STUMP » Articles » Taxing Tuesday: Don't Tax Me, Bro! » 3 July 2018, 12:28

Where Stu & MP spout off about everything.

Taxing Tuesday: Don't Tax Me, Bro!  

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3 July 2018, 12:28

In honor of my burnt-out brain (and the holiday tomorrow), I am eschewing making fun of New Jersey today.

Don’t worry, I’ll do it next week. Or maybe Friday.

NEW HAMPSHIRE PUSHES BACK

Nope, not about the SALT cap.

They’re pushing back re: sales taxes on internet retailers based in NH.

New Hampshire to Fight Back: Governor Sununu and State Leaders Unveil Strategy To Fight Supreme Court Sales Tax Case

Pursuant to the authority granted to the Governor and Council in Part 2, Article 50 of the New Hampshire Constitution, Governor Sununu announced that at the next Governor and Council meeting on July 11th, he will ask the Council to approve a proclamation declaring a special legislative session. The proclamation will authorize the legislature to convene in a special session to consider legislation that will protect our businesses from improper attempts by other states to force our businesses to collect sales and use taxes.

YAY NEW HAMPSHIRE!

I do like what they intend on doing:

First, any out of state taxing authority seeking to audit or impose tax collection obligations on a New Hampshire business will be required to notify the New Hampshire Department of Justice.

Second, before proceeding, the out of state taxing authority will be required to receive a written determination, from the New Hampshire Department of Justice, that the authority’s statutes provide certain protections and meet strict requirements.

Third, these protections and requirements will include a safe harbor for a certain amount of sales, a prohibition against retroactive enforcement, a safe harbor for small businesses, and other strict requirements. In addition, an out of state taxing authority will have to show that its laws will not impose an unconstitutional burden on New Hampshire businesses.

Fourth, the New Hampshire Department of Justice will be empowered to file an expedited suit to block any attempt to impose tax collection obligations undertaken in violation of this new law.

I like whacking back, making the states that want to tax NH businesses have to put some time & effort into it.

INTERNET SALES TAXES: COMPLIANCE ALONE IS BURDENSOME

I’m glad somebody addressed the compliance costs issue:

Did The Supreme Court Potentially Bankrupt Tens Of Thousands Of Small Online Businesses?

I have a small online business, www.economicsecurityplanning.com, which sells personal financial planning software. During our 25 years in business, I’ve lived in fear of today’s decision. We have employees and, thus nexus, in 6 states. Each time we hired someone in a state, we immediately registered to pay sales taxes.

But doing so required further tasking our sales-tax processing company at, for us, a very high price, to process yet an additional state’s sales tax payments. It also led, as I discovered to my horror, to our needing to file a corporate tax or gross receipts tax return in each of the 6 states, annual reports in several of the 6 states, reports in several states about workers compensation and unemployment insurance and a variety of “small” fees. The compliance cost of hiring the sales-tax processing company, paying our accountant and responding to the weekly and sometimes daily letters about filing this form or that is already costing my company $50,000 a year.

$50,000 a year is a huge sum for a small company, especially one like mine that is investing every penny it earns to grow and just breaking even. Based on the Supreme Court decision, my company’s tax compliance bill as opposed to tax bill could easily come to $150,000 if, as I suspect, states will be emboldened by this ruling and apply what they call “economic nexus” and levy corporate income or gross receipts taxes to any company selling any products to any entity in their states.

This is the sort of thing I had in mind.

Now, if they made some sort of central clearinghouse for reporting and sending the taxes, maybe this wouldn’t be so bad. But it’s not like the states have incentives to get together on this.

And it’s not like there needs to be a lot of transactions involved:

Yes, South Dakota, which prevailed in this decision, is currently exempting, from sales taxation, small businesses with $100,000 or less in state sales or fewer than 200 individual transactions. My company’s cheapest product — www.maximizemysocialsecurity.com — sells for $40. If we sell 200 licenses of this program to folks in South Dakota, revenue from that state will total $8,000. So it doesn’t take a large dollar volume of business for my company to be forced to pay sales tax in South Dakota. Fortunately, South Dakota doesn’t tax corporate income or gross receipts. But it’s only one of two such states that taxes neither. The other is Wyoming.

And then there’s this:

And, here’s the kicker. You have to file even if you have no tax liability. This is our case. We’d be forced, thanks to today’s decision, to pay our accountant to submit not 6, but 48 corporate or gross receipt tax returns. This will all be required in order to pay zero, nada, nichts, rien, niente, … in taxes since we are currently making zero profit! And to add icing on the cake, even if you have zero taxable income you are, it seems, forced to pay a basic filing fee. Multiply a small, say, $300 fee by 48 states, and you’re talking close to $15,000.

I understand that doesn’t sound like a lot of money to a politician. But it is to someone running a small business.

SALES TAX DEPENDENCY

From the Tax Foundation: To What Extent Does Your State Rely on Sales Taxes?

Today’s map highlights the extent to which sales taxes are responsible for tax revenue generation in each state. Washington – lacking both a corporate and an individual income tax but levying the harmful gross receipts tax on businesses – relies the most on sales tax revenue, which accounts for 45.9 percent of total tax collections. Tennessee, which does not tax wage income and is currently phasing out its tax on investment income, has the second highest reliance on sales taxes (40.7 percent of state and local tax collections). South Dakota is the third most reliant on sales tax revenue, with 40.5 percent of tax collections attributable to sales taxes. (South Dakota does not collect individual or corporate income taxes.)

Here’s the map:

OTHER TAX LINKS

UGANDA’S SOCIAL MEDIA TAX: TWEETS










OTHER TAX TWEETS








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