The SALT Shaker - December 2016

December 1, 2016

By Keith Habel, CPA

Partner, SALT Practice Leader

Illinois

Compliance Alert: The Illinois Department of Revenue issued a compliance alert for taxpayers failing to timely report a nontaxable sale of a motor vehicle or other items that require a title or registration with the State of Illinois. Failure to file Form ST-556 or Form ST-556-LSE within 20 days of the date of delivery will result in a $100 penalty. IL DOR Compliance Alert

Minnesota

Revised Sales and Use Tax Fact Sheet: The Minnesota Department of Revenue revised a fact sheet for local sales and use taxes. Local Sales and Use Taxes Fact Sheet

Wisconsin

Volkswagen (VW) Court Settlement: The Wisconsin Department of Revenue posted information about sales and use tax treatment regarding the settlement VW made with federal and California regulators affecting Wisconsin taxpayers. VW Court Settlement – Sales and Use Tax Treatment

Electronic Commerce Recap

The following summarizes 2016 proposed and enacted state legislation concerning electronic commerce. Some of the updates below were previously included in our newsletter while some have not yet been discussed.

Arizona

Transaction Privilege Tax Ruling: The Arizona Department of Revenue issued an advisory ruling covering factors that determine substantial nexus for out-of-state businesses as well as guidance on how to determine the tax rate used for calculating the transaction privilege tax. TPR 16-1

Louisiana

Click-Through and Affiliate Nexus Bill Enacted: Click-through and affiliate nexus laws have been enacted in Louisiana sales and use tax laws to require certain remote dealers to collect state tax on sales made in Louisiana for tax periods beginning on and after April 1, 2016. House Bill 30

Nebraska

New Legislative Bill: The Legislature of Nebraska introduced Legislative Bill 1087 to modify the definition of “engaged in business” in the state to include online referral, product listing or other activities that facilitate sales for entities with nexus in the state. The bill has not yet moved past the introduction stage. Legislative Bill 1087

South Dakota

Sales Tax Economic Nexus Created: Effective May 1, 2016, new law requires the collection of South Dakota sales tax by sellers who otherwise do not have a presence in South Dakota if in the previous or current calendar year the seller has sales into South Dakota exceeding $100,000 or has two hundred or more separate transactions into South Dakota. If a seller meets one of the requirements, then it has a requirement to collect and remit South Dakota sales tax. Senate Bill 106

In April 2016, a complaint was filed in the South Dakota Judicial Circuit challenging the constitutionality of and seeking declaratory judgement that the law violates the Commerce Clause under Quill v. North Dakota. A separate complaint, filed by the South Dakota Department of Revenue, requests declaratory judgement that the law is valid. Am. Catalog Mailers Assoc., Netchoice v. Gerlach and SD DOR v. Wayfair, Systemax, Overstock, Newegg

These cases have yet to be heard. Currently, South Dakota is requesting remand back to the state court, while the retailers argue that the case is a matter of federal constitutional law and should be heard by the U.S. District Court. However, in a brief issued in July regarding the Wayfair case, the South Dakota DOR stated that the law is written to protect retailers from enforcement of the tax rule until the litigation is resolved. Case 3:16-cv-03019-RAL

Tennessee

Sales and Use Tax Economic Presence Rule Enacted Creating Nexus: The Tennessee Department of Revenue issued an administrative rule that renders substantial nexus for state sales and use tax purposes on out-of-state dealers that meet the following criteria: regularly soliciting customers through any means and making sales that exceed $500,000 to consumers in Tennessee during the previous 12-month period. These out-of-state dealers must register with the department for sales and use tax purposes by March 1, 2017. Amended Administrative Rule 1320-05-01-.63; New Administrative Rule 1320-05-01-.129

Utah

Remote Transactions Parity Act: In January 2016, the Utah House of Representatives introduced the Remote Transactions Parity Act which provides definitions, addresses sales and use tax rates, and details circumstances under which a person may be required to collect and remit sales and use tax. An amendment in February limited nexus to remote sellers with sales greater than $50,000 in the preceding 12-month period. The bill did not pass but is expected to be revisited in 2017. House Bill 235

For more information or assistance on state and local tax (SALT), call 888-556-0123, email info@honkamp.com.