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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Sep 082014

papa johns sales tax battleOn July 23, a federal judge in Tampa declined to dismiss a class action against Papa John’s, America’s fourth-largest pizza chain, over allegations Florida customers were improperly charged sales tax on delivery fees. While the judge did not determine whether or not the allegations were true, her decision forced Papa John’s to file a formal answer to the class action complaint. The judge also ordered both sides to meet with a mediator this coming November in an effort to avoid a jury trial.

The crux of the class action complaint is that Papa John’s improperly included its $3 delivery fee in calculating Florida sales tax. The class action plaintiffs argue Florida law only requires sales tax on the sale of pizza itself, not any additional delivery fees. The plaintiffs seek to recover the alleged sales tax overpayments on behalf of all affected Papa John’s customers.

In its motion to dismiss, Papa John’s argued the class action was inappropriate for several reasons. First, Papa John’s cited Florida law, which expressly bars a customer from recovering sales tax overpayments collected by a retailer—so long as the retailer actually remitted said payments to the state. Second, Papa John’s said since customers voluntarily paid the sales tax on the assumption it applied to the delivery fee, the company could not be held liable even if the tax was erroneously charged. Finally, Papa John’s said even if the plaintiffs are entitled to a refund, they must first apply to the Florida Department of Revenue, who actually received the allegedly erroneous payments.

U.S. District Judge Virginia M. Hernandez Covington said none of those arguments justified dismissal at this time. The judge did not rule on the merits of Papa John’s first two arguments; she merely found they presented disputed issues of fact for a jury to decide. On the final argument, the judge said Florida law does not allow customers to request a tax refund directly from the state. To the contrary, the law only permits the retailer, Papa John’s, to seek a refund, and customers must then seek a refund from the company.

Judge Hernandez Covington also denied Papa John’s request to delay the case until the Florida Department of Revenue could determine whether or not sales tax was required on delivery fees. No delay was justified, the judge said, because Florida administrative regulators have already made it clear that such charges are illegal.

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

Sep 082014

Hotel occupancy taxes ruled not due on online markups in North Carolina

Online travel companies (OTCs) won another important sales tax victory last month in North Carolina, where a state appeals court rejected efforts by four counties to assess occupancy taxes on the fees collected for Internet-based reservations of hotel rooms. The OTCs obtain rooms for the hotels at a discount and sell them to customers at a higher rate. The counties argued the OTCs should then pay occupancy taxes on their higher rate. The courts disagreed.

Online Travel Companies

Online travel companies (OTCs) won another important sales tax victory last month in North Carolina, where a state appeals court rejected efforts by four counties to assess occupancy taxes on the fees collected for Internet-based reservations of hotel rooms.

The North Carolina legislature allows counties to assess occupancy taxes through local ordinance. But the counties may only tax those transactions already subject to the state’s sales tax. The four counties in this case all impose occupancy taxes: 6% in Wake County, 5% in Dare County, 4% in Buncombe County and 8% in Mecklenburg County. All four counties filed separate lawsuits against a number of OTCs seeking judgments the companies were required to collect and remit occupancy taxes. The four lawsuits were eventually consolidated and heard before a state superior court judge, who granted the defendants’ motion to dismiss in 2011.

In a decision issued August 19th of this year, a three-judge panel of the North Carolina Court of Appeals upheld the superior court’s dismissal. Judge Wanda Bryant, writing for the panel, said sales and occupancy taxes only applied to “retailers” or a “similar type business.” The counties conceded the OTCs were not retailers. Therefore, the question was whether they constituted “similar type” businesses. Bryant said they were not. In this context, the “type” of business was anyone who operated “hotels, motels, tourist homes, or tourist camps,” not companies that merely “arrange” the rental of such facilities via the Internet. The counties argued the court should read the definition of “similar” business more “broadly,” but Bryant said that would “ignore” the clear language of the state’s sales tax law.

The appeals court also rejected the argument, principally raised in Mecklenburg County’s complaint, that the OTCs had a duty under their contracts with individual hotels to collect and remit sales tax on the marked-up prices charged to online customers. Bryant said the trial court properly granted summary judgment to the OTCs on this point, noting the counties failed to identify any North Carolina statute or binding case law on this point. Unlike other states, Bryant said, North Carolina does not recognize a general duty to remit sales tax based on “contractual undertaking.”

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

Sep 022014

Sales and/or use tax rates have changed in in Zip2Tax products in one state since August 2014.

In Alabama, tax rates changed for Pleasant Grove, Red Bay, Union Springs and the county of Chilton.

There were 12 states with ZIP code changes effective after August 2014 including Alabama, California, the District of Columbia, Delaware, Massachusetts, North Dakota, New Hampshire, Ohio, Oregon, Tennessee and Texas.

Download the full ZIP code change documentation.

Angel Sauer

Angel Sauer, sales tax research team leader

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