WHO TO CONTACT DURING THE LIVE EVENT For Additional Registrations: -Call Strafford Customer Service 1-800-926-7926 x1 (or 404-881-1141 x1) For Assistance During the Live Program: -On the web, use the chat box at the bottom left of the screen If you get disconnected during the program, you can simply log in using your original instructions and PIN. IMPORTANT INFORMATION FOR THE LIVE PROGRAM This program is approved for 2 CPE credit hours. To earn credit you must: • Participate in the program on your own computer connection (no sharing) – if you need to register additional people, please call customer service at 1-800-926-7926 ext.1 (or 404-881-1141 ext. 1). Strafford accepts American Express, Visa, MasterCard, Discover. • Listen on-line via your computer speakers. • Respond to five prompts during the program plus a single verification code. • To earn full credit, you must remain connected for the entire program. Sales and Use Tax Fundamentals: Mastering Tax Base, Compliance, Nexus, and Other Essential Multistate Concepts TUESDAY, JANUARY 29, 2019, 1:00-2:50 pm Eastern FOR LIVE PROGRAM ONLY
Transcript
WHO TO CONTACT DURING THE LIVE EVENT
For Additional Registrations:
-Call Strafford Customer Service 1-800-926-7926 x1 (or 404-881-1141 x1)
For Assistance During the Live Program:
-On the web, use the chat box at the bottom left of the screen
If you get disconnected during the program, you can simply log in using your original instructions and PIN.
IMPORTANT INFORMATION FOR THE LIVE PROGRAM
This program is approved for 2 CPE credit hours. To earn credit you must:
• Participate in the program on your own computer connection (no sharing) – if you need to register
additional people, please call customer service at 1-800-926-7926 ext.1 (or 404-881-1141 ext. 1).
Strafford accepts American Express, Visa, MasterCard, Discover.
• Listen on-line via your computer speakers.
• Respond to five prompts during the program plus a single verification code.
• To earn full credit, you must remain connected for the entire program.
Sales and Use Tax Fundamentals: Mastering Tax Base,
Compliance, Nexus, and Other Essential Multistate Concepts
TUESDAY, JANUARY 29, 2019, 1:00-2:50 pm Eastern
FOR LIVE PROGRAM ONLY
Tips for Optimal Quality
Sound Quality
When listening via your computer speakers, please note that the quality
of your sound will vary depending on the speed and quality of your internet
connection.
If the sound quality is not satisfactory, please e-mail [email protected]
Professional Affiliations: AICPA, Texas Society of CPAs, CalCPA NAWBO - Silicon Valley, AFWA (Past National President)
Honored To Be Recognized As:
• “25 Most Powerful Women in Accounting” by CPA Practice Advisor
(2012, 2013, 2014 and 2015)
• “Women of Influence” by San Jose Silicon Valley Business Journal
(2014)
• Woman of Influence – AFWA National 2016
Tax Types
Tax Type: Sales Tax
Sales Tax – General Definition?
• Sales tax applies when seller has nexus and is subject to the state taxing authority
• A tax on the sale of tangible personal property or service
• Seller may pass tax on to the consumer; must be separately stated on the invoice
• Applies only to intrastate transactions
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Tax Type: Sales Tax
Five states without a sales tax:
• NOMAD States:
• New Hampshire
• Oregon
• Montana
• Alaska (local jurisdictions may impose a tax)
• Delaware
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Tax Type: Privilege Tax
Privilege tax – General Definition?
• Imposed on seller’s gross receipts for privilege of doing business in state
• Seller is liable for tax, but can pass tax on to the purchaser
• Can be included in the sales price or, separately stated on the invoice
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Tax Type: Transaction Tax
Transaction tax – General Definition?
• Tax imposed on the sale of tangible personal property or services
• The purchaser is liable to the seller for the tax due
• The tax must be separately stated on the invoice
• If the seller is not registered in the state where goods are received, the purchaser is liable under audit for tax due on their purchases
• Examples: Colorado, Florida, Texas, and Virginia
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Tax Type: Gross Receipts
Gross Receipts – General Definition?
• Similar to transaction tax, but with fewer exemptions or exclusions to the taxable base
• Hawaii - if the tax is passed on to the purchaser, the tax becomes part of the gross receipts for tax calculation
• The tax must be separately stated on the invoice
• In some states it is like the income tax and cannot be passed on (Washington B&O, Ohio CAT, Texas Margins)
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Tax Type: Consumer Levy
Consumer Levy – General Definition?
• Imposed on the buyer with responsibility for collection by the seller
• Seller is still required to remit the tax even if it is not collected from the buyer, but it is usually easier to recover the tax from the buyer
• Generally imposed on the privilege of using or consuming the products or services purchased
• Under audit, the state can collect the tax from either the seller or the purchaser
• Most of the states are considered Consumer Levy states
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Definition: Use Tax
Use Tax – General Definition?
• Imposed on the storage, use, or consumption of a taxable item or service on which no sales tax has been included on the invoice
• Complementary to sales tax
• Purchases made outside the taxing jurisdiction but used in the taxing jurisdiction
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Tax Type: Use Tax
Types of Use Tax
• Seller’s use – tax collected by registered vendor on interstate sales
• Consumer’s use – tax owed by the purchaser when the vendor does not include tax on the invoice
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Illustration: Intrastate Sales Tax vs Interstate Seller’s Use• Sales tax applies to supplies of taxable goods and
services when the transaction occurs within a state.
• Vendor has a physical location in the state of the buyer – warehouse, branch location, corporate office
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Illustration: Intrastate Sales Tax vs Interstate Seller’s Use • Seller’s use tax applies to supplies of taxable goods and
services when transaction occurs between two states
• Vendor shipping product out of state
• Vendor approving order out of state
• Customer receipt of goods or service from out of state vendor
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Intrastate Sales Tax vs. Interstate Seller’s Use Tax
• Some locals within a state impose sales tax, but not seller’s use tax
• Examples include:• Alaska: no state sales tax, but local sales tax rates
• Arizona: many cities impose a sales tax, but not seller’s use tax
• Colorado: many home rule cities impose a seller’s use tax (intrastate transactions) while state administered cities do not
• Illinois: Chicago imposes a sales and consumer’s use tax, but not seller’s use tax
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Intrastate Sales Tax vs. Interstate Seller’s Use Tax
• Some locals within a state impose sales tax, but not seller’s use tax.
• Examples in Pennsylvania:• Allegheny County is the only county in the state that
imposes tax at the county level. Allegheny county imposes sales and consumer’s use tax, but not seller’s use tax.
• Philadelphia City is the only city in the state that imposes tax at the city level. Philadelphia imposes sales and consumer’s use tax, but does not impose seller’s use tax.
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Tax Type: Summary
• Intrastate Transactions - What tax type applies?• Sales tax
• Interstate Transactions – What tax type applies?• Seller’s use
• Purchase Transactions – What tax type applies?• Consumer’s use
• Intrastate Transactions- Situs determination depends on state
• Destination states
• Origin states
• Modified origin states
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• Situs Rule on Services• Situs is determined by:
• Where received
• Where performed
• Where enjoyed
Situs on Interstate Transactions
• Goods shipped from one state and delivered across state lines to another state
• Taxing situs is where the goods are consumed
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List of Origin and Modified Origin States
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Situs: Intrastate Transaction on Sale of Goods in Origin State
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• Ship-to is Erie, PA and physical origin is Philadelphia, PA
• Pennsylvania is an origin state
• Taxing Situs is?
• Origin: Philadelphia, PA
• Tax type is?
• Sales Tax
Situs – Some Things to Keep in Mind
Once you registered with a state:
• Review whether or not the state is an origin or
destination state (for local tax application)
• Review whether or not you have any physical presence
in the state
• Determine software requirements for correct situs
determination outcomes
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State and Local Tax Jurisdictions
Transaction tax at state and local tax jurisdictions can be
taxed differently:
• Local taxes are authorized by state statute
• Some items have reduced rate at state and exempt at local
• Home rule jurisdictions administer tax separately from states
• Some state have locals that override the other local rates
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Situs Determination for Intrastate Transactions in Colorado
Colorado wants to know the vendor’s relationship with the buyer
• Does the vendor have a physical location in the same county as the buyer?
• Does the vendor have a physical location in the same city as the buyer?
• If yes, collect sales tax in destination
• If no, collect seller’s use tax in destination
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Revenue Agency Administration of Sales Tax
Filing Frequency
• State and local filing frequencies• Monthly, quarterly, semi-annually or annually
• Each jurisdiction has its own guidelines – frequency can change
• Thresholds• Dollar amounts
• Time period
• Registrations• Initial frequency
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E- Electronic Filing (E-Filing)
• State and local jurisdictions may require e-filing of returns
• Automated solutions – save time and money
• Manual filing – takes more time and increase risk of error
• Third-party providers• Reduce compliance burden
• Simplify filing process
• Provide reconciliations
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Electronic Filing (E-Filing)
• May be required if taxpayer is required to make E-Payments
• May be required based on the combined tax liability of a taxpayer
• All types of returns cannot be filed electronically (e.g., consumer tax returns in KY)
• Amended returns
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E- Payment
• State and local jurisdictions may require E-Payments
• Dollar amount thresholds
• May be required based on the combined tax liability of a taxpayer
• Automated solutions – save time and money
• Manual filing – takes more time and increase risk of error
• Third-party providers
• Reduce compliance burden
• Simplify payment process
• Provide reconciliations
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V Vendor Compensation
• Some states offer vendor compensation or a “discount” to taxpayers
• Timely filing (due date in most states is the 20th of the month following reporting period)
• Compensation is calculated on the amount of tax the vendor has collected
• Compensation/Discount may be limited by dollar amount per return or period (See Federation of Tax Administrators – State Sales Tax rates and Vendor Discounts List - January 2019)
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States with Sales Discounts
• The following states have sales tax discounts:
• AL, AZ, AR, FL, GA, IL, IN, KY, LA, MD, MI, MS, MO, NE, NV, NY, ND, OH, PA, SC, TN, TX, UT, VA, WI, WY
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Vendor Compensation Example
• Calculate the amount of tax the vendor has collected for the state of Georgia.
• Multiply the total tax collected by 3 percent, or ".03."
• Subtract $90 from the total, and multiply the remaining total by .167. The vendor compensation in Georgia only applies to 3 percent of the total tax collected up to $90, which is based on collecting the first $3,000. Anything collected above $3,000 is based on 1/2 of 1 percent, or .005, of the tax collected. This compensation is accrued on a monthly basis.
