Lights! Camera! Action! Shuttered Venue Operators Grants (SVOG) Takes Center Stage on April 8

By David Blum and Felicia Leborgne Nowels on Posted in Federal Tax

On April 8, The Small Business Administration (SBA) finally opens its Shuttered Venue Operators Grant (SVOG) program, which was established by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, as part of the the Consolidated Appropriations Act, signed into law on December 27, 2020, and as amended by the American Rescue Plan Act on March 11, 2021.

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Word Play: The Curious Case of Economic Nexus Legislation in Florida

By Michael Bowen on Posted in Florida

In June 2018, the United States Supreme Court in Wayfair held that the physical presence of the taxpayer was no longer a prerequisite for imposition of a sales tax. In so doing, the Court blessed the concept of “economic nexus” for sales tax purposes. Since that landmark decision, many states seized the opportunity to raise sales tax revenue by enacting economic nexus laws. At this moment, forty-four states have economic nexus laws in place. Of the six states without such laws, four – Delaware, Montana, New Hampshire, and Oregon – do not impose a statewide sales tax.[1] The remaining two states – Florida and Missouri – have long-been holdouts. Recently, Florida economic nexus legislation has gained substantial momentum. So, why now? What has changed? Continue Reading

What Will Come of Maryland’s Unique and Controversial Digital Advertising Tax?

By Stefi George and David Blum on Posted in E-Commerce, Maryland

On February 12, 2021, overriding the Governor’s veto, Maryland enacted a first-of-its-kind tax “Digital Advertising Gross Revenues Tax” that has already sent shockwaves through the industry. As widely anticipated, within one week of the enactment four trade associations representing industry leaders filed suit in Maryland federal court to attempt to overturn the tax. Continue Reading

In Search of Revenue – Chicago Issues Bulletin on Economic Nexus For Streaming and Cloud Services

By Akerman Law on Posted in Chicago, E-Commerce, Illinois, Nexus, Sales Tax

On January 21, 2021, the City of Chicago’s Department of Finance issued an informational bulletin clarifying its position regarding economic nexus for Chicago’s amusement tax as applied to streamed amusements and Chicago’s personal property lease transaction tax (“PPLTT”). It also announced a “safe harbor” that businesses can rely upon when analyzing nexus. Chicago states that it will utilize the state of Illinois’ thresholds (i.e., (i) the sales of tangible personal property or services to customers in Illinois are $100,000 or more; or (ii) the retailer or service provider enters into 200 or more separate transactions for sales of tangible personal property or services to Illinois customers in the past 12 month period[1]) as applied to customers in the City to analyze whether a business has nexus with the City. Continue Reading

Summary of Tax Provisions in the Consolidated Appropriations Act, 2021

By Bill Sullivan, Peter Larsen and Jiyeon K. Barta on Posted in Federal Tax

On December 27, 2020, President Trump signed the new $900 billion stimulus package – the Consolidated Appropriations Act, 2021 (the CAA), which, among other things, advances legislation intended to provide additional help for Americans and businesses to survive a continued public health and economic crisis due to COVID-19. This article provides a summary of certain key tax provisions in the CAA. The CAA also extended various expiring tax provisions, which are not included in this summary.

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New York Broadly Applies Information Service Tax to Marketing Analytic Services

By Stefi George and David Blum on Posted in New York, Sales Tax

A year and a half following the New York Court of Appeals’ significant 2019 decision in Matter of Wegmans Food Markets, Inc. v. Tax Appeals Tribunal of State of New York, 33 NY3d 587 (2019), New York continues to grapple with the sales tax treatment of information services. Continue Reading

Illinois’ New Fast Track Resolution Program: A Tax Appeal Option Worth Considering

By David Blum and Akerman Law on Posted in Illinois, Use Tax

The Illinois Audit Fast Track Resolution (“FTR”) program is now available for all Illinois sales and miscellaneous tax audits except for Motor Fuel Use Tax. The Department published Informational Bulletin FY 2021-01 this month highlighting the details of the program, including information on the application process, the program’s advantages, the conference process, and withdrawals. Additionally, the bulletin clarifies that if a resolution is not reached through FTR, the taxpayer will retain all its original statutory review, protest, and appeal rights.

The idea behind the FTR program is simple — provide a forum for the prompt resolution of disputed audit issues while the case is still under the jurisdiction of the Audit Bureau.  It started out as a pilot program to reduce the appeal backlog and was modeled after the IRS Fast Track program. This is also similar in concept to New York’s Conciliation Program. The two main advantages of the program are (1) expedited review (the Department anticipates that the FTR conference would be held approximately 60 days after being accepted into the program); and (2) the Department can involve its legal team to consider both legal and factual issues as well as “hazards of litigation.” This is in contrast with the Department’s current Informal Conference Board program in which the potential hazards of litigation are not considered.

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IRS Issues Limited Guidance On Employee Payroll Tax Deferral and Puts Onus on Employers

By Stefi George on Posted in Federal Tax

On August 8, 2020, President Trump issued a Memorandum to the Secretary of the Treasury authorizing the deferral of payroll taxes for certain employees from September 1, 2020 through December 31, 2020. Employers and payroll processors have eagerly awaited guidance from the IRS to address significant questions regarding implementation of the deferral.

Late Friday, just days in advance of the September 1st implementation date, the IRS released Notice 2020-65, 2020-38 IRB 1, implementing the deferral set forth in the Memorandum. The Notice officially defers the due date for payroll taxes for certain employees, but provides that the deferred taxes must be repaid ratably between January 1 and April 30, 2021. Further, if any of the deferred tax remains unpaid on May 1, 2021, interest, penalties and additions to tax will begin to accrue. The Notice provides that each employee’s deferral eligibility is determined separately for each pay period – if an employee’s pay is not consistent throughout the year, the employee may be eligible for deferral for certain pay periods and not others.

Notably, the guidance places the burden on employers either to collect the tax from employees’ paychecks or pay it themselves in early 2021. The guidance is silent as to what employers should do if an employee ceases employment before April 30, 2021.  Presumably, the employer remains on the hook for repaying the deferred taxes, and must pay the taxes if it cannot collect the funds from the employee. Continue Reading

Impact of White House Memorandum Deferring Payroll Taxes For Certain Workers

By Stefi George on Posted in Federal Tax

On August 8, 2020, President Trump issued a Memorandum to the Secretary of the Treasury authorizing the deferral of payroll taxes for certain employees from September 1, 2020 through December 31, 2020. This issuance is in the form of a Memorandum rather than an Executive Order, and since any modification to taxes falls within the authority of Congress, it is possible that there may be legal challenges to this action.

In addition, it is unclear whether the Treasury Department is bound by the Memorandum and whether the IRS could assess interest and penalties for the amounts actually deferred (although the argument for penalty waiver under the IRS regulations would be strong). Moreover, if the deferral is elective (as Treasury Secretary Steven Mnuchin recently announced), the IRS will need to clarify whether an employer would have liability to employees for failing to make the deferral available.

The Memorandum directs the Secretary of the Treasury to use his authority to defer but not eliminate the payroll tax obligations of certain employees. Thus, this relief action temporarily increases some worker’s take-home pay, but with an obligation to repay the tax in the future. By its terms, the Memorandum applies only to the employee’s portion of Social Security tax, and not Medicare tax. Continue Reading

Tennessee, North Carolina’s Changing Nexus Standards – Seeking Revenue, and Reducing Economic Nexus Thresholds

By David Blum and Akerman Law on Posted in Nexus

On June 30, 2020, the Tennessee legislature passed SB 2932 which reduces the economic nexus sales threshold for remote sellers from $500,000 to $100,000 in the past 12-month period. It also makes the same reduction in the sales or sales facilitated threshold for marketplace facilitators for sales made through the facilitator’s platform. The law becomes effective on October 1, 2020. Interestingly, this bill was introduced on May 19, 2020, a mere six weeks prior to its passage and signage by the Governor.

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