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.

 

Tennessee rules for sales tax on vacation rentals

While budgeting for travel, plan on paying sales tax on vacation rentals through companies like Airbnb

tax on rentals

Many people have turned to their spare bedrooms as source of additional income but sales tax on vacation rentals is a new fly in the ointment that renters in several states may have to deal with. Websites like Airbnb and VRBO allow anyone to list their properties for short-term rental. Travelers then book rooms through the website, which in turn deducts its fees from the money paid to the renter.

But as these services have become more popular, officials in a number of states have questioned whether sales tax should apply to these transactions. About a half dozen states currently require Airbnb and its competitors to collect local sales and hotel occupancy taxes. Just recently, Tennessee’s top law enforcement official said the Volunteer State should be one of them.

Earlier this year, a member of the Tennessee legislature asked state Attorney General Herbert H. Slatery III for an official advisory opinion to answer three questions. The first was whether Tennessee sales tax was due on “short-term rentals of homes, apartments, and rooms” arranged through websites. The second question was whether such rentals qualified as “hotels” subject to additional state and local tax on occupancy. And finally, assuming such taxes are due, who is responsible for collecting them?

On December 1, Slatery issued his opinion. Under Tennessee law, sales tax is assessed on any “sale, rental or charges” for any “accommodations” furnished to a person for less than 90 continuous days. The attorney general said the types of services offered through Airbnb and VRBO fit that description. However, Slatery also said only those “individuals who regularly or frequently rent their homes on a short-term basis” were liable for collecting sales tax. Individuals who only rent rooms through a website “infrequently or irregularly” are not subject to tax.

Slatery further determined individuals who regularly rent out rooms in their homes are effectively operating “hotels,” which are subject to varying levels of occupancy tax depending on the specific Tennessee county. By law it is the homeowners, not the third party websites, who are liable for collecting the tax since they are the “operators” of the hotel. And unlike the general sales tax, occupancy taxes must be collected even on “occasional” or “isolated” short-term rentals.

But as the attorney general noted, Airbnb and similar websites allow individual renters “to set the price of the rental and to specify any taxes that are due from guests.” Therefore he did not expect compliance with Tennessee sales and occupancy tax laws to be “overly burdensome” for people who rent rooms.

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

Four states greet November with sales tax changes

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

Exemption certificates need to be reviewed for validity

Do you know the validity period of your exemption certificates? Did you know that each state treats them differently and that you should review them periodically to make sure they are still good?

It is a good business practice to periodically review exemption certificates because quite a few states claim their exemption certificates are good until the business has a change, the business closes, or the certificate is revoked. You won’t know if these conditions are met unless you check with your customers and vendors regularly and request updated exemption certificates from them.

Some states have no stated expiration for their exemption certificates but they recommend regular or periodic updates. In these cases we listed the least amount of time between recommended updates. In cases where the state listed “good until the exemption no longer applies” we stated that there was no expiration date. Other states note that exemption certificates are good forever however “exempt status must be renewed”, or they “recommend” updates. In these cases we noted the recommended update or renewal timeframe.

Exemption Certificate Validity

State Abbrev. Validity Period
Alabama AL Till Changed Or Revoked
Alaska AK NA – No Certificates
Arizona AZ Date On Certificate
Arkansas AR NA – No Certificates
California CA Till Changed Or Revoked
Colorado CO No Expiration
Connecticut CT 3 Years
Delaware DE NA – No Certificates
District Of Columbia DC Till Changed Or Revoked
>Florida FL 5 Years
Georgia GA Till Changed Or Revoked
Hawaii HI Till Changed Or Revoked
Idaho ID No Expiration
Illinois IL 5 Years
Indiana IN No Expiration
Iowa IA 5 Years
Kansas KS Till Changed Or Revoked
Kentucky KY Till Changed Or Revoked
Louisiana LA 3 Years
Maine ME Till Changed Or Revoked
Maryland MD 5 Years
Massachusetts MA No Expiration
Michigan MI 4 Years
Minnesota MN 3 Years
Mississippi MS NA – No Certificates
Missouri MO 5 Years
Montana MT NA – No Certificates
Nebraska NE No Expiration
Nevada NV 5 Years
New Hampshire NH NA – No Certificates
New Jersey NJ 5 Years
New Mexico NM No Expiration
New York NY Till Changed Or Revoked
North Carolina NC No Expiration
North Dakota ND No Expiration
Ohio OH No Expiration
Oklahoma OK 3 Years
Oregon OR NA – No Certificates
Pennsylvania PA 3 Years
Rhode Island RI No Expiration
South Carolina SC Till Changed Or Revoked
South Dakota SD 1 Year
Tennessee TN Till Changed Or Revoked
Texas TX No Expiration
Utah UT 1 Year
Vermont VT No Expiration
Virginia VA Till Changed Or Revoked
Washington WA 1 Year
West Virginia WV 1 Year
Wisconsin WI 5 Years
Wyoming WY No Expiration

Back To School sales tax holiday list for 2015

Back To School Sales tax holidayThe most complete list of all 17 states holding a Back To School sales tax holiday for 2015, updated July 14, 2015.  This list is complete with items sales tax will be suspended on, the upper price limit, the sales date ranges, when the sales were first initiated, and a link to where you can get more information.

The 2015 Back To School sales tax holiday will be held in Alabama, Arkansas, Connecticut, Florida, Georgia, Iowa, Louisiana, Maryland, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Virginia.

Keep in mind that while some states suspend the state portion of the sales tax during these Back To School specials, but county, city, or other local sales taxes might still apply if those municipalities are not participating the sales tax holiday.

Also consider that not all items are viewed equally in the eyes of the tax adjuster. Shoes may be considered an item of clothing in one instance, but “track shoes” may be considered sporting goods and not included along with the tax-free items during this Back To School sales tax holiday.

State Items Included Max Price 1st Year 2015 Dates Information Links
Alabama clothing $100 2006 August 7-9 http://www.revenue.alabama.gov/
computers $750
school supplies $50
books $30
Arkansas clothing $100 2011 August 1-2 http://www.dfa.arkansas.gov/
school supplies
Connecticut clothing and footwear $300 2001 August 16-22 http://www.ct.gov/drs/
Florida school suppies 2007+ August 7-16 http://dor.myflorida.com/
clothing $100
supplies $15
computers $750
Georgia school supplies 2012+ July 31 – August 1 http://dor.georgia.gov/
clothing $100
supplies $20
computers $1,000
Iowa clothing $100 2000 August 7-8 https://tax.iowa.gov/
Louisiana all taxable personal property $2,500 2007 August 7-8 http://www.revenue.louisiana.gov/
Maryland clothing & footwear $100 2010 August 9-15 http://www.marylandtaxes.com/
Mississippi clothing & footwear $100 2009 July 31-Aug. 1 http://www.dor.ms.gov/
Missouri clothing $100 2004 August 7-9 http://dor.mo.gov/
computers $3,500
school supplies $50
New Mexico clothing $100 2005 August 7-9 http://www.tax.newmexico.gov
computers $1,000
computer equip. $500
school supplies $30
Ohio clothing $75 2015 August 7-9 http://www.tax.ohio.gov/
school supplies $20
instructional material $20
>Oklahoma clothing $100 2007 August 7-9 http://www.tax.ok.gov/
>South Carolina clothing 2000 August 7-9 http://www.sctax.org/
school supplies
computers
other
Tennessee clothing $100 2006 August 7-9 http://tn.gov/revenue/
school supplies $100
computers $1,500
Texa clothing, backpacks and school supplies $100 1999 August 7-9 http://comptroller.texas.gov/
Virginia clothing $100 2006 August 7-9 http://www.tax.virginia.gov/
school supplies $20
energy star products $2,500
hurricane preparedness items $60
generators $1,000

Source: Federation of Tax Administrators

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