TWIST - August 2, 2021

Welcome to TWIST for the week of August 2nd, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

This week we have a couple multistate updates.  First, Alabama and New Mexico have recently issued guidance addressing their marketplace facilitator laws. New Mexico FYI-206 addresses the obligations of marketplace facilitators and marketplace sellers and how the new destination sourcing rules apply to such sales.  In Alabama, a notice issued by the Department of Revenue confirms that marketplace facilitators are required to collect and remit Simplified Seller’s Use Tax even when facilitating a sale for a marketplace seller that is a brick and mortar business, such as a restaurant or a grocery store.  The Missouri Department of Revenue ruled that until the state’s marketplace facilitator law becomes effective on January 1, 2023, a vendor making sales through a marketplace facilitator is required to report on the vendor’s use tax return the tax collected on the sales by the marketplace facilitator.  In other multistate news, over the last year and a half about 20 states provided temporary nexus and withholding COVID-related relief for businesses and employees. In the corporate income tax area, most states taking action announced that the state would not assert corporate income tax nexus over a business based on the presence of employees working in the state due solely to COVID-19. Several states also indicated that employees in the state temporarily due to COVID-19 would not be considered in assessing whether the businesses has exceed P.L. 86-272 protections. Additionally, some states provided COVID-19 specific income tax withholding rules to govern employees temporarily in the state during the pandemic.  Recently, many of these states have rescinded their declarations of emergency, and much of the COVID-19 relief is expiring.

The Department of Revenue in Florida recently issued a Tax Information Publication addressing the state’s conformity to the Internal Revenue Code as in effect on January 1, 2021. The publication discusses federal changes in the CARES Act and the CAA that Florida did not adopt and describes how taxpayers should report the associated required adjustments on their Florida corporate income tax returns.

Finally, in Virginia, the Tax Commissioner ruled that a clothing retailer’s charges for logo set up fees and easy shipping return labels were subject to sales and use tax, as they were associated with the taxable sale of tangible personal property. 

Thank you for listening to TWIST and stay well.