Tax Changes for November 2016

Sales November 2016

Sales November 2016

Sales and/or use tax rates have changed in Zip2Tax products since the October updates.

In Alabama, tax rates changed for the cities of Coffeeville and York.  

  • The Coffeeville official notice can be found here.
  • The York official notice can be found here.

In Arizona, tax rates changed for the City of Globe.

  • The Mayor and Council of the City of Globe passed Ordinance No. 834. which amended the City Tax Code to increase the tax rate on retail sales from two percent (2%) to two and three-tenths percent (2.3%).  More details here AZ DOR.



There were 16 states with ZIP code changes…

……in Arizona, California, Connecticut, DC, Florida, Georgia, Indiana, Minnesota, North Carolina, Nebraska, New Mexico, New York, Oregon, Puerto Rico, Texas, and Wisconsin.


Until next month, best regards!

For October’s changes click here.

B.D. French, Researcher

B.D. French, Tax Researcher

Puerto Rico first to adopt value added tax

value added tax

value added tax

value added taxMany states and localities have recently raised sales taxes in response to mounting budget deficits. But no U.S. jurisdiction has taken such drastic measures as Puerto Rico, which not only increased its sales tax rate by nearly 65% this year – it plans to replace the sales tax altogether with a value added tax (VAT). This would make Puerto Rico the first U.S. state or territory to adopt a VAT, which is commonly used by other nations around the world.

Debt crisis prompts major tax increase

On August 3, the government of Puerto Rico defaulted on a $58 million bond payment. Puerto Rico’s governor, Alejandro Garcia Padilla, noted the island’s economy is in a “death spiral” due to years of government overspending and declining employment. Indeed, the $58 million default was only the first sign of trouble. The government currently owes more than $70 billion to its creditors, with major payments coming due in December and January.

In an effort to raise government revenues, Gov. Padilla signed a tax reform law known as Act 72 this past May. Among other things, Act 72 raised the island’s sales and use tax from 7% to 11.5% as of July 1. (The island-wide rate is actually only 10.5%, but municipalities collect an additional 1%.) The law further extended the sales tax to a variety of services, including car rentals, bank charges levied against business checking accounts, waste disposal, and telecommunications. Act 72 will also create a new 4% sales tax, effective October 1, for providers of “designated professional services,” such as accountants, architects and engineers.

Sales tax vs. Value Added Tax

Puerto Rico adopts a VATThese sales tax increases are only a transitional measure, however, until April 1, 2016, when Puerto Rico will switch from a traditional sales tax regime to a value added tax (VAT). A VAT is a consumption tax traditionally assessed at each stage of production. In other words, while traditional sales tax is only calculated at the point of a retail sale to an end user, a VAT applies every time there is a transaction involving a product or service.

The idea is to embed the tax in the supply chain so that each participant – i.e., the producer of raw materials, the manufacturer of finished goods, and the retailer who sells he goods – must account for the VAT. In theory, this allows the government to collect more revenue than a traditional sales tax, as every participant in the supply chain must account for the VAT, cutting down on opportunities for tax evasion. This is no doubt why the value added tax is attractive to Puerto Rico’s revenue-starved government.

Yet Puerto Rico’s VAT will differ from similar tax regimes in one major respect. The island will exempt the sales of “raw materials” used in manufacturing from the VAT. (Technically, these sales will be subject to a 0% VAT.) Normally raw materials are a principal source of VAT revenue. But given Puerto Rico’s unemployment rate is well over 12%, the government is understandably reluctant to further burden the island’s beleaguered manufacturing sector.

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

Sales tax rates and use tax changes for July 2015

Sales tax rates – July 2015

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.

For June’s changes click here.

Angel Downs, Zip2Tax's ead tax researcher

Angel Downs, Zip2Tax’s lead tax researcher

Puerto Rico makes changes to sales tax and beefed up tax enforcement

tax enforcement

In order to preserve the status of its only investment grade bond and reduce its outstanding debt, Puerto Rico has increased its sales tax rate and stepped up tax enforcement. Tax is a logical place to begin repairing the territory’s credit status because taxes can reduce Puerto Rico’s ratio of debt to revenue. Additionally, sales tax is a key to bond sales in Puerto Rico. The only Puerto Rican bond to retain an investment grade rating is the Cofina bond, whose revenue is backed by sales tax.

Recent legislation attempts to fight these problems by increasin

Puerto Rico sales tax increase

Puerto Rico just raised its sales tax to 7 percent.

g the sales tax to 6 percent and stepping up tax enforcement. Effective as of February 1, 2014, a new sales tax limits the authority of municipalities to tax food and food ingredients. The new law keeps the previous overall rate of 7 percent, but imposes a mandatory 1 percent tax on food and food ingredients. Municipal sales and use taxes are reduced from 1.5 percent to 1 percent, effectively reallocating these funds to the territory level. The reallocation is also part of an effort to create a uniform municipal sales tax. This uniformity is intended to ease Puerto Rico’s efforts to tax remote Internet vendors who sell to consumers in the territory.

In addition to increasing the rate, Puerto Rico is also increasing enforcement. Currently, Puerto Rico’s underground economy makes up 27 to 28 percent of gross domestic product. This is significantly higher than the continental United States, which has an underground economy estimated at 19 percent of GDP. In fact, Puerto Rico only collects 56 cents for every dollar of tax due.

Additional enforcement could result in an additional $391 million in tax revenue, which could significantly reduce Puerto Rico’s outstanding debt and thus increase its credit rating. In order to fight sales tax evasion, Puerto Rico has added a new $20,000 fine for each instance of sales tax evasion, and hired an additional 200 tax enforcement investigators. Further, the territory has introduced legislation to require all businesses engaged in sales to certify sales tax payment systems with the Treasury. Such registrations will provide accountability and reduce the financial incentive for business to evade the sales tax.

The changes to Puerto Rico’s sales tax appear centered on increasing enforcement and creating a uniform tax. Businesses operating in Puerto Rico should be aware of the increased focus on tax collection and the potential for additional efforts to tax remote vendors.

Chris Saddock

Chris Saddock