Are Remote Retailers and Marketplace Providers in the 'Path of Totality'?

Well, it's the day - solar eclipse day. A once in a lifetime event. Are you ready? Do you have your glasses? Will you see the total eclipse or partial eclipse?

According to the Washington Post, "the path of totality — the 70-mile-wide strip of America from Oregon to South Carolina in which the moon will, for a couple of minutes, block the sun — crosses the homes of an estimated 11 million people."

A total eclipse is something that happens once in a lifetime (if you are lucky; every 400 years or so). Well, today, our modern economy is converging with past sales tax law creating a sales tax 'eclipse' and is having difficulty figuring out how to look at it. We need the 'right glasses' to be able to tax remote retailers (online sellers) and marketplace platform providers. Amazon, since it is the largest marketplace provider I am aware of, has become the creator of this convergence, or sales tax 'eclipse.' 

We - state and federal governments, departments of revenue, taxpayers and tax professionals - must accept the fact that this sales tax 'eclipse' is happening. We must also work together to find the 'right glasses' or we will cause damage to our 'eyes' (economy and state revenue). 

Currently, states have imposed economic nexus standards and use tax notice and reporting requirements ALL with the intent to skirt the physical presence standard established by the Quill court case. The physical presence standard requires a retailer to have a physical presence standard in the state before the state can require the retailer to collect sales tax. 

I am all for states figuring out the best way to tax these remote retailer transactions; or first determining if they should tax it. I get that the states need revenue. What I disagree with is how states are going about trying to make it happen. Adopting economic nexus laws that fly in the face of Quill to simply get companies to challenge the economic nexus law is ridiculous. States want taxpayers to either comply or challenge the law, hoping the U.S. Supreme Court will take the case and overturn Quill. 

The use tax notice and reporting requirements are more burdensome and complicated than simply collecting and remitting sales tax. Again, another indirect way that states are simply trying to get companies to collect sales tax. If you can't change the law, create a law that is more complicated so companies choose the less burdensome road. I get it, but I disagree with it.

Companies want certainty. Companies don't want to focus on sales tax, they want to focus on their business. They want taxes to get out of the way or at least be something easy and clear to comply with. Companies don't want to get caught not complying and have to pay additional taxes, interest and penalties. The problem is, states are trying to force new tax collecting obligations without working together with businesses and tax professionals. They are forcing it, which is producing uncertainty and more confusion. 

State taxes already present a maze of taxing jurisdictions all competing for business and revenue with non-uniform tax laws. With this sales tax 'eclipse' staring us down, all I ask is that we work together to find the 'right glasses.' I ask the states to stop forcing damage to our eyes.

Tax Legislation: Are We Asking The Right Questions?

State tax developments are everywhere. They happen daily. The question is - are we just reporting them or are we challenging them?

This legislative season has seen crazy proposals to raise revenue, balance budgets - all influenced by political pressures and confusion. We have policy organizations submitting reports and studies asserting that certain proposals are ridiculous or would either be unfair or detrimental to the state and specific taxpayers. This complexity not only applies to state tax legislatures, but also the federal government - as we know. The problem is that states generally have to balance their budgets every year to operate (although apparently that doesn't apply to Illinois).

One thing I noticed is that state legislative sessions are focused on raising revenue. Always asking what can or should be taxed? What new forms of business do we need to tax? What tax revenue are we missing out on?

I think those are the wrong questions. The questions we should be asking are:

• What services should the state or federal government provide?
• To what extent ($$) should the government provide those services?
• How do we prioritize those services?
• What is the cost/benefit of providing those services?
• At what point does the provision of those services cause detriment to citizens and our economy? 
• What oversight will each service have to avoid waste and efficient use of taxpayer dollars?

We don't always need more revenue. We need to rethink and revamp the purpose of government. Our governments should be lean and efficient. They should provide us with what we need most - not more or less. It's not about tax revenue, it's about efficient government. It's about the health and wealth of our country - financially, physically and spiritually. 

If we never ask the right questions, we won't get the right answers.

ONE-STOP SHOP FOR FREE STATE TAX RESOURCES

I have put together a web page of sites that offer FREE updates on state tax developments. I have also included some of my favorite business and practice management sites, magazines and blogs. 

Please take a look - ONE-STOP SHOP.

Please let me know which sites you find most useful and if you have a site I should add. 

Thank you and enjoy.

A STATE TAX 'MUST READ' FOR 2017

With federal tax reform highly likely and international tax reform working in the background, state tax reform may be close behind.

It is definitely an interesting time to be working in the tax field. With new ideas and new perspectives, we are most assuredly closer to change than we have ever been. If we have learned anything about change, is that change requires 'us to change.' We must be open to new ways of thinking, but we must also be involved. Stay informed. Speak up. Play a part.

Liz Malm at Multistate Associates, Inc. has written 3 recent posts in their Multistate Insider publication that you have to read if you are curious at all about what will happen with multistate taxes in 2017. 

First, "Tax Issues to Watch in 2017: Taxation of Services."  According to the post, the sales taxation of services could be seriously debated in 16 states during the upcoming state sessions. The post provides a great explanation, recap and overview of all states as its relates to the sales taxation of services.

The second post you must read is "State Tax Policy in 2017: What to Expect." The post covers some of the biggest policy trends impacting multistate taxation. Trends that grew in strength in 2016, and may get even stronger in 2017, such as: sales tax nexus, sales taxation of services, short-term rental taxation, tangible personal property taxes, combined reporting and apportionment changes, tax havens, general rate increases and elimination of exemptions and deductions, and last but not least, questions surrounding what the state tax fallout will be from federal tax reform.

Third, find out what the National Conference of State Legislatures is thinking by reading "NCSL Tax Task Force Meeting Spots Emerging Issues for 2017."