2020 Sales Tax Developments

Three months in and it’s already been a hectic year on many frontssales and use taxes have been no exception. Developments in 2020 so far include: 

 

Alaska –  While Alaska does not have a state level sales tax, certain local municipalities do.  The Municipal League has finalized the uniform Alaska Remote Seller Sales Tax Code, which establishes a framework for administering local sales taxes on remote commerce.  

 

Arizona revised its threshold for annual transaction privilege tax (TPT) electronic filing and paying. Effective Jan. 1, the threshold became $5,000, a change from the 2019 level of $10,000. Businesses with an annual TPT and use tax liability of $5,000 or more during the prior calendar year are now required to file and pay electronically starting in February for the January reporting period. 

Those failing to electronically file and pay are subject to penalties of 5% of the tax amount due for filing a paper return (minimum penalty: $25) and/or 5% of the amount of payment made by check or cash. 

 

Georgia will require marketplace facilitators to collect and remit sales tax on behalf of third-party sellers per a bill signed by the governor earlier this year. The measure takes effect April 1. 

 

Hawaii now requires certain taxpayers, including general excise taxpayers whose liability exceeds $4,000 for the taxable year, to file returns electronically. General excise taxpayers whose annual liability exceeds $4,000 are required to file periodic returns monthly; the new requirement kicks in for periodic general excise tax returns for months beginning on or after July 1. 

Annual returns for taxable years beginning on or after Jan. 1 will be required to be filed electronically. The state will levy a 2-percent penalty on the amount of tax required to be shown on the return if the return is not filed electronically unless the failure is due to “reasonable cause and not due to neglect.” 

Hawaii also began requiring marketplace facilitators to collect and remit the tax due on all sales, including those by third-party or marketplace sellers, effective Jan. 1. Economic nexus is $100,000 or more in gross income sourced to Hawaii or at least 200 transactions with parties in the state. 

 

Illinois began requiring certain marketplace facilitators to collect and remit the tax due on sales made through the platform in the state starting in January. A marketplace facilitator is considered the retailer of each sale of tangible personal property or taxable services made through the marketplace if: cumulative gross receipts from sales of tangible personal property or taxable services to purchasers in Illinois by the marketplace facilitator and its marketplace sellers are $100,000 or more or the marketplace facilitator and marketplace sellers cumulatively enter into 200 or more separate transactions for the sale of tangible personal property or taxable services into Illinois. 

If a remote marketplace establishes economic nexus by meeting one or both thresholds, it must collect and remit Illinois sales and use tax for one year. 

 

Louisiana’s Supreme Court has found Walmart free of obligation to collect and remit sales tax for its third-party sellers contrary to claims of authorities in the Parish of Jefferson. The case hinged on whether an online marketplace is obligated as a dealer under state regulations “and/or by contract to collect sales tax on the property sold by thirdparty retailers through the marketplace’s website. 

 

Michigan’s Marketplace Facilitator Law kicked in Jan. 1. Marketplace facilitators who make more than $100,000 in sales or at least 200 transactions in Michigan must collect sales tax on behalf of third-party sellers on their platform. Marketplaces that have adopted this law include Amazon, eBay, Etsy and Walmart. 

Michigan law defines marketplace facilitators as a “person that facilitates retail sales for third-party marketplace sellers by listing or advertising the seller’s product for sale on its marketplace, and either directly or indirectly (through agreements with third parties or the facilitator’s affiliates), collects payment from retail purchasers and transmits that payment to marketplace sellers for consideration.” 

 

North Carolina now mandates that marketplace facilitators are liable for the tax on third-party sales, starting Feb. 1. The nexus threshold is more than $100,000 in gross sales in North Carolina or at least 200 separate transactions in North Carolina. Marketplace facilitators meeting the above threshold are required to collect and remit tax on behalf of all marketplace sellers, regardless of whether the seller has a physical presence in North Carolina. 

 

Wisconsins Act 10 makes marketplace providers liable for sales tax and mandates that marketplace providers must inform third-party sellers that the marketplace is collecting and remitting sales tax on their behalf, effective Jan. 1 

 


 

Sales and use tax collection is constantly changing, we can help ensure you stay compliant. Especially in today’s uncertain enironment, sales tax updates and extensions are happening daily.  Keep up with the latest updates by reaching out. When you work with TaxConnex™, it’s all on us. 


 

Sales tax change frequency by state

Zip2Tax compares the sales tax change frequency of the states. Ever wonder how your state measures up?

It’s generally accepted that there are around 11,000 sales tax jurisdictions across this great and diverse country of ours. This fact alone would seem to be a fairly reasonable argument for the outsourcing of sales and use tax rates from a company such as Zip2Tax. As the head of marketing for Zip2Tax I am always trying to understand our customer’s needs better. I found myself wondering about the sales tax change frequency for all these jurisdictions. I mean, 11,000 rows in a document might be manageable if they only changed their rates every few years or so, right?

So I sat down and with my trusty Excel spread sheet and a large cup of strong coffee and started going back through our research documentation counting the number of months that there had been any sales tax changes in each state. I wanted to determine which states had the highest sales tax change frequency. I sampled a three-year period from December 2015 going back through January 2013.

… fully one-third of the time that these states CAN make sales or use tax rate changes, they DO.

When the numbers were crunched I had some surprises in store, to be sure. For one, the states that provide Zip2Tax with the most new customers have no obvious correlation with which states had the highest sales tax change frequency. In fact, California and New York were only slightly above average.

The standout in this sample was Alabama which turned out to be far and away the leader with changes in 30 out of the 36 months – that’s 83% of the time. This also helped to dash my hopes of discovering a hotbed of customer need for our product since Alabama has so far not proven to be a great source of new business.
sales tax change frequency

Arizona came in second with 14 changes over that same period. Georgia, Louisiana, Oklahoma and Texas all tie for third place with 13 sales tax rate changes over 36 months. That translates to mean that fully one-third of the time that these states CAN make sales or use tax rate changes, they DO. Not to overstate the obvious, but that is more frequently than quarterly updates.

… more than two-thirds, updated that tax a minimum of once a year, and by the end of 3 years, 86% of the states had made changes…

In fact, 68% of the states that collect a sales tax, that’s more than two-thirds, updated that tax a minimum of once a year, and by the end of 3 years, 86% of the states had made changes.

So as I drained the last of my cold coffee I felt some gratification in that even though sales tax will remain an extremely complex moving target in nearly all 50 states, at least it should mean a steady supply of customers for sales tax rate providers like Zip2Tax for the foreseeable future.

Fill in the sign up form below this blog to receive our monthly newsletter and get alerted when one of these states makes a sales or use tax change or other important tax-related information.

 

Four states greet November with sales tax changes

Four states greet November

Sales tax changes occurred in four states in Zip2Tax products since October 2015.

In Arizona, tax rates changed for Jerome, Sierra Vista and Mammoth.

In Tennessee, tax rates changed for Hardin County, Henry County and Dunlap.

In Wisconsin, tax rates changed for Brown County.

In Wyoming, tax rates changed for Converse County.

There were 28 states with ZIP code changes effective after October 2015 including Alabama, Arizona, California, Colorado, Connecticut, District of Columbia, Georgia, Illinois, Massachusetts, Maryland, Michigan, Minnesota, Missouri, North Carolina, Nebraska, New Jersey, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Washington, Wisconsin and West Virginia. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

For October’s changes click here.

Angel Downs, Zip2Tax's ead tax researcher

Angel Downs, Zip2Tax’s lead tax researcher

Sales and use tax rate changes for May 2015

Sales tax rates – May 2015

Sales tax rates – May 2015

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

In Alabama, tax rates changed for Five Points.

In South Carolina, tax rates changed for Colleton and Georgetown Counties.

There were 7 states with ZIP code changes effective after April 2015 including Georgia, Illinois, Kentucky, Maine, New York, Ohio, and Pennsylvania. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

There were 7 states with ZIP code changes effective after April 2015 including Georgia, Illinois, Kentucky, Maine, New York, Ohio, and Pennsylvania. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

There were 7 states with ZIP code changes effective after April 2015 including Georgia, Illinois, Kentucky, Maine, New York, Ohio, and Pennsylvania. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

For April’s changes click here.

Sales tax rates - May 2015

Angel Downs, Lead Tax Researcher

 

 

Sales and use tax rate changes for April 2015

Sales tax rates – April 2015

Sales and use tax rate changes in Zip2Tax products in 17 states since March 2015. There have been changes in Alaska, Arkansas, California, Georgia, Kansas, Louisiana, Minnesota, Missouri, North Carolina, North Dakota, Nebraska, Ohio, Oklahoma, Texas, Utah, Washington and Wyoming.

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

In Arkansas, tax rates changed for Barling, Cherry Valley, Dermott, Evening Shade, Higginson, Lead Hill, Lockesburg, Ward, Wilmot and Mississippi County.

In California, tax rates changed for Atascadero, Benicia, Coachella, El Cerrito, Guadalupe, Paradise, Pinole, Rancho Cordova, Red Bluff, Richmond, Sausalito, Stanton, El Cajon, and Alameda, Humboldt and Monterey Counties.

In Georgia, tax rates changed for the counties of Baker, Brooks, Chattahoochee, Clinch, Habersham, Liberty, Seminole and Twiggs.

In Kansas, tax rates changed for Eureka, Hoisington, La Harpe, Melvern, Shawnee, Wellington, and the counties of Dickinson, Gove, McPherson, Rooks, and Smith.

In Louisiana, tax rates changed for Epps, Terrebonne Parish, Delhi, Forest Hill, West Monroe, Colfax and Lafayette Parish.

In Minnesota, tax rates changed for the counties of Carlton, Saint Louis, and Steele.

In Missouri, tax rates changed for Ralls, Saint Francois, and Wright Counties, Park Hills, Brookfield, Liberty, Marshfield, Portageville, and Princeton.

In North Carolina, tax rates changed for the counties of Anson and Ashe.

In North Dakota, tax rates changed for Grafton, Jamestown, Killdeer, Kindred, Underwood and Williams County.

In Nebraska, tax rates changed for Benedict, Decatur, Elwood, Stanton, Upland, Utica, Bancroft, Bassett, Burwell, Duncan, Fairbury, Howells, Minden, Nebraska City, Norfolk, Rushville, Wayne, York and Dakota County.

In Ohio, tax rates changed for the counties of Hamilton, Lucas and Mahoning.

In Oklahoma, tax rates changed for Healdton, Nicoma Park, Elk City, Owasso and Grady County.

In Texas, tax rates changed for Lake Dallas, San Elizario, Bellevue, Ennis, Muchison, Progresso, Taft and Zapata County.

In Utah, tax rates changed for American Fork, Clearfield and Washington County.

In Washington, tax rates changed for North Bend, Seattle, Tonasket, Friday Harbor and Pacific County.

In Wyoming, tax rates changed for the counties of Crook, Johnson, Washakie, and Campbell.

There were 27 states with ZIP code changes effective after March 2015 including Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Massachusetts, Maryland, Michigan, Minnesota, Missouri, North Carolina, Nebraska, New Jersey, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Tennessee, Texas, Utah, Virginia, Washington, and West Virginia. A PDF document enumerating ZIP code additions and deletions can be made available upon request.

For March’s changes click here.

Angel Downs

Angel Downs, Lead Tax Researcher

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