Get Ready for the New Fiscal Year: Understanding and Adopting the New Tax Regulations

Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals

Get Ready for the New Fiscal Year: Understanding and Adopting the New Tax Regulations

• Understand changes in key sales tax provisions for states with a fiscal new year of July 1, 2014

• Discover how to improve compliance practices relative to increasingly dynamic sales tax laws and regulations

• Understand the current status of key provisions of the Marketplace Fairness Act (MFA)

Learning Objectives

After attending this event you will be able to:

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Ask, Share, Learn – Within the Largest Community of Corporate Finance Professionals

Get Ready for the New Fiscal Year: Understanding and Adopting the New Tax RegulationsShane Ratigan, JD, LLM, Tax Law and Compliance Expert, Avalara, Inc.

Agenda

• Marketplace Fairness Act Update• Trends

– Services

– Cloud Based Services

– Use tax for Businesses

– Exemption Certificate Management

• Notable Changes State by State

Marketplace Fairness Act of 2013

• Allow states to require out-of-state businesses to collect sales tax

• Requires some tax simplification• Applies to anyone making remote sales

On May 6, 2013 the Senate passed the Marketplace Fairness Act of 2013 by a vote of 69 to 27…

The bill is now in House Judiciary.

• Grants authority to states to require a remote retailer to collect sales tax

• Significantly changes nexus for sales tax purposes

• Includes a $ threshold to require compliance ($1,000,000 in remote sales- includes exempt sales)

What Would Passage of Marketplace Fairness Act Do…

What Would Passage of Marketplace Fairness Act Do…

• What is a remote seller?

• What is a remote sale?

• The aggregate threshold, once reached, requires collection on all remote sales everywhere.

What Would Passage of Marketplace Fairness Act NOT do …

• No requirement of uniform taxability rules

• No requirement of uniform rates

• No alteration to existing nexus rules for businesses who are not obligated by the proposed bill.

Not just for online/internet sales

• MFA applies to anyone who makes remote sales, regardless of how they make remote sales and regardless of whether those sales are taxable

• Think catalog sales, think travelling sales people, phone and fax orders

Remote seller = Any out-of-state business entity that sells into a state in which that seller “… would not legally be required to pay, collect, or remit state or local sales and use taxes

unless provided by this Act.”

Nexus would still exist, but…

• Current Constitutional nexus analysis does not vanish

• Vendors with less than $1,000,000 in remote sales will still work in the nexus universe

• All existing nexus twists and turns carry forward, including click through nexus

Senate MFA Minimum simplifications

State and local sales and use tax simplifications required:• Central administration of tax for remote sellers

• Single audit for all state and local taxing jurisdictions within a state for remote sellers

• Single return for remote sellers

• Limitations on return filing frequency(state/local) for remote sellers

• Uniform state and local tax base

• Uniform sourcing rules for remote sellers

• Certain liability relief for remote sellers and “certified software providers”

Get Ready for the New Fiscal Year:Understanding and Adopting New Tax Regulations

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