Sales Tax Laws You Need To Know

Blog post by Gail Cole of Avalara

While you focus on your business, we stay on top of legislative and policy changes that can affect your tax compliance.

Numerous state legislatures are wrapping up their current sessions, and that makes for some interesting tax policy developments. For example, a bill seeking to impose a tax obligation on certain out-of-state sellers and marketplace facilitators has been delivered to the governor of Missouri. And the governor of Florida just signed a law creating three new sales tax holidays; Florida retailers had just a few days to prepare for the tax-free period that started May 28, 2021.

Tax-free times
It could be a good year for a sales tax holiday.
New sales tax holidays have been proposed in more than 10 states. Some, like Florida, frequently enact one or more one-time tax-free periods. Others, like Indiana and New Jersey, may do so for the first time. And Louisiana and North Carolina are looking to reestablish sales tax holidays previously suspended or eliminated. Learn more.

COVID-19 inspires states to exempt more products, albeit temporarily.
During this year’s back-to-school sales tax holiday in Arkansas, the temporary exemption will apply to certain electronic devices that can help students with virtual school. And Tennessee is providing a sales tax holiday for food to help the beleaguered food service industry. Learn more.

COVID-19 tax relief.
Several states have extended tax relief measures to give breathing room to businesses suffering from the effects of COVID-19. Learn more.

Taxing times
If it can be possessed and exchanged, it can be taxed.
Colorado lawmakers want to make it crystal clear that the method of delivery doesn’t impact taxability: Digital goods are subject to Colorado sales and use tax. Learn more.

Taxing online sales
Kansas finally enacts an economic nexus and marketplace facilitator law.
Under a remote seller provision established by the Kansas Department of Revenue in 2019, doing any amount of business in the state could conceivably create a sales and use tax obligation for an out-of-state seller. Starting July 1, 2021, Kansas will provide safe harbor for small sellers. Learn more.

Tax-free remote sales hang by a thread in Missouri.
Missouri lawmakers have sent an economic nexus and marketplace facilitator bill to the governor. If enacted, many out-of-state sellers will be required to collect and remit Missouri sales and use tax starting in 2023. Learn more.

States broaden scope of economic nexus and marketplace facilitator laws.
Almost every state with a sales tax has laws requiring certain out-of-state sellers and marketplaces to register then collect and remit sales and use tax. Increasingly, states are holding these businesses liable for other taxes and fees too. Learn more.

Nuts and bolts
Tax compliance software gives accountants a leg up.

Changes in sales and use tax obligations set in motion by the 2018 U.S. Supreme Court decision in South Dakota v. Wayfair, Inc. have made sales tax compliance more onerous. To help clients, accounting practices are increasingly turning to sales tax technology. Learn more.

Rate changes.
There are always at least a few. Learn more.

Selling through multiple channels can complicate sales tax compliance.
Buy online pickup in store, direct sales, marketplace sales — every channel brings unique considerations. Learn more.

News from the pump
Could suspending tax prevent a run on the pumps?
In a surprise move, Georgia temporarily suspended motor fuel taxes in response to the Colonial Pipeline incident. Learn more.

News from the tap
Alabama becomes 47th direct-to-consumer wine state.
Wine producers will be able to ship wine directly to consumers starting August 1, 2021. At that point, direct-to-consumer (DTC) wine sales will be fully prohibited in only two states. Learn more.

Beverage alcohol businesses wrangle compliance issues.
To successfully grow DTC sales, producers and sellers of beer, spirits, and wine must obtain all necessary licenses and permits, collect and remit all required taxes, verify the age of the consumer, and respect alcohol and volume limits. Learn more.

Surge in DTC beverage alcohol sales turns spotlight on fulfillment houses.
The rapid rise in DTC alcohol sales triggered by COVID-19 has inspired states to scrutinize the role of fulfillment houses and ensure they comply with alcohol regulations. Learn more.

2021 is proving to be an impactful year for DTC legislation.
Pivotal changes in Alabama, Kentucky, Florida, and several other states could significantly impact beverage alcohol sellers in 2021. Learn more.

Staying connected
Growing need for broadband access at odds with rapidly rising Federal Universal Service Fund (FUSF).
As consumer and industry trends have shifted, the FCC is under pressure to improve broadband access. Yet rapidly rising FUSF fees are placing a burden on the companies that pay the bill. Learn more.

Up in smoke
The amended PACT Act greatly impacts cannabis, e-cigarettes, and vaping products.
Anyone who advertises, sells, transfers, or ships cigarettes or smokeless tobacco in interstate commerce must now comply with a host of complex registration requirements. Learn more.

Wacky tax roundup
There are no free rides when it comes to sales tax.
Florida has created a compliance nightmare of a sales tax holiday. Freedom Week provides partial sales tax exemptions for more than 20 products or product categories. Learn more.

Automating tax collection, remittance, and filing helps businesses of all sizes reduce the pain of tax compliance.



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