TWIST - January 27, 2020

Welcome to TWIST for the week of January 27^th. This is Sarah McGahan from KPMG’s Washington National Tax state and local tax practice. If you are a regular reader or listener of TWIST, you probably noticed we are trying something new this year. Instead of reading longer summaries of each development, we are doing a round-up of the week’s happenings in our podcast and longer write-ups on the developments we discuss are available on the TWIST webpage.

Okay- so this week, first up is a bill recently introduced in the NY Assembly that, if enacted, would impose a five percent tax on the gross income of “every corporation that derives income from the data that New York individuals share with the corporation  The bill provides few details on how to compute the tax, but does specify that revenues raised by the measure would be deposited into a newly created “New York data fund,” with a portion of the funds to be disbursed back to New York taxpayers. There is a similar bill pending in the NY Senate.

Another development is from Massachusetts Governor Charlie Baker’s recently proposed budget. Under the budget proposal, retailers that collect more than $100,000 in sales tax annually would be required to begin remitting taxes from the first three weeks of the month in the final week of the same month. Remittance for the final week and reconciliation of the monthly filing would continue to occur in the following month. Moreover, the second phase of the proposal would require retailers and credit card processors to capture sales tax at the moment of purchase and remit taxes on credit card and other electronic transactions on a daily basis. This real time remittance would begin in 2023. This is not the first time the Governor has advocated for these types of changes.

Finally, we have a number of Wayfair-related updates. First, there is a bill pending signature in Georgia that would impose a collection obligation on marketplace facilitators, as defined. In LA, the Sales and Use Tax Commission for Remote Sellers adopted regulations requiring mandatory e-filing and payment for remote sellers. For tax periods on or after July 1, 2020, remote sellers required to collect and remit the sales and use tax must file tax returns and make sales and use tax payments electronically. In AR guidance was recently issued providing that a remote tire seller that met the state’s economic nexus standards was required to collect the state’s rim removal fee. In NC, the Department of Revenue recently issued technical bulletins addressing certain excise taxes imposed by the state. These taxes include the white goods disposal tax, solid waste disposal tax, alternate highway use tax, scrap tire disposal tax, and dry-cleaning solvent tax. According to the bulletins, several of these taxes are interpreted by the Secretary of Revenue to be additional sales or use taxes. Thus, while not explicitly stated, a marketplace facilitator may be required to collect and remit these taxes if it is considered a retailer for state sales and use tax purposes.

Finally, we also covered a decision out of Arkansas upholding the imposition of use tax on the original purchase price of a trailer. What made this case somewhat different is that the trailer was purchased and used outside Arkansas for 7 years before the taxpayer brought it to Arkansas. However, because the taxpayer did not prove that tax was paid earlier, the assessment was upheld.

Please stay tuned to TWIST for additional state tax updates!