Field Notes | Zip2Tax News Blog

North Carolina Senate unveils plan to reduce sales tax rate but expand sales tax base

May 132013

This past week Republicans in the North Carolina Senate released a plan to revamp the state’s tax code. This new plan slightly reduces the sales tax rate across the state while also expanding the tax base by removing many sales tax exemptions.

Right now, consumers pay a combined state and local sales tax rate of 6.75% in most North Carolina counties. This bill would lower the total rate to 6.5 percent. However, more sales would be taxable. Right now, North Carolina only charges sales taxes on about 30 services. This bill would add another 100 or so to the taxable list. Services like repairs, haircuts, legal services, and window cleaning would all become taxable under this new law.

In addition, this bill removes the sales tax exemption for groceries, prescription drugs, and insulin. Republicans believe that by adding new transactions to the taxable base, they would bring in hundreds in millions of dollars of new annual revenues while creating a fairer tax code.

The Republicans want to use this extra money to finance cuts in the North Carolina’s income and corporate tax rates as well as to completely remove the state’s estate tax.

Democrats argue that this new tax code reduces taxes for the wealthy while raising them for the lower and middle class. Republicans believe it would not, as they point out low income residents receive government benefits that are tax free.

This is still just a proposal and the Republicans won’t have the exact plan finalized until late May or early June. North Carolina GOP leaders expect that a new tax code will be in place by the end of the year.

Maine lawmakers considering raising and expanding sales taxes

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May 132013

On May 1^st, a bipartisan group of Maine lawmakers released a plan to both raise and expand sales taxes in the state. These extra revenues would be used to reduce the state income tax rate and provide tax relief to Maine homeowners.

Under this new law, Maine would raise its sales tax from 5 to 6 percent. It would also expand the taxable base to more services and products. Items like groceries, haircuts, cooking and heating oil, and funeral services would all become taxable. Nearly all consumer purchases would be taxed under this law, with a few exceptions for education and healthcare purchases.

In exchange, this bill would cut the state’s maximum income tax rate for individuals down from 8 to 4 percent. It lowers the corporate tax rate down from 8.93 percent to 7.5 percent and removes Maine’s estate tax. This bill also raises the state’s homestead exemption from $10,000 to $50,000 so Maine homeowners would owe less in property taxes.

Lawmakers will review this bill extensively over the next few weeks until the current legislative session ends in June. Republican Gov. Paul LePage is unenthusiastic about this new plan, so lawmakers need to win him over before any changes will go into effect.

Oregon lawmakers discuss state sales tax

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Apr 262013

Oregon Governor John Kitzhaber hasn’t said whether he supports or opposes the proposed state sales tax in one of just five remaining states without a sales tax.

Oregon is currently one of only five states without a sales tax. This may change though with upcoming legislation. On April 15th, Oregon lawmakers held a hearing to discuss whether the state should add a 5 % sales tax on most goods and services. As written, this proposal would exclude a few items like food and medicine.

Oregon Governor John Kitzhaber didn’t give a clear opinion on where he stands on this new sales tax. He admits that Oregon needs to revise its current tax system and that a sales tax could be part of a solution. However, he also commented that he is looking at other financing alternatives.

This bill is still under discussion by Oregon legislators. However, a vote could go to the Oregon public later this year to decide whether or not the state should add a sales tax.

Temporary Kansas sales tax may become permanent

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Apr 262013

Kansas Gov. Sam Brownback is pushing to keep a temporary sales tax to help fund schools.

Nearly three years ago, Kansas temporarily increased its sales tax to 6.3 percent up from 5.7 percent. This tax increase is set to expire this July 1st. Governor Sam Brownback is now pushing to keep this tax increase permanent to help Kansas fund its public school system.

Kansas is currently facing a school financing lawsuit in the Kansas Supreme Court. If the state loses this case, it will need to increase K-12 per student funding by 17%. Brownback argues that Kansas needs higher sales taxes to prepare for this extra cost. He also believes the state needs more sales taxes to balance the budget.

Kansas lawmakers from both parties are reluctant to increase the sales tax rate. Democrats argue that the budget shortfall came from Brownback cutting income taxes. They worry that Brownback would use the extra sales tax revenue as an excuse to further reduce income taxes. Republicans would rather see more budget cuts instead of increasing sales taxes.

If no agreement is reached by July 1st, Kansas will return to its 5.7 percent tax rate.

Alabama sales tax rules clarified

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Mar 112013

The Alabama legislature recently made some of the state’s notoriously difficult sales tax rules slightly less burdensome.

The legislature has decided to adopt a centralized sales and use tax filing system which will allow Alabama businesses to file in one location rather than having to file separately with each and every local jurisdiction in which they did business. The central filing system should be implemented sometime in late 2013.

Secondly, a recent court ruling has clarified the definition of what creates nexus. While physical presence DOES create clear nexus, it has been determined that delivery alone or occasional sales by a single salesperson most likely will NOT create nexus within most local jurisdictions.

Charles F. Spielmann

Wisconsin contemplates sales tax holidays

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Feb 272013

Wisconsin lawmakers have proposed two different sales tax holidays for state residents.

Rep. Chad Weininger of Green Bay and Sen. Rick Gudex of Fond du Lac circulated a bill as of February seeking co-sponsors of the measure that would waive sales taxes two weekends of the year.

The August sales tax holiday would apply to certain school-related items including clothing up to $75, a computer up to $2,000, school computer supplies up to $250, school instructional materials and various other school supplies.

The November sales tax exemption would apply to Energy Star products.

Charles F. Spielmann

Franchisor tax reporting reminder for New York

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Feb 272013

All franchisors of businesses operating in New York state must file an annual information return before March 20 each year.

The information that a franchisor is required to provide on the return includes the gross sales of each New York franchisee as reported to the franchisor, the total amount of sales by the franchisor to the franchisee, and any income reported to the franchisor by the franchisee. The franchisor is also required to give each franchisee listed on the report a summary statement showing the information the company reported to the state.

Any applicable company with New York franchisees that fails to file the information return may be assessed a fine for each one of its franchisees operating in the state, with a maximum fine of $10,000 per reporting period. If a franchisor is unable to file the return by March 20, it can seek a 90-day extension. Extensions are automatically granted if a request is made before the March 20th deadline.

For more information about the annual report and to file the return or a request for extension electronically, visit the New York State Department of Taxation and Finance’s website.

Charles F. Spielmann

Ohio budget proposal includes sweeping tax changes

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Feb 272013

Several changes proposed in the latest Ohio state budget could have significant implications for businesses with nexus in the state.

Ohio Gov. John Kasich’s proposed budget, released Feb. 5, includes a reduction in income tax, income tax breaks for pass-through entities, and new extraction taxes. It also proposes to extend sales taxes to most services and payments for intangible property not specifically exempted.
If this budget proposal passes, the Ohio state sales tax rate would go down by 0.5% while bringing in an extra $5.2 billion over three years. It is expected that local sales tax rates would be similarly adjusted.

While many questions regarding the taxability of services remain unanswered, the following services, would remain exempt from sales tax:

Construction and mining services (including services used in producing oil and natural gas)
Education and personal instruction
Electricity, natural gas (sold by a utility) and water
Food storage
Health care services (hospital, physician, dentist and nursing charges, medical lab fees, etc.)
Intracity bus fare
Interstate air fare
Labor on real estate repair or remodeling
Livestock veterinary services
Rental of a primary residence
Residential waste collection
Social assistance services

The Ohio General Assembly is working their way through the implications of the governor’s proposed budget and decisions are expected before the end June.

Charles F. Spielmann

Tennessee exemption certificate authentication

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Feb 182013

The Tennessee Department of Revenue has made it easier for merchants to verify the sales tax exempt status before a transaction has been completed. They are offering an online search at their web site, www.TN.gov/revenue, to verify the status of exemption certificates by typing in the account number and selecting the type of certificate.

The vendor is still held responsible to maintain a valid copy of the certificate for their files as this online verification keeps all business details private.Certificates of resale, nonprofit exemption certificates, and agricultural exemption certificates can be verified using this site.

Other types of exemptions may be verified by contacting the department of revenue’s contact center at 800-342-1003 (toll-free within Tennessee) or 615-253-600 (Nashville and out-of-state) from 7:00am-5:00pm, Central time, Monday through Friday, excluding holidays.

Charles F. Spielmann

Texas sale tax seminar schedule announced

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Jan 212013

Texas sales tax The Texas Comptroller’s office has announced sales and use tax seminars scheduled for January and February 2013. In addition to the scheduled seminars, the comptroller’s office can set up special seminars for organizations upon request. To find the comptroller’s office in your area, go to http://window.state.tx.us/taxinfo/fieldoff.html.

Texas sales and use tax seminars are offered in both english and spanish (varies by location). The seminars are free and no registration is required. Attendees set the pace, so be prepared with all of your questions regarding rules, updates, forms and procedures.

Go to tax.help@cpa.state.tx.us for more information, or call 1-800-252-5555.

Charles F. Spielmann

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