Weekly Blog Update for Week of 2/3/2012 – Arizona Hits Amazon.com with Bill; Florida, Tennessee and Vermont Consider New “Amazon” Legislation; Expedia Not Subject to Philadelphia Hotel Tax; Scholastic Subject to Tennessee Sales and use tax; Connecticut and Oklahoma to Issue Refunds as Debit Cards …and more

 by Jennifer Weidler

ARIZONA

Arizona Hits Amazon.com with $53 Million Bill for Allegedly Uncollected Taxes

The Arizona Department of Revenue issued a bill to Amazon.com alleging that it owes $53 million in uncollected taxes in the state.  Amazon.com has announced its belief that the assessment is without merit and its intent to defend against the assessment.

 

ARKANSAS

Arkansas Expands Definition of Developmental Disability

Arkansas has expanded the definition of “developmental disability” for the 2011 Individual Income Tax Forms and Instruction Booklet to include two (2) new disabilities: (1) spina bifida; and (2) Down syndrome.  These two disabilities will now qualify for developmental disability services.  This conforms the forms and booklets to changes made by Act 68, which formally added the two disabilities to those conditions that qualify for developmental disability services.

 

COLORADO

Colorado DOR Issues Publication Explaining Withholding Obligations

The Colorado Department of Revenue has issued a publication, which seeks to explain requirements and procedures for employers required to withhold taxes.  Primarily, if Colorado tax is withheld, taxpayers are required to have a Colorado 1099 or W-2G withholding account.  Taxpayers must then remit the tax.  For further information on Colorado’s withholding requirements, see the publication.

 

CONNECTICUT

Connecticut to Issue Tax Refunds in Form of Debit Cards

Following the lead of states like Oklahoma, Louisiana and South Carolina, the Connecticut Department of Revenue has announced its intention to issue personal income tax refunds in the form of debit cards to taxpayers who do not use direct deposit.  JP Morgan Chase will administer the debit card program and taxpayers will need to call Chase in order to activate their cards.  Taxpayers may use the debit card at ATMs, banks and credit unions displaying the VISA logo, and gas stations and retail locations that accept VISA.  Notably, if the taxpayer does not activate the debit card within 365 days, the debit card account will be closed and the available balance will be returned to the Connecticut Department of Revenue.  Moreover, if the debit card is activated and a balance remains on the card after the twelfth consecutive month of inactivity, Chase will charge an inactivity fee of $1 per month.

 

DISTRICT OF COLUMBIA

The District of Columbia Announces Changes for Tax Filing Season

The District of Columbia has announced changes for this tax filing season.  Among the changes, the estimated tax payment that a businessmust make has changed from 100% to 110% of the prior year’s taxes.  Additionally, the District of Columbia will no longer mail individual income tax packages.  Instead, taxpayers can obtain the forms and instructions online or in paper form at various District agencies or public libraries.

 

FLORIDA

Florida Legislature Considering Revenue-Neutral Legislation Aimed at Amazon.com and Online Retailers

The Florida Senate is currently considering legislation, SB 7206, which would provide for click-through nexus provisions aimed at requiring Amazon.com and like online out-of-state retailers to collect sales taxes.  Pursuant to the legislation, remote sellers would be required to collect state sales taxes if they engage in at least $10,000 in annual sales through in-state affiliates that receive a commission.  As we previously reported, Amazon.com has offered to bring thousands of jobs to the state in exchange for a two (2) year state tax break.

 

NEW YORK

New York Issues Information for Tax Return Preparers

The New York Department of Taxation and Finance issued a publication, which provides important information for tax return preparers for tax year 2011.  The publication addressed numerous issues, such as: electronic filing mandate; return due dates; signature requirements; penalties; and consumer rights regarding tax preparers.

 

OHIO

City of Akron, Ohio Offering Tax Amnesty Program to Businesses

The city of Akron, Ohio has announced that it will offer a tax amnesty program for businesses that have failed to report and pay net profit and wage taxes for tax years through 2010.  The program is slated to run from March 5 through May 4, 2012.

 

OKLAHOMA

Oklahoma to Issue Tax Refunds in Form of Debit Cards

Following the lead of states like Connecticut, Louisiana and South Carolina, the Oklahoma Tax Commission announced its intention to issue personal income tax refunds in the form of debit cards to taxpayers who do not use direct deposit.  The Commission has published a list of frequently asked questions for taxpayers.

 

PENNSYLVANIA

Commonwealth Court Holds Expedia Not Subject to Philadelphia Hotel Tax

The Pennsylvania Commonwealth Court (“Commonwealth Court”) affirmed the decisions of the Philadelphia County Common Pleas Court and the City of Philadelphia Tax Review Board (“TRB”), finding Expedia, Inc. (“Expedia”) was not an operator of a hotel and was not subject to the City of Philadelphia’s (“City”) Hotel Room Rental Tax (“Hotel Tax”).  For more detailed information, see our prior coverage of this case.

 

Pennsylvania Tax Update Reminds Taxpayers Estimated Coupon Packets and Fiduciary Return Booklets Will No Longer Be Mailed

Pennsylvania Tax Update 159 advises taxpayers that the Department of Revenue will no longer mail Estimated Payment Coupon Packets (REV-857-I) or the Pennsylvania Fiduciary Income Tax Return Booklet (PA-41).  Instead, forms and instructions will be available on the Department’s website.  The change is expected to result in a significant cost savings for the Commonwealth.

 

Pennsylvania Extends Nexus Compliance Deadline to September 1, 2012

On January 27, 2012, the Pennsylvania Department of Revenue announced its decision to issue a one-time extension of the nexus compliance deadline.  Remote sellers with a physical presence in the Commonwealth must be licensed and begin collecting sales tax as of September 1, 2012.  The original compliance deadline had been February 1st, but it became apparent that the original date was impractical.  Those businesses that do not register by the new September 1st deadline will face a variety of enforcement strategies, including: audits, assessments, liens, and/or referral to a collection agency or the Office of the Attorney General.

 

Pennsylvania Adds Use Tax Line to State Personal Income Tax Return

In an attempt to encourage compliance with the use tax reporting requirements, the Pennsylvania Department of Revenue added a use tax line (Line 25) to the 2011 PA-40 (Pennsylvania Personal Income Tax Return), thereby simplifying the use tax reporting process.  The Pennsylvania Tax Update explained that when sales tax is not collected by a seller on a taxable item or service, it is the responsibility of the purchaser to report and remit use tax to the state.

 

TENNESSEE

Tennessee Court Holds Naval Captain Responsible for Tennessee Use Tax on Personal Aircraft

A Tennessee trail court held that a naval captain, who purchased an airplane in Texas during 2007, was required to pay Tennessee use tax on the aircraft when he was reassigned to a naval base in the state. (See, McIntyre v. Farr, Dkt. No. 09-2145-III).  Tennessee laws provide no exemption from use tax for military personnel who, on military orders, are relocated to the state.

 

Governor Urges Tennessee Legislature to Adopt “Amazon” Law, Exempting the Online Retailor from Sales Tax Collection

During his State of the State address, the Tennessee Governor urged lawmakers to approve legislation under HB 2370 that would exempt Amazon.com from collecting state sales taxes.  In exchange for the exemption, Amazon.com would agree to set up two (2) distribution centers in the state.  Pursuant to the legislation, the online retailor would be exempt from collecting Tennessee state taxes until January 1, 2014.

 

Tennessee Court of Appeals Holds Out-of-State Book Distributor Subject to Sales and Use Taxes Because of Substantial Nexus Through Local Schools and Teachers

The Tennessee Court of Appeals held that an out-of-state book distributor, Scholastic Book Clubs, Inc., was subject to Tennessee sales and use taxes because the distributor had substantial nexus with the state.  The court found the substantial nexus to be present through the local schools and teachers who participated in Scholastic’s program, holding that those teachers acted as agents for the company.  It found that Scholastic’s utilized teachers to effectuate its sales, creating a de factor marketing and distribution mechanism, and therefore Scholastic had nexus with the state. For more detailed information, see our prior coverage of this case.

 

VERMONT

Vermont Bill Would Create August Sales Tax Holiday

Vermont is considering a Bill, S250, which would create a sales tax holiday.  The proposal is an attempt to help the state recover from the devastation caused by last year’s Tropical Storm Irene.  Among other things, the tax holiday would waive the state’s 6% sales and use tax for general purchases of up to $2,000 apiece.  The tax holiday would take place on August 28, 2012, the one-year anniversary of Irene.

 

Vermont Introduces New “Amazon” Law

On January 31,Bill H.639, a replica of the California-style “Amazon” law, was introduced to the legislature.  The Bill would require remote sellers, such as Amazon.com, to collect and remit state sales tax on Vermont purchases.  Currently, Vermont maintains an “Amazon” law similar to New York, but with a twist.  The current Vermont “Amazon” law requires out-of-state sellers with in-state affiliates to collect sales taxes from Vermont purchasers only after fifteen (15) or more states have adopted requirements that are the same or substantially similar to its own “Amazon” law.  The new Bill seeks to repeal the current “Amazon” law’s language relating to the 15-state requirement and instead implement language similar to California’s AB 155.  However, pursuant to the Bill, if Federal sales tax streamlining legislation requiring tax collection on remote sales is not implemented before July 31, 2012, Vermont would require collection of the state sales tax from remote sellers beginning September 1, 2013.

 

WASHINGTON

Washington Releases 2012 Tax Exemption Study

The Washington Department of revenue has issued its2012 Tax Exemption Study, presenting a detailed list of tax exemptions for state and local taxes, including exemptions relating to: property tax; excise tax; business and occupation tax; public utility tax; and sales and use tax.

 

WISCONSIN

Wisconsin Warns Taxpayers about Tax Services Providing “Quick Money” and “Instant Tax Refunds”

The Wisconsin Department of Revenue has issued a warning to taxpayers thinking of availing themselves of tax services that advertise “instant tax refunds” or “quick money.”  The Department has urged taxpayers to reconsider doing so, since these quick refunds are essentially just loans that will ultimately cost the taxpayer in fees and interest.

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