Jul 012015
 

Sales tax rates have changed in 20 states and Puerto Rico and there were 13 states with ZIP code changes in Zip2Tax products since June 2015. Sales and or use tax rates are changed in Alabama, Arkansas, Arizona, California, Colorado, Iowa, Illinois, Kansas, Louisiana, Minnesota, Missouri, New Mexico, Ohio, Oklahoma, South Dakota, Utah, Washington, and West Virginia.

In Alabama, tax rates changed for Cedar Bluff and Fairview.

In Arkansas, tax rates changed for El Dorado, Manila, Moorefield and Ouichita County.

In Arizona, tax rates changed for Graham County and the city of Marana.

In California, tax rates changed for the city of Weed.

In Colorado, tax rates changed for Georgetown.

In Georgia, tax rates changed for the counties of Muscogee and Whitfield.

In Iowa, tax rates changed for Lone Tree, Solon, Hills, Swisher and West Branch.

In Illinois, tax rates changed for Carbon Cliff, Carbondale, Coulterville, Crestwood, Deland, Elkville, Glenwood, Highwood, La Grange, Lyons, Montgomery, Morrison, Oglesby, Rantoul, Rock Falls, Toledo, Wadsworth, Westmont, and the counties of Calhoun, Greene, Jefferson, Jersey, Jo Davies, Knox, McDonough, Morgan, Perry, Piatt, Scott, White and Whiteside.

In Kansas, the state rate changed and there were tax rates changes for Clifton, Hutchinson, Lyndon, Marquette, and the counties of Gove, Morton, and Nemaha.

In Louisiana, tax rates changed for Winn Parish, Claiborne Parish, and Calcasieu Parish.

In Minnesota, tax rates changed for Hubbard County.

In Missouri, tax rates changed for Cape Girardeau, Hold County, Lawrence County, Buffalo, California, Concordia, Hannibal and Saint Joseph.

In New Mexico, tax rates changed for the counties of Bernalillo, Chaves, Dona Ana, Luna, Roosevelt, San Miguel, Santa Fe, Sierra, Torrance, Valencia, and the cities of Artesia, Sliver City, and Kirtland.

In Ohio, tax rates changed for the county of Richland.

In Oklahoma, tax rates changed for Barnsdall, Castle, Clinton, Colbert, Commerce, Foster, Rattan, Vici and the counties of Custer and Cotton.

In Puerto Rico, the possession tax rate changed.

In South Dakota, tax rates changed for Columbia and Westport.

In Texas, tax rates changed for Garrett, Sandy Oaks and Kendleton.

In Utah, tax rates changed for Farmington.

In Washington, tax rates changed for Sequim TBD and Dayton TBD.

In West Virginia, tax rates changed for Bolivar, Charles Town, Charleston, Martinsburg, Milton, Nitro, Parkersburg, Ranson, Thomas, Vienna and Wheeling.

There were 13 states with ZIP code changes effective after June 2015 including Alabama, Arizona, California, Florida, Iowa, Kansas, Kentucky, Montana, North Carolina, Ohio, South Carolina, South Dakota, and Utah. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

Angel Downs, Zip2Tax's ead tax researcher

Angel Downs, Zip2Tax’s lead tax researcher

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Jun 252015
 

Is a pixel real? Are downloads taxable? Digital goods redefine tangible personal property standards.

Video on demand

Historically, most states impose sales or use taxes on “tangible personal property.” In the broadest sense, this includes anything a person may own that is not real property (i.e., land). But the rise of Internet-based commerce has complicated matters. Is a movie you download from iTunes “tangible”? What if you just stream the same movie from Netflix? Different states have adopted different approaches to these digital goods.

In New Jersey, for example, the state collects sales tax on any music, ringtones, movies, books, or audio and video works “delivered through electronic means.” But the state does not tax video programming services, such as video-on-demand. So if you order a pay-per-view movie from your cable provider, it is not taxable, but if you buy the same movie from iTunes, it is taxable.

Many other states do not have specific laws taxing digital property but rather include such goods in the broader definition of “tangible personal property.” In some cases state legislatures have made this explicit. In others it has been left to the tax authorities and the courts to determine which digital goods are considered tangible personal property. This can lead to quite a bit of confusion. In Louisiana, for instance, the state’s Supreme Court has said tangible personal property “is synonymous with corporeal movable property,” essentially any material object you can move from one place to another. Accordingly, computer software and other downloaded content subsequently fixed in some physical form, such as on a computer’s hard drive, is subject to sales tax in Louisiana.

But what about something like video-on-demand? At least one Louisiana court thinks it is not taxable. Last December, the Louisiana Fifth Circuit Court of Appeal held a local government could not impose sales tax on a cable company’s on-demand video service, as customers could not “download, store, record, distribute, or copy” such programs in any fixed medium.

An attempt at uniformity

Streamlines Sales and Use Tax Agreement

States participating in the Streamlines Sales and Use Tax Agreement. Image courtesy www.streamlinedsalestax.org

The Streamlined Sales Tax Governing Board, a group comprised of more than 20 states, has offered a uniform definition of “digital products” for individual states to use when setting their respective tax policies. The board suggests audio-visual works, audio works, and books delivered to customers electronically should not be lumped together with tangible personal property, but defined separately as “specified digital products.” This is the approach taken by New Jersey and about a dozen other states. Note the board does not take a position on whether states should tax digital products, only that they be classified separately for reporting purposes.

Despite the board’s efforts, some states like Louisiana continue to define digital products within the confines of tangible personal property, while others have still made no attempt to separately classify such downloads at all.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

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Jun 222015
 

The Marketplace Fairness Act is dead, long live the Remote Transactions Parity Act?

Internet sales tax

Conservatives say the Remote Transactions Parity Act is just another Internet sales tax that equals taxation without representation.

On June 15th House Oversight Chairman Jason Chaffetz (R-Utah) introduced a new Internet sales tax bill he’s calling the Remote Transactions Parity Act (RTPA). The bill is similar to the Marketplace Fairness Act which died in the House last year. Supporters say this version has critical improvements as well as the support of some major players.

RTPA would require sellers without a physical presence in a state to collect sales tax on eligible transactions based on the going rate at the location of the consumer. The bill would also require states to simplify their tax codes, and pay to set up, install and maintain software for remote sellers to collect sales taxes.

According to the National Law Review, states that are members of the Streamlined Sales and Use Tax Agreement (SSUTA) would be automatically eligible to impose sales and use taxes on remote sellers. States that are not SSUTA members, about half of the states in the union, could be authorized to require retailers without nexus in the state to remit sales and use taxes on sales if they met the following simplification requirements:

  1. destination sourcing for interstate transactions;
  2. a single entity for administration of sales and use tax;
  3. a single audit of remote sellers per state;
  4. a single return per state;
  5. uniform tax base for all state and local sales taxes within the state; and
  6. relief for errors, including remote sellers being relieved of errors made by a certified software provider or the state itself, and certified software providers being relieved of errors made by a remote seller or the state itself

The bill has bipartisan support as well as the backing of some of the major players in the industry: Amazon, Overstock and the National Retail Foundation.

The RTPA isn’t enjoying unanimous support however. Dissent comes mainly from withing the split Republican party with conservatives labeling this as a tax increase or an Internet sales tax, and that it amounts to taxation without representation.

House Judiciary Chairman Bob Goodlatte (R-Va.) circulated his own draft proposal last January calling for the sales tax rates to be based on the retailer’s location. Goodlatte has also expressed concerns about protecting small businesses from audits, and that exempting certain small sellers would make a bill too complicated.

The RTPA differs from the MFA in that the small seller exemption starts at $10 million or less and gradually phases out over time. MFA’s exemption is continuous for sellers making less than $1 million. The RTPA also provides audit protection for sellers grossing less than $5 million unless there is reasonable suspicion of fraud.

RTPA faces opposition from its own set of power players: NetChoice, the R Street Institute and Americans for Tax Reform.

While the Marketplace Fairness Act managed to pass through the Democrat-led Senate in 2013, Speaker John Boehner (R-Ohio) and Senate Majority Leader Mitch McConnell (R-Ky.) have shown no interest in debating the bill this year even though it has been reintroduced.

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Jun 172015
 
Utah

Utah voters likely to consider local option sales tax on gasoline to fund road work

Voters in dozens of Utah cities and counties may soon decide whether to add another quarter percent to their local sales tax. In March, Utah Gov. Gary Herbert signed into law House Bill 362, a broad package of measures designed to fund transportation projects throughout the state. The bill converts Utah’s statewide gasoline tax from a per-gallon levy to a 12% sales tax. This will raise the price of gasoline by 5 cents per gallon when it goes into effect on January 1, 2016. The new law further indexes future increases to inflation, meaning the total sales tax could eventually rise by as much as 15 cents per gallon.Local Option Sales Tax

HB 362 also authorizes each of Utah’s counties to impose an additional sales and use tax of 0.25%. In counties that provide public transit services, 10 cents out of the 25-cent increase would go to the transit authority, 10 cents to the municipalities (cities, towns, et al.) within the county, and the remaining 10 cents to the county itself. If the county does not provide public transit service, the county would keep 15 cents and give the remaining 10 cents to the municipalities.

Individual localities must pass a resolution to implement the local option sales tax. Local voters must then approve the tax increase. According to the Salt Lake Tribune, “at least 55 Utah cities and towns have passed or are considering” such measures for this November’s ballot.

Opponents of the local option sales tax argue any public vote should be postponed until November 2016 to coincide with the next presidential election. The Utah Taxpayers Association noted in a recent press release Salt Lake County officials are “feeling pressure” to ignore a local ordinance requiring any sales tax referendum take place next year in order to placate the demands of pro-tax groups to hold a vote this year.

The potential difference in turnout is not insignificant. According to the Utah Lieutenant Governor’s office, which oversees statewide elections, about 80% of registered voters participated in the 2012 presidential election. That figure dropped to just over 46% in last year’s midterm elections. That figure will likely be even lower this November, when only local offices are on the ballot.

But proponents argue it is important to pass sales tax increases now to fund important transportation projects. One local official told the Tribune her city needed at least $50 million to fund a “wish list” of road projects, which even the upcoming gasoline tax increase would not cover. The Utah Transportation Coalition, a group composed of the state’s major employers, has also pushed for quick votes, arguing localities only have “one-third to one-half the funds they need for transportation infrastructure.”

Conversely, the Utah Taxpayers Association said voters should reject any effort to increase the local sales tax. The association said rather than “hide the cost of Utah’s roads in a sales tax,” officials should follow Oregon’s lead in considering funding transportation projects through a per-mile levy against motorists who actually use the roads.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

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Jun 082015
 

“Tampon tax” on feminine hygiene necessities called unfair

tampon taxStarting July 1, Canada will exempt products “marketed exclusively for feminine hygiene purposes” from the federal government’s 5% goods and services tax (GST). Members of Canada’s Parliament had lobbied Prime Minister Stephen Harper’s government for years to abolish what they deemed an unfair “tampon tax” that discriminated against women. On May 25, the government responded by presenting a motion to Parliament to formally exclude “sanitary napkins, tampons, sanitary belts, menstrual cups or other similar products” from the GST. Parliament unanimously approved the motion on June 1. Subsequently, at least one Canadian province, Newfoundland and Labrador, announced plans to exempt feminine hygiene products from its provincial sales tax, which is currently 8% and scheduled to rise to 10% next year.

Fighting tampon taxes in the United States and around the world

According to a June 3 article by Taryn Hillin for the website Fusion, only five U.S. states  – Maryland, Massachusetts, Pennsylvania, Minnesota and New Jersey – specifically exempt feminine hygiene products from state sales tax. Although most states exempt “necessities” such as toiletry and health care items from sales tax, the majority do not classify tampons as such. But as Hillin observed, “feminine hygiene products are not a choice; they’re a required part of being a woman.”

Canada’s recent action may spur some U.S. states to reconsider their own “tampon taxes.” For instance, on May 21, New York Assemblyman David I. Weprin introduced a bill to exempt all feminine hygiene products from sales tax, which is as high as 8.875% in some parts of the state. It is unlikely, however, the full legislature will act upon the bill before the scheduled end of its session later this month.

The movement to abolish the “tampon tax” has also spread outside of North America. Joe Hockey, the Treasurer for Australia’s federal government, said in a May 25 interview he would support exempting feminine hygiene products from the country’s 10% goods and services tax. But Hockey’s boss, Prime Minister Tony Abbott, later said his government had no plans to push for an exemption at this time, adding GST rules are largely determined by the individual Australian states.

Meanwhile, in the United Kingdom, Prime Minister David Cameron said last April he would support exempting feminine hygiene products from the country’s goods and services tax, but his government could not do so unilaterally because of European Union regulations, which sets a minimum 5% tax on “sanitary products.”

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

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Jun 012015
 

Sales tax rates and/or use tax rates have changed in Zip2Tax products in Alabama since May 2015.

In Alabama, tax rates changed for Parrish and Clio.

There were 14 states with ZIP code changes effective after May 2015 including Alabama, Florida, Georgia, Kentucky, Michigan, Missouri, New Jersey, New York, Oregon, Pennsylvania, South Carolina, Texas, Utah, and Virginia. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

Angel Downs, Zip2Tax's ead tax researcher

Angel Downs, Zip2Tax’s lead tax researcher

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May 282015
 

Sales tax on shipping

Whether or not you should charge sales tax on shipping charges depends on several factors

Shipping charges may be exempt from sales tax if some or all of the following apply:

  1. Delivery by common carrier or USPS
  2. Charges stated separately and not bundled with other charges such as handling
  3. Shipping charges are not included in the price of the item
  4. Purchased items are tax exempt
  5. If shipment includes both exempt and taxable property the seller should allocate the delivery charge and tax the non-exempt portion.
  6. Charges paid by purchaser
  7. Delivery and billing by independent contractor who is not the seller and paid by the purchaser
  8. Delivery charges are optional
  9. Delivery is separately contracted
  10. Items delivered outside the state
  11. Retailer is engaged in a separate delivery business
  12. Shipment is made direct to the purchaser
  13. Shipment occurs after title passes to purchaser

 

Taxability of shipping rules by state

Some states apply sales tax on shipping based on the shipping agreement in relation to the item’s transfer of title to the purchaser while others treat shipping as a non-taxable service if contracted for independently. Some states try to merge these two approaches thereby creating a patchwork of regulations and opaque rules.

While not a fail-safe approach, here are a few best practices to improve your company’s chances of avoiding having to collect sales tax on shipping: Have the buyer pay the freight charges; bill the transportation charges separately following the sale; pass the title to the purchaser before shipping; and use a common carrier or the US mail.

Following is a list of the basic tax on shipping rules for each state and a few of their most general exceptions and caveats.

Refer to the numbered exemptions listed above

Alabama – Shipping is not taxable in Alabama (AL) if 1 and 2.

Arizona – Shipping is not taxable in Arizona (AZ) if 2.

Arkansas – Shipping is taxable in Arkansas (AR).

California – Shipping is not taxable in California (CA) if 1, 2, 7 or 13.

Colorado – Some shipping is taxable in Colorado (CO) except if 2, 3 and 8; certain localities may tax all shipping.

Connecticut – Shipping is taxable in Connecticut (CT) except 4.

District of Columbia – Some shipping is taxable in the District of Columbia (DC) except when 2 and 13.

Florida – Some shipping is taxable in Florida (FL) except when 2 and 8 or 2 and 13.

Georgia – Shipping is taxable in Georgia (GA) with certain exceptions.

Hawaii – Shipping is taxable in Hawaii (HI) except 10.

Idaho – Shipping is not taxable in Idaho (ID) if 2.

Illinois – Some shipping is not taxable in Illinois (IL) if 9.

Indiana – Shipping is taxable in Indiana (IN) but 5.

Iowa – Shipping is not taxable in Iowa (IA) if 2 or 9 but 5.

Kansas – Shipping is taxable in Kansas (KS) but 5.

Kentucky – Shipping is taxable in Kentucky (KY)

Louisiana – Shipping is not taxable in Louisiana (LA) if 2 and 13.

Maine – Some shipping is taxable in Maine (ME) except when 1 and 2 and 12 all apply.

Maryland – Shipping is not taxable in Maryland (MD) if 2.

Massachusetts – Some shipping is taxable in Massachusetts (MA) except when 2 and other exceptions.

Michigan – Shipping is taxable in Michigan (MI) except when 11 or 13 but 5.

Minnesota – Shipping is taxable in Minnesota (MN) but 5.

Mississippi – Shipping is taxable in Mississippi (MS)

Missouri – Some shipping is taxable in Missouri (MO) except when 2 and 8.

Nebraska – Shipping is taxable in Nebraska (NE) but 5.

Nevada – Some shipping is taxable in Nevada (NV) except 2 and 13.

New Jersey – Shipping is taxable in New Jersey (NJ) except when 4.

New Mexico – Shipping is taxable in New Mexico (NM)

New York – Shipping is taxable in New York (NY)

North Carolina – Shipping is taxable in North Carolina (NC) but 5.

North Dakota – Shipping is taxable in North Dakota (ND) but 5.

Ohio – Shipping is taxable in Ohio (OH) but 5 and except 6.

Oklahoma – Shipping is not taxable in Oklahoma (OK) if 2 and 3 but 5.

Pennsylvania – Shipping is taxable in Pennsylvania (PA) except when 4 or 7.

Rhode Island – Shipping is taxable Rhode Island (RI) except 7.

South Carolina – Shipping is taxable South Carolina (SC) except 13.

South Dakota – Shipping is taxable in South Dakota (SD) except 7 but 5.

Tennessee – Shipping is taxable in Tennessee (TN) except 7.

Texas – Shipping is taxable in Texas (TX) except 7.

Utah – Some shipping is taxable in Utah (UT) except when 1, 2 and 3 but 5.

Vermont – Shipping is taxable in Vermont (VT)

Virginia – Shipping is not taxable in Virginia (VA) if 2.

Washington – Shipping is taxable in Washington (WA) except 13.

West Virginia – Shipping is taxable in West Virginia (WV) except 1 , 2 and 7.

Wisconsin – Shipping is taxable in Wisconsin (WI) but 5.

Wyoming – Shipping is not taxable in Wyoming (WY) if 2.

As always, we recommend you consult with the department of revenue for any state in which your company has nexus and ask for a determination in writing whenever the rules are confusing or contradictory.

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May 272015
 
Illinois sales tax

Illinois litigation examines tax on shipping questions

When purchasing goods online from an out-of-state retailer, you may be liable for sales tax not just on the cost of the items, but also any shipping and handling fees. The courts in many states have struggled with when to tax such costs. The issue also spawned an unusual lawsuit recently decided by an Illinois appeals court.

Kean v. Wal-Mart Stores, Inc.

Before discussing that case, it is important to understand the previous approach taken by Illinois courts to this subject. In 2009, the Illinois Supreme Court unanimously held out-of-state shipping charges are subject to the state’s sales tax. This decision arose from a class action filed by a disgruntled Wal-Mart customer who objected to paying sales tax on an $8 shipping charge included in a $23 trampoline purchase. Wal-Mart included the shipping charges in assessing sales tax, which the customer argued was illegal under Illinois law. The Illinois administrative code states that shipping charges are excluded from sales tax only if they are separately contracted.

The Illinois Supreme Court disagreed and dismissed the lawsuit. The court agreed with Wal-Mart’s interpretation of the law, which held the shipping “was an inseparable link in the chain of events leading to completion of the sale,” and thus subject to tax. In other words, the customer did not enter into a separate agreement with respect to shipping (which would not be subject to sales tax); the shipping was part of a “single sale and purchase,” and therefore Wal-Mart properly assessed tax on the entire sales price.

The People ex rel. Schad, Diamond and Shedden, P.C. v. QVC, Inc.

Sales tax bounty hunters

Attorneys have the ability to file lawsuits on behalf of a state such as one recently filed in Illinois against QVC seeking a portion of uncollected sales tax on shipping charges. Such “qui tam” actions are essentially a legal form of bounty hunting.

Based on the Supreme Court’s 2009 decision, a law firm in Chicago sued retailer QVC in 2011, alleging it had failed to collect sales tax on shipping charges paid by Illinois customers over a period of several years. The law firm filed what is known as a “qui tam” action, where it claims to be acting on behalf of the State of Illinois. Qui tam lawsuits are essentially a legal form of bounty hunting. The private litigant initiates and oversees the lawsuit, and if any damages are recovered, it gets to keep a portion of the proceeds as a reward.

The flip side is the state can choose to intervene and prosecute the qui tam action itself. Which is exactly what happened here – the Illinois Attorney General intervened and decided to dismiss the complaint against QVC. The law firm objected, but a judge granted the state’s motion to dismiss and declined to award the law firm a bounty.

The law firm appealed. In an April 21, 2015, decision, a three-judge panel of the Illinois Court of Appeals upheld the trial court’s decision. Justice P. Scott Neville, Jr., writing for the panel, said the state was well within its rights to seek dismissal of the law firm’s complaint. He noted in 2006 – before the Supreme Court’s decision in the Wal-Mart case – Illinois tax officials audited QVC and told the company it did not have to collect sales tax on shipping charges. Shortly after the law firm brought its lawsuit in 2011, QVC began collecting and paying such taxes. But this decision did not retroactively invalidate the state’s 2006 determination. To the contrary, Neville said, “The State considered and approved all of QVC’s practices, including its explicit practice of not charging use taxes on shipping and handling charges for merchandise shipped to Illinois.”

The law firm nonetheless claimed it was entitled to a share of the taxes QVC began collecting in 2011, arguing it was a direct consequence of the qui tam action. But Neville said the court “cannot construe the payment QVC voluntarily started to make on sales after the filing of this lawsuit as part of the proceeds of this lawsuit.” In a qui tam action, the private litigant must first obtain a court judgment in order to collect. A private litigant receives no award when, as here, the state chooses to dismiss the lawsuit after a defendant voluntarily alters its conduct.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

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May 152015
 
MS

Is sales tax due on casual sales?

Not every sale is subject to sales or use tax. If it were, then anyone holding a garage sale would be liable for collecting and remitting sales tax. That is why states typically exempt “casual” sales from taxation – that is, private sales that are not made in the ordinary course of the seller’s business.
use tax exemption

Tax collectors, of course, want to maximize revenue, so they make every effort to reclassify casual sales as taxable. One issue the courts then have to sort out is where to place the burden of proof. Does the state have to prove a sale is taxable, or does the taxpayer have to prove it’s not? The Mississippi Supreme Court recently addressed this question and ultimately ruled in favor of the taxpayer.

Castigliola v. Mississippi Department of Revenue

In the case of Castigliola v. Mississippi Department of Revenue, a Mississippi resident went to Florida and purchased a boat from a private seller. The seller was not a broker or dealer in boats, but he did employ a yacht broker to provide limited marketing services. By purchasing the boat through the broker, the sale was exempt from Florida’s sales tax.

But Mississippi tax officials argued the buyer should then be liable for paying use tax in his home state.  The Mississippi Department of Revenue argued the seller’s use of a broker meant the sale was not “casual,” and therefore taxable under Mississippi law. The department subsequently imposed a $7,500 use tax bill against the buyer, who appealed to the courts.

Although a trial-level court ruled in favor of the department, the Mississippi Supreme Court unanimously reversed in an April 30 decision. Chief Justice William L. Waller, Jr., writing for the court, said there were two issues here. First, was the burden on the buyer to prove he was entitled to a “casual-sale” exemption from use tax; and second, whether the purchase itself was subject to use tax.

The distinction between use tax exemption and use tax exclusion

On the first question, the chief justice said the trial court improperly placed the burden of proof on the buyer, rather than the department. Because the buyer argued his purchase was “beyond the State’s taxing authority,” he was claiming an “exclusion” rather than an “exemption” from use tax. This was not merely a semantic argument, the chief justice said, but an important legal distinction. Under Mississippi law, the burden is on the state to prove “a particular transaction falls within its statutory power to tax.” Only after the state establishes this power does the burden shift to the taxpayer to prove he is entitled to an exemption under some specific statute or rule.

Here, the chief justice said, “the casual-sales exception to sales and use tax is an exclusion and not an exemption.” This means the burden was on the state to prove the purchase of the boat was not a casual sale. Any ambiguity on this point must be resolved in favor of the taxpayer. The department’s only basis for arguing the transaction here was not a casual sale was the involvement of the third-party broker. But the chief justice said that argument “is erroneous, if not disingenuous.” There was no question the buyer purchased the boat from the private seller, not the broker. The use of a third-party marketing agent did not convert a casual sale into a taxable event.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

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May 122015
 
Texas sales tax relief

Sales tax relief is on the agenda for the state’s legislature with two bills presently under consideration. The first would lower the general sales tax rate for the first time in the state’s history, while the other would provide a unique tax “holiday” for hunters and gun enthusiasts.

Texas House Bill 32

On April 29, the Texas House of Representatives unanimously passed House Bill 31, which would reduce the statewide sales tax rate from 6.25% to 5.95%. This is only a floor, as individual cities, counties, transit authorities and other “special purpose districts” may impose additional sales tax. Under current law, the maximum sales tax in any Texas jurisdiction is 8.25%, according to the Texas Comptroller of Public Accounts.

If agreed to by the Texas Senate and signed into law by, House Bill 31 would take effect on January 1, 2016. The House concurrently passed a separate bill reducing the state’s franchise tax on business receipts. Texas Rep. Mark Keogh, a principal sponsor of both bills, said taxpayers would save nearly $5 billion if the two bills become law. “[S]ales and franchise tax cuts passed by the house will allow all Texans to retain more of their liquid cash in the immediate while extending tax cuts permanently into the future.”

Texas sales tax relief

The Texas Senate has proposed a “Second Amendment Sales Tax Holiday” for August 29 – 30 this year that, if passed, would repeal the general sales tax from firearms and hunting supplies.

Texas Senate Bill 228

Meanwhile, the Texas Senate passed its own, narrower sales tax break on April 30. Dubbed the “Second Amendment Sales Tax Holiday Act,” Senate Bill 228 proposes an annual two-day lifting of the state’s sales tax for purchases of firearms and “hunting supplies,” which would include “ammunition, archery equipment, hunting blinds and stands, hunting decoys, firearm cleaning supplies, gun cases and gun safes, hunting optics, and hunting safety equipment.” The tax holiday would take place on the final full weekend of August – this year, that would be August 29-30 – and is timed to coincide with the start of hunting season in Texas on September 1.

A Senate report argued the tax holiday is necessary because “retailers in East and Southeast Texas have been at a competitive disadvantage as it relates to their Louisiana counterparts.” Louisiana already has a sales tax holiday for firearms and hunting supplies during the first weekend of September. Mississippi and South Carolina also have similar holidays, according to the National Rifle Association. If signed into law, the Texas sales tax holiday is expected to reduce state revenues by about $3.6 million annually.

S.M. Oliva is a writer living in Charlottesville, Virginia. He edits the international legal blog PrivyCouncil.info

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