If alternative apportionment is wide open and anything goes, why have statutes?
Are we moving from apportionment to allocation when we use single-sales factor apportionment and market-based sourcing?
Is single-sales factor apportionment 'fair apportionment'? It moves income to customer states, not to states where the activities occurred that generated the income. Income is not based solely on sales.
Are throwback and throwout rules unconstitutional because they look beyond the borders of the state?
Should states be able to enact retroactive legislation to protect the state budget from financial loss?
Should retroactive legislation be limited to a state's statute of limitations?
Should judicial decisions only apply to the taxpayer involved in the litigation if it involves a refund?
Businesses Want to Do Business, NOT Taxes
Businesses are playing a game where the rules keep changing, in the middle of the game.
Taxes keep changing. A constant battle for businesses to keep up when all businesses want to do is business, not taxes.
Businesses must be able to do business with certainty. State tax laws already lack uniformity and create so many opportunities for businesses to screw up. Now, they keep changing, year to year, day to day.
Over the past few months as state governments have been in session, they have passed numerous pieces of legislation to balance the budget including changes to tax rates, filing methodologies, sourcing rules, etc. along with how or if they will conform to all or parts of federal tax reform.
I have been monitoring state tax legislation and have submitted approximately 30 alerts to clients regarding the changes (and we aren't done yet). More to come.
Let's work together to make state taxes less important, so businesses can thrive.
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.
Welcome to SALT CRASHERS! (Home Depot & DIY Meets State Tax)
"You can do it. We can help." "More saving. More doing." These are slogans of the Home Depot home improvement company, but I think they may apply to the state tax consulting industry as well.
"DIY" or "Do It Yourself" has become a popular home improvement network (I think a spin-off of HGTV). Shows such as, House Crashers, Yard Crashers, etc. come to your house and re-do your yard or house, but you do alot of the work while they direct and support you with a lot of additional workers, etc. It is a coordinated team effort. Does this approach sound similar to how you use outside consultants?
I know some companies may hire outside consultants and totally hand-it off to them to do. They don't have the expertise in-house and/or don't have the time to spend on the issue. That is why they are hiring outside consultants.
Other companies are more "Do It Your-selfers" or "DIYs." They like to do things themselves and use consultants as an add-on or supplement on an as-needed basis. However, if you have ever watched Yard Crashers or House Crashers, you may notice that having these outside experts come to the house shaves projects and YEARS off the homeowner's to-do list. Meaning, the homeowner may have never completed the project without the help of these outside experts. The homeowner also may have never thought of the ideas (i.e., landscaping plan, remodeling plan, the placement, the fixtures, etc.) for their house or yard.
Therefore, when asking yourself, what kind of person or company am I? Am I a DIY or do I want to hand-it off? Also ask yourself, what could I be missing? Are there ideas and expertise that I could utilize to not only save my company money, but create a more tax-efficient structure?
Trust me. I am a DIY. I like doing things myself. However, even I have had to learn that I don't always know everything (shocker, I know). Others can help with their ideas and expertise.
Just remember, you can always do some things yourself, you just don't have to go it ALL alone.
Truly, in the SALT world, "you can do it," and "we can help" do seem to apply. SALT consultants can provide "more saving and more doing."
What kind of company are you?
How do you prefer to work with outside consultants, and why?