What’s New in Sales Taxes in the U.S. for 2016

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Posted by: briansittley Comments: 0 0 Post Date: January 21, 2016

avalara_slsTaxChgs16From time to time we like to share relevant insights from our partners at Avalara, providers of sales tax solutions to business.  They do a great job of understanding the taxation landscape across every state and jurisdiction in the country.  We have clients who use their services, and we like to let our readers know about the latest news and trends that may affect your business.
Following are a few highlights excerpted from a recent report from Avalara, which you’ll find here.  Efforts proceed to ‘level the playing field’ between on-line and brick and mortar stores, by imposing sales taxes on Internet purchases.  Among the proposals being considered or debated today in Congress:

  • Marketplace Fairness Act of 2015 (MFA) – Just like the old one, only different

Similar to the MFA 2013 proposal, this legislation would grants states authority (should they meet certain criteria) to require non-exempt remote sellers to collect sales tax. If passed, the MFA would broaden state authority to require remote sellers to collect sales tax regardless of whether that business has a physical presence within those states.  The bill faces potential legal hurdles, among other changes, so it’s a long way yet from a done deal.

  • Remote Transactions Parity Act of 2015 (RTPA) – harder to pronounce than MFA but friendlier to small business

The Remote Transactions Parity Act (RTPA) of 2015 is similar to the MFA in that it would allow states to apply sales tax to remote sales. As with MFA, the 23 member states of the Streamlined Sales Tax (SST) initiative would be authorized to require remote sellers to collect and remit sales tax soon after legislation is passed. Non SST member states would have to adopt and implement certain minimum simplification requirements. 

  • Online Sales Simplification Act (OSSA) – everybody pays

OSSA is quite different from the MFA 2015 and the RTPA. Most notable, perhaps, is that it does not provide for a small seller exception and it would allow states to require in-state sellers to collect sales tax on all interstate sales.

  • State by State Changes (Midwest edition):
    • Sales tax in Chicago over 10%. Cook County commissioners have approved a 1% sales tax rate increase, raising the sales tax rate in Chicago to 10.25%. The additional sales tax began 1/1/16 and is expected to bring in approximately $474 million annually,
    • Illinois: One county says to the other: raise your sales tax, we’ll raise ours. In an unusual case of quid pro quo, councils in both Normal and Bloomington, Illinois, decided to increase home rule sales taxes from 1.5% to 2.5%, which will bring the combined local rates to 8.75%. During a summer retreat, the Normal Town Council proposed a 1% sales tax rate increase that “would be contingent on Bloomington also raising its sales tax.”
    • Iowa: Computers may get exemption status like machinery.  Expanding the items eligible for Iowa’s machinery and equipment sales tax exemption to include computers would have a positive impact on jobs, according to the Iowa DOR. Manufacturers would reduce their sales tax burden by an estimated $5-$6 million annually between 2017 and 2020, which could create revenue for job expansion
    • Michigan: Save money being safe. State proposes gun safety tax exemptions.
    • Minnesota: High cost of smoking gets higher. Tobacco products sold in Minnesota are going to get more expensive with excise and sales taxes on cigarettes increasing.
    • Wisconsin: Wisconsin is hiring more auditors according to the department’s Auditor Recruiting Video. The Department of Revenue is looking for 102 additional auditors and 11 agents to help uncover more than $80 million in annual revenue for Wisconsin.

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