Jul 012014
Zip2Tax sales tax calculator app

The Zip2Tax Sales Tax Calculator is now available as a free download on Google Play. The app is free to use for any Zip2Tax customer with an Online Lookup account or just call 866-492-8494 for a free trial today.

The Zip2Tax mobile sales and use tax calculator can find the general sales or use tax rate for any U.S. address, including your current location instantly and figure the tax for any dollar amount while you are on the go.

The app is free to download and, after a signup where you create an account with Zip2Tax, LLC, your first 15 days is free to use the app’s features without any obligation. No credit card is required and you will not be billed anything after the trial period expires if you do not wish to purchase a subscription.  Google Play

With this mobile app you can look up sales or use tax rates at your current location as determined by your phone’s GPS so you don’t need to be precisely sure where you are standing to get a fairly accurate rate, or, you can punch in a ZIP code to see a listing of the possible matching tax jurisdictions. The Zip2Tax app also features PinPoint lookups for users needing a full street address match for exact door step accuracy.

With a Zip2Tax Online Lookup subscription you also get access to full browser-based lookups via the Zip2Tax.com website, live U.S. based customer service, help with common sales tax related questions, and news and updates on sales and use tax issues affecting businesses in the U.S and Canada.

It would help us out if you could take a moment to rate this app, and we would appreciate it very much if you would leave feedback. We do read feedback and try to provide solutions to problems or make improvements whenever possible.

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Aug 222014

Many retailers issue their own credit cards. These cards are actually backed by outside financing companies who collect a fee from the retailer on each purchase. When a customer uses a store credit card, the finance company pays the retailer the full purchase price, including any applicable sales tax. The retailer is then responsible for remitting any sales tax to the state or local government.

But what happens when a customer uses a store credit card and fails to pay the bill? The Missouri Supreme Court recently considered this issue in connection with the question of whether the retailer is entitled to a refund of any sales tax paid on such uncollected debts.Circuit city

In this case, the retailers were Circuit City and Dillard’s. Both issue private credit cards, Circuit City through JPMorgan Chase and Dillard’s through GE Capital. In 2010, both retailers asked the Missouri Department of Revenue to refund sales taxes previously remitted for sales that were later written off as bad debts by the credit card issuers. They argued Missouri law requires such a refund whenever sales tax is “erroneously or illegally collected.”

But neither the Department of Revenue nor the Missouri Supreme Court saw it that way. Judge Laura Denvir Stith, writing for a unanimous Supreme Court in an opinion issued July 29 of this year, said the retailers suffered no loss as a result of the bad credit write-offs. They were already paid in full. It was the card issuers—JPMorgan and GE—who took a federal tax deduction for the unpaid bills.

Nonetheless, the retailers argued they should be treated as part of a single “unit” together with their credit card partners. That would allow them to claim a sales tax refund for the card issuers’ losses. Again, Judge Stith said that was not the proper interpretation of Missouri law. The retailers and their credit card partners are clearly separate entities, not two parts of a single business entity. Stith said the retailers could not create a loophole whereby they could be considered a single unit for the sole purpose of obtaining a sales tax refund.

Ultimately, Stith said, neither the retailers nor their credit card partners were entitled to a sales tax refund under Missouri law. The banks didn’t pay any sales tax to begin with, and the retailers never suffered any actual losses that would make them eligible for a refund.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog Bonham’s Cases.

Aug 222014
Alaska local sales tax

Sales taxes range from 3% to 7.5% between the six cities of Alaska’s Kenai Peninsula Borough. A recent case over a seasonal exemption on groceries in certain general law cities in the borough upheld the voter’s right to amend sales tax policy through referendum.

Sales taxes may be assessed at multiple levels of government. In Alaska’s Kenai Peninsula, for example, the borough (county) government levies a 3% tax on all retail sales. But each of the six cities within the borough may add their own sales tax, so the actual rate varies between 3% and 7.5%.

Alaska allows citizens to amend local laws through referendum. In 2008, Kenai Peninsula Borough voters approved Proposition 1, which exempts “nonprepared food” (groceries) from the borough sales tax during the nine-month period lasting September 1 to May 31. Normally this exemption would also apply to four of the six Kenai Peninsula cities, because their taxing power is directly tied to the borough. These are known as “general law cities” in Alaska. But prior to the referendum, the borough’s assembly adopted an ordinance permitting general law cities to maintain their own year-round sales tax on groceries.

In 2010, a Kenai Peninsula resident, James Price, moved to place a second referendum on the local ballot, this one repealing the ordinance restoring the general law cities’ year-round taxation power. The borough said the referendum could not proceed because it conflicted with the state constitution. A state superior court judge sided with the borough, but on August 8 of this year, the Alaska Supreme Court disagreed and reversed.

Justice Craig Stowers, writing for a unanimous court, rejected the borough’s view that Price’s proposed referendum violated a constitutional prohibition on using a referendum to approve or reject “local or special legislation”. The borough said the proposed repeal would only affect general law cities, yet everyone in the borough would be permitted to vote. Nonetheless, Stowers said, the sales tax question “is of boroughwide interest” and “affects all borough residents” who shop in the general law cities. Therefore it was not a “special or local” initiative as defined by state law.

Stowers also dismissed the borough’s claim the proposed referendum is “unenforceable” because it improperly transfers legislative powers from the elected borough assembly to the voters. The borough said only the assembly could “determine whether cities may tax sources not taxed by the borough.” Stowers said this flew in the face of both Alaska law and the state’s constitution, which “expressly empowers voters to nullify the exercise of legislative power by rejecting legislative acts.” The assembly, he said, could not restrict the voters’ rights to amend sales tax policy through referendum.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog Bonham’s Cases.

Aug 192014

Michigan high court finds that consumer must prove retailer paid sales tax on purchase in order to qualify for use tax exemption

Use taxes are the consumer counterpart to sales taxes. For example, Michigan imposes a 6% use tax on the “use, storage, and consumption of all tangible personal property.” This use tax may be offset by any sales tax paid to the retailer at the time of purchase. But what if a customer cannot prove the sales tax was paid? The Michigan Supreme Court recently addressed that question.

Michigan sales and use tax

Andrie, Inc. is a Michigan-based company being sued by the state for non-payment of use tax on fuel. The company is fighting the lawsuit claiming sales tax was paid when the fuel was purchased but the state says Andrie must provide proof.

Andrie Inc. is a Michigan-based company that transports asphalt products across the Great Lakes. Andrie purchases fuel for its vessels in Michigan. The 6% tax is due on all of these purchases, whether as a sales tax paid to the fuel retailer or as a use tax paid by Andrie directly to the state. When the Michigan Department of the Treasury audited Andrie for a seven-year period dating back to 1999, however, it claimed the company failed to pay nearly $400,000 in back use or sales taxes.

The problem for Andrie was that many of its invoices for fuel purchases did not contain a line-item expressly stating whether sales tax was assessed as part of the purchase price. For its part, the Department of the Treasury could not say whether or not the retailers had paid any sales taxes to the state. But as far as the department was concerned, the burden was on Andrie, not the state, to prove the tax was paid.

Andrie understandably disagreed with this position. It paid the use tax under protest and sued the department in the Michigan Court of Claims for a refund. That court, and later the Michigan Court of Appeals, agreed with Andrie that since gasoline purchases are subject to sales tax, the burden should be on the retailer, not the customer, to prove the tax was paid.

The Michigan Supreme Court disagreed. In an opinion issued on June 23 of this year, the court voted 6 – 1 to reverse the two lower courts. Chief Justice Robert P. Young, Jr., writing for the majority, said the sale of property is subject to both sales and use taxes. Each is a “separate taxable event,” and Andrie is only entitled to a use tax exemption if it can prove the sales tax was paid. Whether the sales tax should have been collected is irrelevant; the chief justice said Michigan law clearly states any sales tax must be “due and paid” before a use tax exemption is granted.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog Bonham’s Cases.

Aug 142014

Are disposable utensils sales tax exempt for fast food restaurants?


Are disposable utensils considered wholesale or retail sales when sold to fast food restaurants for use with prepared meals? Alabama courts found the sale was a retail transaction and later reversed the decision finding for the wholesale, tax free argument.

Sales tax is usually assessed at the retail level. Most states exempt wholesale transactions from sales tax. But distinguishing retail from wholesale can be problematic. An Alabama appeals court recently had to decide whether the sale of certain supplies to a chain restaurant constituted a final, retail sale or merely a wholesale transaction exempt from tax.

Kelly’s Food Concepts is a restaurant supplier based in Selma, Alabama. Its customers include popular national chains like KFC and Popeye’s. Kelly’s sells items including plastic utensils, napkins and straws to these restaurants.

In 2011, the Alabama Department of Revenue audited Kelly’s and determined the company failed to collect state and local sales taxes on the sale of these supplies. Kelly’s argued these were wholesale transactions exempt under state law. But in 2012, Bill Thompson, the department’s chief administrative law judge, said Kelly’s was incorrect. As he saw it, the restaurants did not “resell” the utensils or napkins to their customers, but rather provided them free with the purchase of food. Relying on a 1984 decision by New York’s highest appeals court, Thompson said only items necessary to package the food should be considered part of the sale. Furthermore, under a prior Alabama appeals court decision, additional items like utensils must be factored into the price of the food. Thompson said Kelly’s presented no such evidence that was the case here; therefore it was liable for uncollected retail sales taxes on its sales of utensils, napkins and straws.

An Alabama Circuit Court judge later reversed Thompson’s decision and held “the purpose of the sale of cutlery and tableware … to the restaurants was for the restaurants to include the items with food and drink the restaurants sold to their customers.” These were, in fact, wholesale transactions not subject to sales tax. The department of revenue appealed this decision.

On June 20 of this year, the Alabama Court of Civil Appeals upheld the circuit judge’s decision. Presiding Judge William C. Thompson, writing for a unanimous court, said when a restaurant sells “prepared food” to the public, that includes any cutlery or tableware. They are “critical elements of the food and drink items sold by the fast-food restaurants to their customers, and, thus, [Kelly’s], as a wholesaler, is neither liable for nor required to collect sales tax from the fast-food restaurants.” The sales tax is properly collected by the restaurant when the customer buys a meal.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog Bonham’s Cases.

Aug 142014

Landmark law requires retailers to prove they DO NOT have nexus

Colorado online nexus

Colorado’s landmark legislation requires retailers to prove their sales DO NOT create nexus for them creating new questions about what that means for online retailers doing business in the state and how they are to handle Colorado’s myriad home rule jurisdictions.

E-Commerce has fundamentally changed the way that consumers shop, with sales growing over 12% in 2013 according to the U.S. Department of Commerce. Presently e-commerce accounts for $322 billion in annual sales, representing significant growth each year from 2009 when e-commerce totaled $209 billion.

While this trend has been promising for online retailers, it’s proven to be a huge headache for state legislators who are tasked with recuperating what they see as lost sales tax from online sales. On June 9, 2014, Colorado’s Gov. John Hickenlooper signed the Marketplace Fairness and Small Business Protection Act into law, representing his state’s attempt to modernize the laws of e-Commerce sales tax to reflect current realities.

The new law expands the definition for what constitutes nexus for retailers based outside of Colorado, so that the Department of Revenue can now collect taxes from businesses that don’t have a significant physical presence in the state. Its supporters in the state legislature claim that House Bill 1269 will infuse the treasury with a stimulus of more than $67 million in sales tax during the upcoming year.

While the bill spares small businesses that have less than $50,000 in annual sales, it will have a far reaching effect on any larger retailer making sales within Colorado. This is due to a clause in the bill that creates a presumption of nexus for online retailers. The tables have been flipped, so that the burden of proof is now on the online retailers to show that they do not have nexus in the state of Colorado. If a retailer is unable to prove their lack of nexus, they will be obligated to pay state taxes.

Other states including New York, Missouri, and Maine have passed similar legislation that have been dubbed “Amazon laws” after the dominant leader of U.S. online retails sales. However, House Bill 1269 will not affect Amazon itself, since Amazon took preemptive steps and cut off its relationships with its affiliates based in Colorado. In fact, Amazon has spent millions of dollars on Capitol Hill in recent years to lobby for a nationwide internet sales tax that would grant it a competitive edge as it continues to expand.

Colorado’s bill is modeled after the similarly named federal Marketplace Fairness Act (MFA), which was passed by the Senate in May of 2013 and would grant states the authority to collect taxes from online purchases.

With little likelihood of forward progress on the MFA in the House this term, the state of Colorado has decided to try out a version of the MFA on its own. Its supporters are optimistic that its benefits will be plainly observable in the coming year, and if so, we can expect additional states to pass their own versions in the foreseeable future.

Jul 312014

Retailers do not usually charge customers more sales tax than the law requires. But that is precisely what Dell Computer did to at least two customers in Rhode Island. This led to more than ten years of litigation, and according to a June 27 decision by the Rhode Island Supreme Court, the case will not end anytime soon.

The two customers purchased their computers from Dell in 2000. One was a business purchase, the other for personal use. Dell charged both customers Rhode Island sales tax not only on the computers, but also the extended warranty offered as a separate option. In 2003, the customers filed a class action against Dell, arguing they were improperly charges sales tax on “nontaxable services.” The customers alleged Dell was negligent in failing to calculate the correct sales tax, and the extra charges constituted an “unfair and deceptive trade practice” under Rhode Island law.

In 2005, Rhode Island’s Division of Taxation advised Dell, “[t]he charge for the optional service, maintenance, or extended warranty contract is not subject to tax when such a charge is separately stated by the retailer to the purchaser.” As Dell did, in fact, separately charge each customer for their service contract, the division concluded the additional sales tax was improper.

Meanwhile, it took nearly six years for the Rhode Island courts to resolve various preliminary issues surrounding the class action. In 2009, the Rhode Island Supreme Court issued a pair of decisions allowing the case to proceed. In 2012, a Superior Court judge granted summary judgment to Dell, finding there were no triable issues for a jury to decide.

The Rhode Island Supreme Court partially reversed the Superior Court. The five-judge court unanimously held Dell should prevail on the negligence claim, as the company “did not owe a legal duty to plaintiffs regarding the collection of taxes.” The justices split 4 – 1 on the unfair and deceptive trade practices claim. The majority said a jury could find Dell’s improper sales tax charges “offended public policy, was immoral, unethical, oppressive, or unscrupulous, and caused substantial injury to consumers.” One justice dissented, arguing “it defies common sense” to say Dell, in a good-faith effort to collect Rhode Island’s sales tax, acted illegally.

The majority’s decision only revives the claim of the customer who purchased a computer for individual use. Rhode Island’s unfair and deceptive trade practices law does not apply to business purchases.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog Bonham’s Cases.

Jul 312014

Sales and/or use tax rates have changed in in Zip2Tax products in Arizona and Louisiana since July 2014.

In Arizona,  tax rates changed for Tempe.

In Louisiana, tax rates changed for Colfax and the parishes of Jefferson Davis, Lafourche and Union.

There were 13 states with ZIP code changes effective after July 2014 including Alabama, Colorado, Connecticut, Florida, Georgia, Illinois, Kansas, Louisiana, Nevada, New York, Oklahoma, Pennsylvania, and Wisconsin.

Download the full ZIP code change documentation.

Angel Sauer

Angel Sauer, sales tax research team leader



Jul 312014

Lodging sales taxMany state and local governments impose special sales taxes on hotel rooms. Often called “lodging” or “occupancy” taxes, hotels must assess these levies against the price charged for a room. But what about travelers who book and pay for their rooms online using a third-party website like Expedia or Priceline? These online travel companies (OTCs) make money by paying the hotel less than the customer pays for the room. For example, if the OTC charges the customer $100 for a room, the hotel might receive $70, with the OTC keeping the remaining $30 as its fee.

Local governments understandably want to collect lodging taxes on the full $100. But their ability to do so depends on the wording of each locality’s tax laws. Recently, a state appeals court in Colorado rejected Denver’s efforts to collect its “lodger’s tax” from OTCs. The court said the tax ordinance, as written, did not apply to the specific services provided by these companies.

The city and county of Denver impose a 10.75% tax on lodging. Historically, Denver never collected this lodger’s tax on travel agents or other companies that aided travelers in making hotel reservations. But in 2010, Denver’s finance manager decided to assess lodger’s taxes against several OTCs. An administrative hearing officer upheld the manager’s decision and said the OTCs were liable for more than $8.1 million in unpaid lodger’s taxes dating back to 2001. A Colorado district court later reduced this award, holding the city could only collect about $3.5 million owed for the previous three years.

On July 3 of this year, the Colorado Court of Appeals went further than the district court and held Denver could not collect any lodger’s taxes from the OTCs. Judge Anthony J. Navarro, writing for a unanimous three-judge appeals panel, said Denver’s tax only applied to “vendors,” which meant those businesses “who actually furnishe[d] lodging.” The OTCs argued they only served as an intermediary between customers and lodging vendors; they do not provide any lodging themselves. Navarro agreed. At best, he said, the Denver tax ordinance was “ambiguous” on this point, and the law must be “strictly construed” in favor of the OTCs.

Navarro noted courts in Florida, Missouri and Texas held similar hotel taxes did not apply to OTC services. That does not mean such taxes can never apply, however, only that local governments must expressly amend their laws to cover OTC services.

See also: D.C. can collect sales tax on online hotel bookings

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog Bonham’s Cases.

Jul 152014

Since 1996 when New York State enacted the first sales tax holiday, similar initiatives have gained popularity in a growing number of states. Typically, sales tax holidays last for a weekend—usually in the beginning of August to coincide with back-to-school sales—and items such as school supplies, books, and clothing are included in the temporary tax break.

North Carolina Back To School Sales Tax

North Carolina is not holding a Back To School sales tax holiday this year.

However, like all other tax exemptions, sales tax holidays come at an expense and the state of North Carolina has recently decided that the costs are too high to justify. The state’s sales tax holiday was first implemented in 2002 and was scheduled to take effect during the first weekend in August. It included items such as clothing, footwear, school supplies, sporting equipment, and computers. According to a notice posted by the North Carolina Department of Revenue, none of these will qualify for the annual tax holiday.

The repealing of the sales tax holiday represents just one aspect of a large scale budget overhaul negotiated by state lawmakers in recent weeks. The incentive is straightforward: repealing the tax holiday is estimated to save North Carolina more than $13 million in lost revenue, a sizable amount of money for a state struggling to balance its budget.

The state sales tax in North Carolina is presently 4.75%, but in most districts the actual rate hovers around 7%.  Since the average parent with children in school is expected to shell out a sizeable amount of money on school supplies in the upcoming weeks, the new policy will be felt by large number of North Carolina families.

Even without the tax holiday, there is some good news on the horizon for North Carolina residents in need of school supplies. That’s because retailers are reaching out to consumers directly, offering back-to-school sales under the banner of “Better Than Tax Free” to fill the void left by the tax holiday.

For example, the Concord Mills outlet will offer all consumers a 10% discount on their purchases during the weekend of July 25 –27, which is an ever greater incentive for consumers than the past sales tax holidays. So even though the tax holiday may have been repealed, residents can still take advantage of lower prices by choosing to shop in Concord, North Carolina, during this weekend promotion. Alternatively, consumers can benefit from sales tax holidays by shopping in the neighboring states of South Carolina, Virginia, and Tennessee during the weekend of August 1-3.

Jul 152014

Back to school sales tax holidayEleven states have already announced that they will be holding their annual Back To School sales tax holidays in August. Here is an up-to-date list of the dates for the various tax holidays as well as a summary of what’s exempted from the usual state taxes.

Alabama: August 1-3. The tax holiday includes clothing (<$100 per item); computers, computer software, and computer supplies (<$750 per item); school supplies, school art supplies, and school instructional material (<$50 per item).

Arkansas: August 1-3. Clothing (<$100 per item); clothing accessories or equipment (<$750 per item); school supplies, school art supplies, and school instructional materials (<$50 per item).

Connecticut: August 17-23. Clothing (<$300 per item); shoes (<$300 per item).

Florida: August 1-3. Clothing, shoes, and accessories (<$75 per item); school supplies (<$15 per item); computers and computer accessories (<$750 per item)

Georgia: August 1-2. School supplies and school instructional materials (<$20 per item); clothing and shoes (<$100 per item); computers and computers software (<$1,000 per item)

Louisiana: August 1-2. The Louisiana sales tax holiday is one of the most expansive and includes far more than school supplies, clothing, and computers:  “The exemption applies statewide to all consumer purchases of tangible personal property, other than vehicles subject to license and title and meals furnished for consumption on the premises where purchased, including to-go orders, provided that the property is not for use in a business, trade, or profession.”

Missouri: August 1-3. Clothing (<$100 per item); school supplies (<$50 per purchase), computer software (taxable value of <$350); personal computers (<$3,500); computer peripheral devices (<$3,500).

New Mexico: August 2-4. Clothing and shoes (<$100 per unit); desktop, laptop, tablets, or notebook computers (<$1,000 per item); computer hardware (<$500); school supplies for use in standard classrooms (<$30 per unit).

Tennessee: August 1-3. Clothing ($100 or less); school supplies ($100 or less); and computers ($1,500 or less).

Texas: August 8-10. Clothing; school supplies; shoes; and backpacks (<$100 per item)

Virginia: August 1-3. School supplies (<$20 per item); clothing and footwear (<$100 per item).