Sales and use tax changes for December 2014

Sales tax rates – December 2014

Sales tax rates – December 2014

Sales and use tax rates changes in three states in Zip2Tax products since November 2014. There were changes in Alabama, Alaska, and Arizona.

In Alabama, tax rates changed for Adamsville.

In Alaska, tax rates changed for Anaktuvuk Pass, Clark’s Point, Hoonah, Hydaburg, Kobuk, Nunapitchuk, Seldovia and Yakutat.

In Arizona, tax rates changed for South Tucson.

There were 9 states with ZIP code changes effective after November 2014 including California, Florida, Georgia, Kentucky, Missouri, Ohio, Virginia, West Virginia and Wyoming.

Download the full ZIP code change documentation.

For November’s changes click here.

Angel Sauer

Sales and use tax changes for October 2014

Sales tax rate changes October 2014

Sales tax rate changes October 2014

Sales and/or use tax changes for 16 states in Zip2Tax products since September 2014. There were changes in Alaska, Alabama, Arizona, Arkansas, California, Idaho, Kansas, Minnesota, North Carolina, Nebraska, Nevada, Oklahoma, Ohio, Texas and Washington.

In Alaska, tax rates changed for Sitka, Skagway and Whittier.

In Alabama, tax rates changed for Enterprise, Childersburg, Greensboro, Marion, Tuskegee, Jackson, Trafford and Union.

In Arizona, tax rates changed for Flagstaff.

In Arkansas, tax rates changed for Crawfordsville, Ekins, Greers Ferry, Cleveland County, Crawford County and Crittenden County.

In California, tax rates changed for Anderson, Cotati, Davis, Hayward, San Pablo, Truckee and Watsonville.

In Idaho, tax rates changed for Nez Perce County.

In Kansas, tax rates changed for Fairway and Mulvane.

In Minnesota, tax rates changed for Douglas County.

In North Carolina, tax rates changed for Davidson County.

In North Dakota, tax rates changed for Burleigh County, Leeds, Morton County, Watford City and West Fargo.

In Nebraska, tax rates changed for Fairfield, Hickman, Atkinson and La Vista.

In Nevada, tax rates changed for Carson City.

In Oklahoma, tax rates changed for the counties of Greer, Latimer, Marshall, Washita and Logan and the cities of Kiowa, Kaw City and Chouteau.

In Ohio, tax rates changed for Erie County.

In Texas, tax rates changed for Tatum, Aubrey, Annetta, Fayetteville, Lakeport, Rogers, Shavano Park, Terrell Hills, Lucas and Tuscola.

In Washington, tax rates changed for Marysville TBA.

There were 12 states with ZIP code changes effective after September 2014 including Alabama, California, DC, Delaware, Massachusetts, North Dakota, New Hampshire, New Mexico, Ohio, Oregon, Tennessee and Texas.

Download the full ZIP code change documentation.

For September’s changes click here.

Angel Sauer

Angel Sauer, sales tax research team leader

Voter control over local sales tax policy upheld in Alaska

local sales tax

local sales tax

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 local 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 borough-wide 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.

Sales and use tax changes for Oct. 1, 2013

Tax rate changes effective October 1, 2013

Tax rate changes effective October 1, 2013

Sales and/or use tax rates in the states of Alaska, Alabama, Arkansas, Arizona, California, District of Columbia, Georgia, Kansas, Maine, North Dakota, Ohio, Oklahoma, Texas, West Virginia, and Wyoming have changed in Zip2Tax products as of October 1, 2013.

In Alaska, tax rates changed for Sitka, Skagway and Whittier.

In Alabama, tax rates changed for Taylor, Pelham, Arab, and Woodland.

In Arkansas, tax rates changed for Blytheville, Elm Springs, Green Forest, Keiser, Monette, Osceola, Pocahontas, Vilonia and Hempstead County.

In Arizona, tax rates changed for Yuma County.

In California, tax rates changed for San Fernando.

In DC, the state tax rate changed.

In Georgia, tax rates changed for Pierce County.

In Kansas, tax rates changed for Andover, Goodland, Harper, Mound Valley, and the counties of Ellis, Chase, Graham, Miami and Reno.

In Maine, the state tax rate changed.

In North Dakota, tax rates changed for Crosby and Lidgerwood.

In Ohio, tax rates changed for Erie County.

In Oklahoma, tax rates changed for Broken Bow, McCurtain, Sallisaw, and Wetumka.

In Texas, tax rates changed for Gregory, Reno, White Deer, Presidio, Trophy Club, Breckenridge, Bryson, Claude, Drum, Lakeside, Lavon, Odern, Olton, Petersburg, Riesel, Rising Star, Sachse, Stockdale, and Wheeler.

In West Virginia, tax rates changed for Charleston, Harrisville, Quinwood and Wheeling.

In Wyoming, tax rates changed for Crook County.

There were 45 states with ZIP code changes effective after September 2013 including Alabama, Arkansas, Arizona, California, Colorado, Connecticut, DC, Florida, Georgia, Iowa, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Hampshire, New Jersey, New Mexico, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming.  Download a complete list of the ZIP code changes.

For September’s changes click here.

Angel Sauer

Angel Sauer, lead tax researcher

Which states are the most business friendly?

America is a competitive place and states battle to be the best at whatever they can. Who has the best schools, the best food, the friendliest people, etc.? As a business owner, you definitely need to know which are the most business friendly.

Like any ranking, this is a matter of opinion and you can spend all day arguing over which state is truly number one. When you dig into the data though, some states have clear advantages over others in terms of taxes and economic strength.Tax Foundation

State corporate tax

A good place to start comparing states is the corporate income tax rate. The less your business owes in state corporate taxes, the better your bottom line so of course we want to keep this low.

South Dakota, Nevada and Wyoming don’t charge a corporate tax, so you can’t do any better than that. Colorado, Georgia, Kentucky, Michigan, North Dakota, Oklahoma, South Carolina, Utah and Virginia also are decent as they cap corporate taxes at 6% or less.

State income tax

State income taxes are another cost of doing business and in a perfect world would be as low as possible. The good news is several states waive this tax altogether to create a more business friendly environment.

If you’re operating out of Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming, you won’t have to pay any state taxes when you draw income out of your business. In terms of taxes, South Dakota, Nevada, and Wyoming start to look pretty appealing because business owners in these states avoid both corporate and individual income taxes.

Sales tax

Sales taxes are a difficult challenge business owners have to deal with. But wait, don’t your customers pay this? That would be mostly right. Your business won’t pay sales taxes out of its profits if you are collecting them correctly at the point of sale. However, your business is responsible for determining the following:

  • IF you are required to collect tax (your business has nexus, or a physical presence, within that jurisdiction);
  • WHICH items are taxable and at WHAT rate (some items and services are tax exempt, others are taxed at a rate different than general rates);
  • HOW MUCH to collect (does the state use origin or destination sourcing, what is the current rate for each jurisdiction);
  • WHERE to send the money (some states have you send it to a single office, others have you make payment to individual municipalities); and
  • and HOW OFTEN you have to do this (this could be annual, quarterly, or monthly depending on the state and the size of your business)?

Collecting sales taxes adds to your item’s total price, so it is in your best interest to keep that amount as low as possible to give you a competitive advantage.  (At least for now. The Marketplace Fairness Act could soon make this a thing of the past.)

Delaware, Montana, New Hampshire and Oregon don’t charge sales taxes. Alaska, Hawaii*, Maine, and Virginia are also competitive by keeping state and local sales taxes to 5% or less.

Use tax

Use tax is a little different than sales tax. This is your responsibility. You owe your state use tax anytime your business makes a taxable purchase but your supplier didn’t charge you sales tax, or the difference between the two amounts if your state’s use tax rate is higher than what your supplier charged you.) Technically, you could be due a tax refund if your supplier charged you a higher sales tax rate inappropriately, but the burden of proof would fall upon you.

In AlabamaArizonaColoradoMissouri and Oklahoma the use tax differs from the general sales tax rate (normally, it is lower). MontanaNew Hampshire and Oregon have no use tax. IllinoisIowaNew MexicoVermont and Wisconsin have a statewide use tax, but no local use tax.

Unemployment

While avoiding taxes is nice, for your business to succeed you also need a thriving economy with buyers looking for your product. The American economy is still struggling as a whole which makes it tough to open a business. However, some states are definitely doing better than others.

North Dakota, South Dakota, Nebraska, Vermont, Iowa, Utah and Wyoming all have an unemployment rate of 4.6% or less. If you’re in one of these states, you’d never know the country’s in an economic downturn.

Of course, these states have relatively small economic volume and may be better suited to specific industries. As far as high volume economies go, Virginia, Texas and Massachusetts are outperforming others as these states have unemployment below 6.6%. Not great, but definitely better than other parts of the country.

States with high unemployment rates may offer temporary tax benefits designed to bring in new businesses. It’s always worth a phone call to the economic development office to see what they have to offer.

The bottom line

So how does this all add up?

Based just on these factors, Wyoming, South Dakota and Alaska take the lead as they are strong in all four categories; they combine low taxes with sound economies. The remoteness of these states might be a strike against them however.

For the bigger players; Texas, hands down, looks very business friendly, even with its exceptionally complicated tax jurisdictions. Nevada, Florida and Washington have encouraging tax laws but high unemployment, whereas Virginia and Massachusetts have better economies but higher taxes.

If you are searching for a home for your business be sure to keep these states in mind as they are the leaders in accommodating businesses.

*Technically, Hawaii has an excise tax rather than sales tax.

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