Sales Tax Jumpstart. September 27, CPE Credits

Transcription

1 Sales Tax Jumpstart September 27, CPE Credits Presented by the Sales Tax Institute Speaker: Diane L. Yetter, Sales Tax Institute

2 Sales Tax Jumpstart September 13 to November 8, 2018 Before the Class: Please join the webinar 7 minutes before the scheduled time of the call for a prompt start. If you have never used Go To Webinar before please take time today to test your connection before your session here: If you have trouble logging on to GoToWebinar, please view the System Requirements: We are aware that some past users have had issues logging in using Internet Explorer or if they have an older version of Go To Webinar installed on their machine. If this is the case you can try uninstalling GoToWebinar and reinstalling or you might want to try an alternative browser. If you continue to have trouble logging on, please call in on the phone using the number and passcode provide in your log-in from GoToWebinar. You can follow the PDF materials which can be accessed at Day of Class: You will have received a personalized link for each class session to use to log into the webinar. Use this link and do not share the link with anyone else. It helps us monitor attendance and gives us the ability to assist you if there are technical issues. You will be able to listen to the webinar either through your computer or via a telephone connection. This information will also be in your personalized . If you have not received the dial in information, please contact us immediately at info@salestaxinstitute.com for assistance. If you have technical difficulties during the webinar, you will be able to chat online with our technical support through the Go to Webinar application. If you cannot log into Go To Webinar, please call our office at x3 for immediate assistance or info@salestaxinstitute.com. Please be aware that it is a violation of our copyright to record the class sessions. CPE Information: Webinar attendees can earn 2.4 hours of CPE credit in the Taxes field of study for today s session. During the webinar, we will use polling questions throughout the scheduled presentation time. In order to receive CPE credit, you will need to participate in the polling questions. After the webinar, you will receive an from newsletter@salestaxinstitute.com containing a link to complete a webinar evaluation form. To receive CPE credit, you will need to complete the evaluation form online and have participated in the polling questions.

3 The Sales Tax Institute is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: Other Sales Tax Institute Courses and Webinars Please visit for more information on the Sales Tax Institute s live and online course offerings and webinars. The following webinars and live courses are currently scheduled. Visit for additional details and registration and additional offerings. Live Webinars: October 22, 2018 Sales Tax Issues for Retailers After Wayfair November 28, 2018 Manufacturing Sales Tax Exemptions That'll Save December 20, Construction & Real Property Sales Tax Deep-Dive Webinars On-Demand - available anytime: Sales Tax 101 Basic Concepts of Drop Shipments Sales Tax for E-Commerce Effective Audit Defense Techniques Sales Tax Challenges with Services Save Time & Eliminate Guesswork with Effective Tax Research

4 Diane L. Yetter, CPA, MST Diane L. Yetter is a strategist, advisor, speaker and author in the field of sales and use tax. She is president and founder of YETTER TAX, a sales tax consulting and tax technology firm in business since She is also the founder of The Sales Tax Institute, a premier think tank that offers live and online courses to educate business professionals about sales and use tax. Diane works with an extensive network of capable partners to deliver a variety of sales tax services ranging from tax technology to tax policy and planning and training. She works with clients of all sizes from Fortune 10 to small, family-owned companies in a variety of industries. She is a Certified Implementation Partner and Trainer with Thomson Reuters ONESOURCE Indirect Tax, a Certified Training and TDM Specialist for Vertex, Inc. and a Business Partner of Avalara and VertexCloud. As a speaker, Diane is frequently asked to present to industry groups concerning sales and use tax issues including the Council on State Taxation (COST), Chicago Tax Club, Diversified Communications (IOFM and Accountex), the Institute of Professionals in Taxation (IPT), National Association of Credit Managers (NACM), National Association for Retail Marketing Services (NARMS), Vertex User Conference, Thomson Reuters User Conference, and Avalara. As an author, Diane has written articles concerning sales and use tax issues; was editor for the edition of the Information Technology Association of America Software & Services State Tax Report and authored Drop Shipments: Taxation, Compliance and Planning and Multistate Guide to Sales and Use Tax: Manufacturing, both published by CCH. She also is the author of the US Sales Tax Chapter for the IBFD VAT Worldwide Research Database. Diane provides answers to sales tax questions on the website She has also appeared as an expert witness. Diane is a member of the AICPA, Illinois CPA Society, Chicago Tax Club, Chicagoland Chamber of Commerce Taxation Committee, Taxpayers Federation of Illinois and the Institute of Professionals in Taxation. She is a member of the Practitioner Connection with the Council on State Taxation, and represents client concerns on a number of task forces. Diane was named in Accounting Today s 100 Most Influential People in Accounting for 2011, 2012, 2017 and Diane serves on the KU Endowment Association s Board of Trustees and is a Past Chair of the Dean s Board of Advisors, University of Kansas School of Business where she is also an adjunct professor, teaching topics on state and local taxation and entrepreneurship. Diane earned a BS in accounting and business administration from the University of Kansas in 1985 and an MS in taxation from DePaul University in Prior to founding the company, Diane was a state and local tax manager in the Chicago office of Arthur Andersen LLP, the sales and use tax director for the Quaker Oats Company, and a sales and use tax auditor for the Kansas Department of Revenue.

5 Optimizing Administration September 27, 2018 Copyright Sales Tax Institute 2018 Announcements 2 Copyright Sales Tax Institute

6 Announcements Safe Sender for our s: Evaluation Forms and CPE Tim Morrison Introduction 3 Nexus Homework Debrief 4 Copyright Sales Tax Institute

7 Nexus Thresholds Threshold Tests Most states use Prior Year as the 1 st test if you exceed in prior year then need to collect on the effective date If didn t exceed in prior year, then look at current year to date if exceed by effective date, then collect on effective date If don t exceed by effective date then monitor to see if exceed and then collect when exceed but no liability for prior sales until reach 5 Nexus Thresholds Passing Threshold Most states say need to start collecting on next transaction Exceptions examples owa 1 st of month following 30 days after passing threshold oil The retailer must determine on a quarterly basis, ending on the last day of March, June, September, and December, whether he or she meets the criteria for the preceding 12 month period. 6 Copyright Sales Tax Institute

8 Nexus Evaluation of Questionnaire Any physical presence Is it permanent or temporary? If temporary what is the nature of visit, duration & frequency? How long have you had physical presence? No physical presence, then look at economic Exceed sales $ thresholds If not then look at transaction count threshold What is the nature of the sales taxable or exempt If exempt, do you need certificates and do you have them? 7 Nexus Evaluation of Questionnaire Actions to Take Look back liability exists oconsider Voluntary Disclosure Agreements (VDA) or Amnesty tax amnesty AL, CT, IN current amnesty programs IL online seller with inventory program NJ amnesty passed awaiting dates oif smaller or short lookback, consider registering with true date and expect back returns to be requested 8 Copyright Sales Tax Institute

9 Nexus Evaluation of Questionnaire Actions to Take No Lookback liability o Register with the current or economic effective date No nexus/registration required o Evaluate if notice and reporting required Decisions Standard registration or SST Tax Type depending on the physical or economic presence activities Tax calculation solutions Tax compliance process Exemption certificate process 9 Nexus Homework Debrief What Challenges did you have? What did you learn? What questions do you have about your results? 10 Copyright Sales Tax Institute

10 Registration 11 Registration After a nexus study has been conducted to determine where a taxpayer has a presence, registration must occur. The taxpayer needs to determine which taxes it will be required to collect or pay. Sales tax vs. Seller s use tax vs. Consumer s use tax How the taxpayer registers can impact the return they are required to file and the rate they are required to collect. 12 Copyright Sales Tax Institute

11 Registration Many application forms request an average annual liability. Used to determine filing frequency Read forms carefully when answering the average annual questions. Tax liability vs. sales If the form asks for sales, you need to determine whether it is asking for taxable sales or gross sales and whether it is asking for in state sales only. 13 Registration Most applications also request the date that business began in the jurisdiction. Used to determine if returns are due for prior periods If a prior period is listed, expect to receive these returns with interest and penalty notices. Nexus date If registration form is being filed for a business that has had nexus for some period of time, careful attention must be given to answering the date question. 14 Most forms are signed under penalty of perjury. Copyright Sales Tax Institute

12 Registration Registration application forms can be obtained from the Department of Revenue of the jurisdiction. State registration application forms Tool: course 18materials 15 SSTP 16 Copyright Sales Tax Institute

13 Streamlined Sales and Use Tax Project Background Formed in 2000 to develop system that eases burden of tax collection Admin procedures, uniform definitions, and tech systems Governing Board formed Oct. 1, 2005 Prior SSTP committee converted to State and Local Advisory Council ( SLAC ) Business Advisory Council ( BAC ) formed to advise Board and SLAC 17 Streamlined Sales and Use Tax Project (cont.) Background Goal is to obtain reduced nexus threshold at federal level so states can require remote sellers to collect tax on all transactions in state Wayfair was in essence Success for the project Impacts all companies doing business in SSTP state not just those that register through the system Benefits for taxpayers who voluntarily register osimplified reporting osimplified registration process 18 Copyright Sales Tax Institute

14 State Involvement in the Project Exists at varied levels Full Member states Highest level of involvement Petition for membership & certificate of compliance Associate/Contingent Membership A state qualifies if it is found to be in full compliance with the Agreement except that its conformity provisions are not yet in effect, but will be within twelve months of the state s admission as a contingent member. State has full voting rights and will become a full member once its 19 laws come into effect State Involvement in the Project (cont.) Advisory States States gain advisory status through enabling legislation or regulations by their state. Advisory states have full rights in the project, participate in work groups, and have voting status on the proposals considered by the SLAC. They serve in an ex officio capacity on the Governing Board, but do not have a vote on the Governing Board. 20 Copyright Sales Tax Institute

15 21 Products of The Project The Streamlined Sales and Use Tax Agreement: Simplify and modernize sales and use tax administration in adopting states Requires modifications to state sales and use tax law Changes to law will differ from state to state Compliance checklist Public notice and comment Current Agreement 22 Copyright Sales Tax Institute

16 Products of The Project (cont.) Tax Collection and Remittance Technology Simplification is combined with sales tax collection technology Three technology models for sellers ocertified Service Provider (CSP) ocertified Automated System (CAS) oa seller created system certified by the states collectively CSP is really only model in use Use of a CSP or CAS will reduce audit liability and scope States pay CSP s for voluntary sellers 23 Products of The Project (cont.) Volunteer Seller Definition Volunteer Seller in a Streamlined State means a Seller that has registered pursuant to Article IV of SSUTA through the Central Registration System and: For Sellers who registered with the Streamlined State on or before November 12, 2002, that did not have a legal requirement to register and in fact did not have a requirement to register in the Streamlined State at the time of registration, regardless of any previous registration the Seller may have made in the Streamlined State; or 24 Copyright Sales Tax Institute

17 Products of The Project (cont.) Volunteer Seller Definition The Seller meets all of the following criteria during the twelve (12) month period immediately preceding the date of registration with the Streamlined State: o no fixed place of business for more than thirty (30) days in the Streamlined State; o less than $50,000 of Property, as defined below, in the Streamlined State; o less than $50,000 of Payroll, as defined below, in the Streamlined State; o less than twenty five percent (25%) of its total Property or total Payroll, as defined below, in the Streamlined State; o was not collecting sales or use tax in the Streamlined State as a condition for the seller or an affiliate of the seller to qualify as a supplier of goods or services to the Streamlined State; and o was not required to register and collect sales or use tax in the Streamlined State as a statutory requirement for the seller or an affiliate of the seller to be able to sell, ship or deliver a particular type of product into the Streamlined State. 25 Products of The Project (cont.) Volunteer Seller Definition Notwithstanding subsection D.2.(b)(2) above, any Seller that registered in a Streamlined State in the three years prior to the effective date of such State s membership, is not considered a Volunteer Seller for that Streamlined State, if the Seller had a legal requirement to register as a result of an administrative or judicial action in the state occurring prior to the date of the Seller s registration that was specific to that Seller. A Streamlined State that questions whether or not a seller is a volunteer shall provide written notice of such question to the Contractor. The Contractor shall have thirty (30) days after receiving such notice to respond in writing to the State. If the State and Contractor do not agree whether the seller is a volunteer within sixty (60) days of the State s notice either the State or the Contractor may submit a written request for a determination by the Executive Committee to the Executive Director. The Executive Committee s determination is final and binding upon the State and Contractor; or 26 Copyright Sales Tax Institute

18 Products of The Project (cont.) Volunteer Seller Definition Any seller who meets the criteria of subsection D.2(b)(2) and who becomes legally obligated to register in a Streamlined State solely because of the enactment of (a) federal legislation, (b) state legislation or administrative action, or (c) a final federal court decision. 27 Products of The Project (cont.) CSP Services provided at no charge to volunteer sellers Set up and integrate the Contractor s certified automated system (CAS) with the seller s system, including a product mapping process Calculate the amount of tax due on a transaction at the time of the sale Generate and file the required sales and use tax returns Respond to notices Protect the privacy of tax information Maintain compliance with the provisions of the Minimum Standards for Certification contained in the SSTGB Rules and Procedures 28 Copyright Sales Tax Institute

19 Products of The Project (cont.) Tax Collection and Remittance Technology CSP Providers oavalara osovos oaccurate Tax oexactor otaxcloud otaxometry otaxify by Sovos 29 Products of The Project (cont.) Streamlined Sales Tax Registration System (SSTR) Web based system designed to enable voluntary registration Benefits to sellers that register ounique ID number oability to update registration data in all member states oconsistent formatting of the ID number Registration system exists to enable sellers to collect tax and receive an amnesty for uncollected taxes osellers must register at 30 Copyright Sales Tax Institute

20 Key Features of the Agreement Rate Simplification One state rate allowed, plus one for limited circumstances (ex. food, drugs) Each local jurisdiction will be allowed one local rate. State and local governments responsible for notice of changes at restricted intervals Member states required to develop rate and boundary databases 31 Key Features of the Agreement (cont.) Uniform rounding rules Tax to third decimal place <.5 cent is disregarded, >.5 cent is rounded up as 1 cent Taxed by item or invoice basis at seller s election No bracket systems Applicable to aggregated state and local taxes 32 Copyright Sales Tax Institute

21 Key Features of the Agreement (cont.) Exemption Certification Requires acceptance of uniform certificate and completion of taxability matrix Revised certificate approved May 2017 for use Jan 2018 o Member states still allowed to accept their current certificates as well o Some contingent member states will accept certificate as well Sellers not held liable for tax unless: o Exemption does not exist in the state o Seller fraudulently fails to collect tax Sellers are relieved of good faith requirements SST Exemption Certificate and Instructions: exemptioncertificate 33 Key Features of the Agreement (cont.) Taxability Matrix Required by the Agreement Provides tax treatment on uniform defined items Indicates tax treatment of items in each member state Relieves sellers and CSP of liability if collecting incorrect amount of tax 34 Copyright Sales Tax Institute

22 Key Features of the Agreement (cont.) Amnesty Provisions Provided to each voluntary seller for one year commencing on date state becomes full member. Sourcing rules Amendment to allow origin sourcing among states Special rules for direct mail Sales tax returns Simplified electronic return in member states for all sellers 35 Should I Register through SST? Pros: If you are a voluntary seller, the state pays for your fees if you use a CSP Simplified registration and account maintenance Cons: You need to register in all full member states Most benefits if use a CSP 36 Copyright Sales Tax Institute

23 Examining Registration Forms 37 Examining Registration Forms What tax are you registering for? What is the start date? Prior ownership Secretary of State registration Is it required? Registered agent 38 Copyright Sales Tax Institute

24 California Secretary of State Registration Rules Without excluding other activities that may not constitute transacting intrastate business, a foreign corporation shall not be considered to be transacting intrastate business within the meaning of subdivision (a) solely by reason of carrying on in this state any one or more of the following activities: Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement thereof or the settlement of claims or disputes. Holding meetings of its board or shareholders or carrying on other activities concerning its internal affairs. Maintaining bank accounts. Maintaining offices or agencies for the transfer, exchange, and registration of its securities or depositaries with relation to its securities. Effecting sales through independent contractors. Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where those orders require acceptance outside this state before becoming binding contracts. Creating evidences of debt or mortgages, liens or security interests on real or personal property. Conducting an isolated transaction completed within a period of 180 days and not in the course of a number of repeated transactions of like nature. 39 New Jersey Secretary of State Registration Rules In general, corporations required to file include: Every corporation existing under the laws of the State of New Jersey; and Every foreign corporation which either: o holds a general Certificate of Authority to do business in New Jersey issued by the New Jersey Division of Revenue; o holds a certificate, license or other authorization issued by any other New Jersey department or agency authorizing the corporation to engage in activity in New Jersey; o does business in New Jersey; o employs or owns capital in New Jersey; o employs or owns property in New Jersey; or o maintains an office in New Jersey. 40 Copyright Sales Tax Institute

25 Examining Registration Forms Officers SSN or Driver s License Officer Home Address Average amount of liability vs. sales Different forms for different taxes Signature who needs to sign? 41 Example Registration Forms 42 Copyright Sales Tax Institute

26 Illinois Business Registration Application Illinois Secretary of State ID number Schedule REG UI 1 Sales: Retail vs. wholesale Sales to IL customers from out of state oeconomic nexus thresholds Date that activity began 43 Kentucky Tax Registration Application Effective date FEIN Secretary of State information (if applicable) Owner information Questions to determine need for the following accounts: Sales and use tax Consumer s use tax Corporate Income Tax and/or Limited Liability Entity Tax Nonresident Income Tax Withholding on Distributive Share Income Tax Date sales began Gross monthly sales Additional locations in Kentucky 44 Copyright Sales Tax Institute

27 New Jersey Business Registration Application Beginning date for business NJ Business/Corp. # Acquisition of items from previous employing units Date of first sale Retailer of litter generating products? Contractor/subcontractor to state, local govt., etc.? Sell or lease motor vehicles? Signature of owner, partner or officer 45 North Carolina Online Registration Form North Carolina Secretary of State ID number Date of first sale or purchase of items subject to NC tax Sales retail, wholesale or both Amount of sales tax expected to owe each month 46 Copyright Sales Tax Institute

28 Questions? 47 Homework & Next Week 48 Copyright Sales Tax Institute

29 Homework Registration Questionnaire Prepare the questionnaire so you are ready to do your registrations Populate the states to register tab with the states you will need to register and the effective dates with the tax types Link to homework: course 18materials 49 Next Week Office Hours Tues Oct 2 11:30 12:30 EDT Open session to address any questions from first 3 weeks of class Focus will be on processes and understanding of concepts that need clarification Submit questions in advance to jumpstart@salestaxinstitute.com or will be able to ask questions during session. Recommend all attend so you can hear what questions people are asking Class Thurs Oct 4 11:30 1:30 EDT Review Registration Homework Exemptions & Dropshipments 50 Copyright Sales Tax Institute

30 Thanks to our Sponsors! 51 Get Social with Sales Tax /company/sales taxinstitute /salestaxinstitute Sales Tax Institute 910 W. Van Buren, Suite 321 Chicago, IL (312) /user/salestaxinstitute 52 Copyright Sales Tax Institute 2018 Copyright Sales Tax Institute