfall ever! Our friends at The Center on Budget and Policy Priorities just released a detailed (and terrifying) report outlining a projected $194 billion deficit for 2010, and another $180 billion deficit for 2011.
As of this writing four states five states (just added Vermont) seven states (just added Maryland & Illinois) eight states (just added California) have recently introduced Complex Nexus or so-called “Amazon” tax legislation:
| State |
Bill |
Introduced |
Threshold |
Effective |
Notes |
| New Mexico |
HB 50 |
Jan. 15, 2010 |
$10,000 |
? |
|
Mississippi |
SB 2927 |
Jan. 20, 2010 |
$0 |
July 1, 2010 |
Died in Committee 2/2 |
| Colorado |
HB 1193 |
Jan. 20, 2010 |
$10,000 |
March 1, 2010 |
Signed into law 2/24/2010! |
Virginia |
SB 660 |
Jan. 21, 2010 |
$10,000 |
? |
Died in House subcommittee 2/24 |
| Vermont |
HB 661 |
Jan. 29, 2010 |
$10,000 |
July 1, 2010 |
Ref’d to Ways and Means Mtg. 2/23 |
| Maryland |
SB 824 |
Feb. 10, 2010 |
$10,000 |
June 1, 2010 |
|
| Illinois |
SB 3353 |
Feb. 10, 2010 |
$10,000 |
? |
|
| California |
8X AB 8 |
Feb. 18, 2010 |
$10,000 |
? |
Passed Senate 2/18 |
All of this activity at the state level should provide ample indication to our Senators and Representatives in Washington D.C. that federal action is necessary to prevent a flood of varied state-by-state laws. Urge your Senators and Representatives to ask around on the hill, and find out what is holding up introduction (and passage) the the Main Street Fairness Act!
Here at Fed-Tax.net we are eager to help all Internet merchants easily and automatically calculate and remit correct local sales tax for every jurisdiction in the United States – at zero cost to merchants. We will do this regardless of which system ultimately prevails, state-by-state affiliate taxes, or a federally authorized Streamlined Sales and Use Tax Agreement.
Our TaxCloud service will launch later this year (watch here for our preview release announcement soon), and will demonstrate beyond any shadow of doubt that it is no longer overly burdensome (technically or financially) for remote sellers to comply with all local sales tax laws. We are building TaxCloud to activate the opinion of the Court as originally penned by Justice Stewart in 1967 (and re-affirmed in 1992) which invited congress to act once “the skill of contemporary man and his machines” has solved this problem.
UPDATE – COLORADO SB 1193 2/2/2010: Last night the Colorado House of Representatives voted (on “Shall the bill pass?”) 33 (Yes) to 32 (No). So, they PASSED SB 1193 – Here is the Current (Amended) Bill now on its way through the Colorado Senate.
UPDATE – VERMONT HB 661 Introduced 2/3/2010: Just saw that Vermont also introduced their own version of an affiliate tax late last week. Sorry we missed it.
UPDATE – Colorado SB 1193 Revised 2/8/2010 – the Colorado Senate has revised SB 1193 significantly.
UPDATE – Maryland SB 824 Introduced 2/10/2010
UPDATE – Illinois SB 3353 Introduced 2/10/2010
UPDATE – California Senate passes AB 8 2/18/2010
UPDATE – Colorado SB 1193 is now LAW – The Governor of the State of Colorado – see Emergency Regulation 39-21-112.3.5.
1 Comment | Issues, News | Tagged: affiliate tax, amazon affiliates tax, California, Colorado, Fed-Tax.net, Main Street Fairness, Mississippi, New Mexico, SSTP, streamlined sales tax, TaxCloud, Virginia | Permalink
Posted by Fed-Tax.net
February 17, 2010
Oklahoma is already a Full Member State of the Streamlined Sales and Use Tax Agreement, but rumor has it that legislators there are understandably frustrated by the lack of federal action to date to fully authorize interstate sales tax collection, so they too are considering introduction of an Amazon Tax.
This is where things get a little funny… The Oklahoma House is now considering HB 2716 which calls on the Oklahoma Attorney General:
“to establish the Unconstitutional Interstate Taxation Prevention Unit to prevent any state or local government entity other than the State of Oklahoma or its political subdivisions from enforcing or attempting to enforce or apply any income, sales, use, excise, gross receipts, franchise or other state or local tax in a manner inconsistent with the Due Process Clause or the Commerce Clause of the United States Constitution.”
Apparently one hand does not know what the other hand is doing… 
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Posted by Fed-Tax.net
February 15, 2010
Cara Griffith was the legal editor for TaxAnalysts.com’s “State Tax Notes” weekly journal before becoming a manager with PricewaterhouseCoopers LLP. TaxAnalysts.com rcently published her thoughtful comparison of the Streamlined Sales and Use Tax Agreement (or “SSUTA”) versus the new fleet of “Vendor Presumption” or “Amazon tax” laws.
As we have said before, we firmly believe the SSUTA approach is the best option for states, vendors, and taxpayers, however Ms. Griffith points out how ultimately damaging these vendor presumption laws are to the SSUTA efforts.
The greatest cause for concern, she writes, is that this developing state-by-state patchwork of varied interpretations of affiliate nexus may mislead Federal legislators into believing that such efforts present a more viable option than SSUTA for states to recover lost revenue due to the explosive growth of e-commerce over the last decade.
The article is certainly worth a few minutes of your time to read, particularly given the pace of introduction of these Amazon Tax laws in so many states.
Leave a Comment » | Issues | Tagged: affiliate tax, amazon affiliates tax, Fed-Tax.net, Main Street Fairness, streamlined sales tax, TaxAnalysts.com, Vendor Presumption | Permalink
Posted by Fed-Tax.net
February 9, 2010
The Colorado Senate has revised HB 1193 quite dramatically.
The Good News: It no longer appears to be targeting affiliate marketing.
The Bad News: It makes no mention of conforming to the Streamlined Sales and Use Tax Agreement. In fact, it now goes into extraordinary detail asserting jurisdictional authority over out-of-state businesses.
Specifically, it states that any out-of-state business which does not voluntarily collect and remit Colorado sales tax must:
- Notify each Colorado customer that sales or use tax is due on all purchases from the business, and the purchaser must specifically file a sales or use tax return with the Colorado Department of Revenue. Failure to deliver this notification will subject that out-of-state business to a $5 penalty for each failure to notify.
- Send separately to each Colorado customer (by actual First-Class Mail by itself in an envelope labeled “Important Tax Document Enclosed”) an end-of-year summary showing the total amount paid by the customer for all purchases over the past year to that business, and reminding the customer again of their obligation to file a sales or use tax return and pay the appropriate use tax for all such purchases.
- Send to the Colorado Department of Revenue (by March 1 of each year) a statement detailing each Colorado customers purchasing activities during the preceding calendar year. Failure to send this statement shall subject the out-of-state business to a $10 penalty for each purchaser which should have been included in such annual statement.
There is also a fair amount of language devoted toward empowering the Colorado Department of Revenue the right to issue subpoena requiring attendance to take oral or written testimony under oath, and to produce all records relating to sales to Colorado residents, along with authorization for judicial enforcement and ability to order judgment against the retailer for contempt.
Holy burden building batman!
Now instead of businesses cancelling their affiliate programs in Colorado, businesses may just suspend all sales efforts in Colorado.
Please Colorado legislators – can we have a few minutes of your time to discuss this matter?
UPDATE 3/2/2010 – This was signed into LAW last week (on Feb. 24th) by the Governor of the State of Colorado.
2 Comments | News, Rants | Tagged: affiliate tax, amazon affiliates tax, Colorado, Complex Nexus, Internet Sales Tax, Main Street Fairness, streamlined sales tax, taxation without representation | Permalink
Posted by Fed-Tax.net
February 9, 2010
Yesterday in the great State of Missouri, Senator Joan Bray introduced legislation calling for Missouri to become a Full Member of the Streamlined Sales and Use Tax Agreement. At this writing, the full PDF of Missouri Senate Bill 905 is unavailable, however a summary was provided upon introduction:
This act requires the Department of Revenue, in consultation with the streamlined sales tax governing board, local taxing entities, and political subdivisions to promulgate rules and take all actions necessary to implement the provisions of the streamlined sales and use tax agreement no later than January 1, 2012. The state and all political subdivisions will adopt and implement the streamlined sales and use tax agreement effective January 1, 2012.
Way to Go Missouri!
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Posted by Fed-Tax.net
February 6, 2010
TaxAnalysts hosted a fascinating panel discussion at the National Press Club this morning that everyone interested in Internet sales taxes should invest the two hours of time the entire debate deserves.
The debate was titled: State Taxes on Internet Sales: Are “Amazon” Laws the Answer?
The event was descibed by the organizers:
A discussion about whether states should tax Internet or other kinds of remote sales, and if so, how. Should states pursue “Amazon” laws that New York and Rhode Island have adopted and other states are considering? Or should Congress enact legislation to enable states to pursue a multistate solution?
The panel was moderated by:
Chris Bergin, President of Tax Analysts (taxanalysts.com)
The panelists were:
Michael Mazerov, senior fellow with the Center on Budget and Policy Priorities.
Stephen P. Kranz, is a partner with Sutherland Asbill & Brennan LLP. Kranz is a well-known figure in the state tax world. A former general counsel at COST, Kranz has become a leading representative of business interests in court as well as before the legislatures.
Scott Petersen, is the Executive Director of the Streamlined Sales Tax Governing Board
George Isaacson, is a senior partner at Brann & Isaacson and tax counsel to the Direct Marketing Association and has represented the DMA in the filing of amicus curiae briefs in state and federal courts throughout the country, including the United States Supreme Court, regarding various tax matters.
1 Comment | News | Tagged: affiliate tax, amazon affiliates tax, Center for Budget and Policy Practices, Fed-Tax.net, Main Street Fairness, SSTP, streamlined sales tax, TaxCloud, The Federal Tax Authority | Permalink
Posted by Fed-Tax.net
