SALT Synopsis: April 2021

The latest state and local tax news to help take the worry out of growth.

Hillsborough County, Florida Transportation Tax Rescinded

On Tuesday, March 16th, the Florida Department of Revenue instructed approximately 35,000 Hillsborough County businesses to stop collecting the new transportation tax in a notice published on its website. This reduces the sales tax charged on goods and services from 8.5% to 7.5%. Hillsborough did have one of the highest sales tax rates in the state of Florida prior to a ruling issued by the Florida Supreme Court. The court declared the county-specific transportation tax is illegal in a February 25th ruling that became final after there were no requests for a rehearing by the March 12th deadline. If you have not adjusted your point-of-sale solutions or tax rate determination software, please contact a Synexus team member and we can assist you.

Louisiana Remote Seller Complications – State and Parish Informational Release

Effective July 2020, the Louisiana Department of Revenue created The State of Louisiana Sales and Use Tax Commission for Remote Sellers (“Commission”) to enforce registration and collection requirements on businesses making taxable sales in Louisiana with no physical presence. The Commission serves as the single entity in Louisiana to which remote sellers remit collected state and local taxes to the state. Initially, it was expected businesses with only an online or remote presence in the state would be required to collect at a combined 8.45%, regardless of the individual parish rates where customers may be located. However, as of July 1, 2020, the Commission began requiring the appropriate parish level taxes also be collected by remote sellers on taxable sales into Louisiana. More recently, the state has been aggressively notifying remote sellers of this requirement. While the centralized filing system created by the Commission may reduce the number of returns businesses are required to file in Louisiana, having to track specific parish rates by Louisiana customer is sure to be an unwelcome administrative burden on businesses with no physical presence in Louisiana, a state with an already solidified reputation of being difficult to do business with. For more information on compliance with this requirement and assistance with your compliance needs, please contact any Synexus team member for assistance.

Maryland Taxability Treatment Changes – Software as a Service

Recently passed legislation in Maryland will require that sales taxes be collected on sales of electronically downloaded software, software as a service (“SaaS”) and digital goods. Taxpayers making sales of these types of products to Maryland customers need to review the taxability of their customers, services and items within their billing applications for appropriate tax treatment. The Maryland Comptroller’s Office has issued guidance on the expansion of the state’s sales and use tax of digital goods which is located on their website. If you have any additional questions, please contact a Synexus team member for assistance.

New Mexico Changes Sourcing Rules

On July 1, 2021 New Mexico gross receipts tax for tangible personal property and general services will move to destination-based sourcing. Currently, the gross receipts tax rate is determined by the location of the business. Destination-based sourcing, on the other hand, will mean the gross receipts tax rate will be determined by the location to which the tangible personal property is delivered, or where the general services are performed.

The changes that take effect in 2021 will not impact the taxation of professional services, where gross receipts tax is determined by the seller’s place of business. Additionally, taxpayers engaged in construction and selling of real estate will continue to report according to place of business, which for construction is the location of the construction project and for selling real estate is the location of the real property.

In addition to changing to destination-based services, New Mexico will break apart their Combined Reporting System. Currently, New Mexico gross receipts, compensating (use), and withholding tax are all reported using the Combined Reporting System (CRS-1) return. Starting July 1, 2021 each of the above tax systems will have their own return and will be filed separately.

If the sales tax laws and policy changes referenced above affect your business, please contact a member of our team by completing the form below.

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