The Great Pumpkin Tax -- UPDATE -- Refund Opportunity!!

In an earlier post we mused about what the IA DOR must have been thinking when it decided to impose the Pumpkin Tax. Well, the pen is mightier than the sword I guess. The Governor must have read our blog and decided to intervene.

Amazon.com May Incur the Wrath of the Media

Misunderstanding the tax law and how it works, does not mean a newspaper editor will refrain from bashing a company. Dean Baker wrote an editorial for the Chicago Sun Times on November 4, 2007, entitled "How Amazon got rich on our tax dollars". The title presages the content. Here's a few of the blistering quotes:

Do You Have Nexus in IL?

Illinois issued a recent letter ruling with some specific examples of activities that create sales tax nexus in their state. And I quote:

Officer Liable for Unpaid Tax Even Though Company Run by Independent Contractor

In a recent administrative hearing in Illinois, an owner of a car dealership who did not actually run the day-to-day operations of the dealership was held liable for taxes not remitted.

Media Thinks Manufacturing Gets A "Whopping" Tax Break

An article in the Atlanta Journal and Constitution caught my eye because it was all about how the medical industry is a big "winner" because it will retain some sales tax exemptions. According to the AP writer Shannon McCaffrey, the industries that contributed the PAC got the best deductions. Then there was this throw away line that reveals some bias, maybe, and lack of understanding of double taxation certainly:

"The biggest single exemption in Richardson's plan is on the sale of raw materials to manufacturers worth a whopping $3.2 billion."

Always interesting how things are viewed by the opinion shapers.

What's Going on in Michigan?

On October 2, 2007, the Governor signed a bill imposing a sales tax on 23 new services to be effective December 1, 2007. These services are:

-- business service center services;
-- consulting services;
-- investment advice services;
-- janitorial and landscaping services;
-- warehousing and storage services;
-- packaging and labeling services;
-- document preparation services; and
-- many personal services, such as concierge and psychic services.

Now they're getting cold feet. That's good.

Handing Out Coupons in CA Gives You Nexus There?

You know Barnes & Noble, the big box bookstore operating all across the US. They just won a nice victory against the CA SBE in the CA Superior Court (Barnesandnoble.com LLC v. State Board of Equalization, California Superior Court, San Francisco County, Case No. CGC-06-456465, October 11, 2007). They are not a client of ours, but according to the published court case, here are some relevant facts regarding the corporate structure, during the applicable tax period.

What's the Rush to Tax? Maryland Trying to Solve Deficit

So Maryland has a projected $1.5B deficit they're trying to deal with. What creative approach do they conceive? Increase taxes. The Governor wants to raise the tax rate to 6% from 5% and tax a raft of new types of businesses. But these things have to be done with input from the taxed businesses. But in politics, you have to strike while the iron is hot. Some legislators, don't like it though.

Manufacturers in Missouri Take Note

New Sales Tax Exemption for Manufacturers

Governor Matt Blunt signed the bill June 13, 2007, saying, “Manufacturing is a vital part of our diverse economy, and this will help level the playing field for Missouri manufacturers.” Effective August 28, 2007, Senate Bill 30 exempts from state tax (4.225 percent) and local use tax, but not local sales tax: (note the exemption is for local use tax but not local sales tax)

AOL Wins in District Court in Iowa

Iowa seems to be in the sales tax news a lot lately. Their amnesty offer just expired, they issued the landmark ruling thwarting pumkin buyers and now they lose this case to AOL.

The Long Arm of the Cigarette Tax Law in Montana

This Montana cigarette tax case (Vanderbyl v. Department of Revenue, Montana State Tax Appeal Board, No. MT-2007-66, October 15, 2007) is an interesting case because you don't often see a state go after individual purchasers who buy taxable stuff over the Internet. I'm sure that in the not-too-distant future, they will start to do so, because they can mine a lot of information from the Internet itself. There'll be no need to have the SSTP probably. They'll be collecting more tax than ever. Just my humble prediction.

Internet Access Ban In Effect 7 More Years -- What About VOIP?

A couple of items caught my eye in this bill that was signed to extend the moratorium on taxing Internet access. One has to do with sales taxes and the other with state income taxes.

Here's one provision that impacts sales taxes:

"Internet access" does not include voice, audio or video programming, or other products and services using Internet protocol for which there is a charge, regardless of whether the charge is bundled with charges for "Internet access."

Caveat Pumpkin Vendors -- IA Knows What You Did Last Halloween

File this in your "someone in Iowa has too much time on their hands" folder. According to the Iowa Tax e-News, issued by the IA DOR, as quoted in the CCH's State Tax Review, of October 12, 2007, only certain kinds of pumpkins can be purchased tax exempt in IA.