Big Changes with Texas Certificates

Are You A Rancher/Farmer in Texas or Do You Have A Rancher/Farmer Customer?  If so, the Texas Sales Tax Law Has Changed for You.

Do you sell to farmers or ranchers in Texas? Then a new law in Texas applies to you. Starting in January, 2012, you’ll have to collect a new certificate from them with their new Comptroller-issued exemption number.

The Comptroller is currently working on the application for a registration number. A farmer/rancher in Texas enjoys a very broad-ranging exemption and until now, there was no need to register. You just buy an exempt item at Home Depot or Lowes or Tractor Supply and sign a statement that you're a rancher and no tax is charged. Now, any store who sells to a rancher will need to collect and manage a new certificate.

Certificate Management Just Got Harder

Many of our clients are experiencing increased sales tax audit liabilities because of missing resale and other exemption certificates. This is an area that states are targeting with laser-like focus. Exemption certificates have always been a problem in most sales tax audits, but as long as you had something on file that you “accepted in good faith”, or if you came up with the missing certificate, the auditors would usually give you a pass. If the item was clearly exempt, they were pretty lenient about the certificates. But states are getting very aggressive; focusing on the technicalities to the extreme. The item may clearly be for resale or exempt like these agricultural items, but it you don’t have the right form completely filled out and signed with a valid id number and the right date, they will tax you all day long til the cows come home. It’s easy, low-hanging fruit.
Read more »

Is an iTune Taxable in California?

How About in Other States?

Back in 2008, we wrote that the CA legislature was contemplating a change to its sales tax statutes to tax downloaded software. As it turned out, they didn’t change the law after all and electronically downloaded music and other digital goods in CA remained exempt from sales/use taxation. Meanwhile, a song purchased on a CD has always been taxable in CA. That may seem a bit unfair. If you buy a song on iTunes and download it to your iPod, you owe no tax in CA, but that same song on a CD is taxable in CA.

This may seem arbitrary and capricious, but there is a reasonable explanation for the different tax treatment.

Read more »

OH SALT Update

Commercial Activities Tax (CAT), Sales & Use Tax, VDAs & Amnesty

By Michael J. Fleming

The State of Ohio and its state and local tax (SALT) policies are currently generating a variety of questions from our clients as well as with others we are speaking with. Since OH is generating so much attention we thought it might be beneficial to share with our readers the subjects that are most frequently arising and provide you with some information as well as our thoughts.

These subjects include OH’s requirement that companies register, file and remit use tax, and the State’s push to go after the 380,000 business who don’t have use tax accounts. We will also take a look at the OH sales tax amnesty that forgives not only all principle and interest but all back sales taxes as well. Finally, we will take a look at the CAT and how you can have nexus without a physical presence.
Read more »