Sales Tax Jumpstart September 13, 2018 2.2 CPE …...She is a Certified Implementation Partner and Trainer with Thomson Reuters ONESOURCE Indirect Tax, a Certified Training and TDM

Sales Tax Jumpstart

September 13, 2018

2.2 CPE Credits

Presented by the Sales Tax Institute

Speaker:

Diane L. Yetter, Sales Tax Institute

Sales Tax Jumpstart September 13 to November 8, 2018

Before the Class: Please join the webinar 7 minutes before the scheduled time of the call for a prompt start. If you have never used Go To Webinar before please take time today to test your connection before your session here: http://bit.ly/UKElWx . If you have trouble logging on to GoToWebinar, please view the System Requirements: http://support.citrixonline.com/s/G2W/Help/SystemRequirements. We are aware that some past users have had issues logging in using Internet Explorer or if they have an older version of Go To Webinar installed on their machine. If this is the case you can try uninstalling GoToWebinar and reinstalling or you might want to try an alternative browser. If you continue to have trouble logging on, please call in on the phone using the number and passcode provide in your log-in email from GoToWebinar. You can follow the PDF materials that were sent to you by [email protected]. Day of Class: You will have received a personalized link for each class session to use to log into the webinar. Use this link and do not share the link with anyone else. It helps us monitor attendance and gives us the ability to assist you if there are technical issues. You will be able to listen to the webinar either through your computer or via a telephone connection. This information will also be in your personalized email. If you have not received the dial in information, please contact us immediately at [email protected] for assistance. If you have technical difficulties during the webinar, you will be able to chat online with our technical support through the Go to Webinar application. If you cannot log into Go To Webinar, please call our office at 312-701-1800 x3 for immediate assistance or email [email protected]. Please be aware that it is a violation of our copyright to record the class sessions. CPE Information: Webinar attendees can earn 2.2 hours of CPE credit in the “Taxes” field of study for today’s session. During the webinar, we will use polling questions throughout the scheduled presentation time. In order to receive CPE credit, you will need to participate in the polling questions. After the webinar, you will receive an email from [email protected] containing a link to complete a webinar evaluation form. To receive CPE credit, you will need to complete the evaluation form online and have participated in the polling questions.

The Sales Tax Institute is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.learningmarket.org. Other Sales Tax Institute Courses and Webinars Please visit www.salestaxinstitute.com for more information on the Sales Tax Institute’s live and online course offerings and webinars. The following webinars and live courses are currently scheduled. Visit www.salestaxinstitute.com for additional details and registration and additional offerings. Live Webinars:

September 25, 2018 – Local Taxes – Where, What, How, and Why? October 22, 2018 – Sales Tax Issues for Retailers After Wayfair November 28, 2018 – Manufacturing Sales Tax Exemptions That'll Save December 20, 2018 - Construction & Real Property Sales Tax Deep-Dive

Webinars On-Demand - available anytime: Sales Tax 101 Basic Concepts of Drop Shipments Sales Tax for E-Commerce Effective Audit Defense Techniques Sales Tax Challenges with Services Save Time & Eliminate Guesswork with Effective Tax Research

Diane L. Yetter, CPA, MST Diane L. Yetter is a strategist, advisor, speaker and author in the field of sales and use tax. She is president and founder of YETTER, a sales tax consulting and tax technology firm in business since 1996. She is also the founder of The Sales Tax Institute, a premier think tank that offers live and online courses to educate business professionals about sales and use tax. Diane works with an extensive network of capable partners to deliver a variety of sales tax services ranging from tax technology to tax policy and planning and training. She works with clients of all sizes—from Fortune 10 to small, family-owned companies—in a variety of industries. She is a Certified Implementation Partner and Trainer with Thomson Reuters ONESOURCE Indirect Tax, a Certified Training and TDM Specialist for Vertex, Inc. and a Business Partner of Avalara and VertexCloud. As a speaker, Diane is frequently asked to present to industry groups concerning sales and use tax issues including the Council on State Taxation (COST), Chicago Tax Club, Diversified Communications (IOFM and Accountex), the Institute of Professionals in Taxation (IPT), National Association of Credit Managers (NACM), National Association for Retail Marketing Services (NARMS), Vertex User Conference, Thomson Reuters User Conference, and Avalara. As an author, Diane has written articles concerning sales and use tax issues; was editor for the 1995-1996 edition of the Information Technology Association of America Software & Services State Tax Report and authored Drop Shipments: Taxation, Compliance and Planning and Multistate Guide to Sales and Use Tax: Manufacturing, both published by CCH. She also is the author of the US Sales Tax Chapter for the IBFD VAT Worldwide Research Database. Diane provides answers to sales tax questions on the website www.salestaxsupport.com. She has also appeared as an expert witness. Diane is a member of the AICPA, Illinois CPA Society, Chicago Tax Club, Chicagoland Chamber of Commerce Taxation Committee, Taxpayers’ Federation of Illinois and the Institute of Professionals in Taxation. She is a member of the Practitioner Connection with the Council on State Taxation, and represents client concerns on a number of task forces. Diane was named in Accounting Today’s 100 Most Influential People in Accounting for 2011, 2012, 2017 and 2018. Diane serves on the KU Endowment Association’s Board of Trustees and serves as Immediate Past Chair of the Dean’s Board of Advisors, University of Kansas School of Business where she is also an adjunct professor, teaching topics on state and local taxation and entrepreneurship. Diane earned a BS in accounting and business administration from the University of Kansas in 1985 and an MS in taxation from DePaul University in 1994. Prior to founding the company, Diane was a state and local tax manager in the Chicago office of Arthur Andersen LLP, the sales and use tax director for the Quaker Oats Company, and a sales and use tax auditor for the Kansas Department of Revenue.

9/13/2018

Copyright © Sales Tax Institute 2018 1

Compliance Foundations | September 13, 2018

Copyright © Sales Tax Institute 2018

Welcome


9/13/2018


Your Team

• Diane Yetter• Course Instructor

• Hannah Bannister• Materials Resource & LinkedIn Support

• Tatisa Joiner• Administrative

• Go to Webinar for live session support

Copyright © Sales Tax Institute 1997‐20183

Course Overview

• Live Course Lecture – Thurs 11:30‐1:30 EDT• Sept 13‐Nov 8 skipping Oct 25

• Office Hours 11:30‐12:30 EDT• Oct 2 and Oct 23

• Tools• Homework

• CPE Tracking and Credit


9/13/2018


Course Materials

•Weekly materials will be available the day before the class• Live lecture power point• Tools• Homework

• Links posted weekly in the LinkedIn group• Landing page: https://www.salestaxinstitute.com/20jumpstart‐course‐18materials


GoToStage – Course Recordings

• Recordings will be downloaded the day after each session• Accessible anytime throughout the course

• Course Recordings: https://www.gotostage.com/channel/salestaxinstitute


https://www.salestaxinstitute.com/20jumpstart-course-18materials

9/13/2018


Class Community

• Peer interaction is key for learning• Live class questions• LinkedIn Group

• Introductions to class• Questions between classes• Peer assistance


LinkedIn Group

• Go‐to place to ask questions• Links to homework and course materials

• Additional helpful resources from us

• LinkedIn Group: https://www.linkedin.com/groups/13613493/

• Ask to join or acceptinvitation from Diane


9/13/2018


Questions & Issues

• Email [email protected]

• Responses from• Hannah – LinkedIn Group, course recordings, course materials

• Tatisa – GoToWebinar issues


One on One Consultation

• Course benefit• Available at 50% discount ($250)• Ability to review your specific issues and questions in more detail with Diane and to include anyone else from your company

• Schedule through Dec 14 when you are ready• https://www.salestaxinstitute.com/sales‐tax‐jumpstart‐consultation


https://www.salestaxinstitute.com/sales-tax-jumpstart-consultation

9/13/2018


Introduction


Historical Perspective of Sales and Use Taxes

• First enacted following the Depression• 1930 – Mississippi enacts a sales tax

• Five states without a sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon

• Local taxes• Use tax


9/13/2018


Historical Perspective of Sales and Use Taxes (cont.)

• Puerto Rico – highest state rate at 10.5%• 5 states with the highest average combined state‐local sales tax rates: LA, TN, AR, WA, AL

• The 5 lowest: AK, HI, WI, WY, ME

• 47.8% of total tax collections by state• Politically ‐ fairly imposed

• Regressive nature of tax



9/13/2018


Sales Tax Determination Process Flow

• Jurisdiction Determination• Jurisdiction with Right to Tax• Nexus Determination

• Tax Determination• Product Classification• Taxability and Exemptions

• Sourcing• Calculation


Definitions


9/13/2018


General Comments

• Differ by Jurisdiction• Know your business and read the law• General discussion!

• Refer to state specifics


Sale

• Any transfer of title or possession, exchange or barter, conditional or otherwise, in any manner by any means whatsoever of tangible personal property for consideration


9/13/2018


Sale (cont.)

• Imposition determined upon passage of ultimate ownership

• Transfer of title occurs when “the right to use property” has changed hands

• Transfer of possession is transfer of property control•Most states include transfers of title and possession in the definition of sale

• Non‐cash transactions


Sales Tax

• Tax on the sale, transfer, or exchange of a taxable item or service

• Applies on the sale to the end user or consumer

• Added to sales price and charged to purchaser

• Applies to intrastate sales


9/13/2018


Sales Tax (cont.)

• Trust Tax• Seller Privilege Tax

• California & Arizona

• Consumer Tax• New York & Ohio

CAUTION: Watch out for “double dipping”


Sales Tax (cont.)

• Collection• How do you conduct business? Which tax are you legally required to file?

• Separation on invoice• Purchaser pays the tax vs tax imposed on seller (seller privilege states)

• Consumer’s Use Tax imposed on seller cost not passed on directly (service, construction)


9/13/2018


Sales Tax (cont.)

• Local Tax Issues• Sourcing for Sales Tax

oOrigin – Ship From

oOrigin – Order Acceptance• Illinois special rules

oDestination

• States with no local tax – 9 states• State administered locals must follow state law

• Some items have reduced rates



9/13/2018


Sales Tax (cont.)

• Local Tax Issues “Home‐rule” jurisdictions• Nexus is determined within the locality• Sourcing is like seller’s use tax• Combination states: AL, CO, IL, ID• Home‐rule only states: AK, LA• Quasi Home Rule: AZ (local laws can differ but all administered by state)

• Home‐rule jurisdictions not always required to follow state statutes

• Local jurisdiction audits


Seller’s Use Tax

• Vendor or Retailer or Seller’s Use Tax is a tax collected by a registered vendor for interstate sales


Seller

CustomerCustomer

Seller

Sales Tax Sellers Use Tax

9/13/2018


Seller’s Use Tax (cont.)

• Idaho• Illinois• Iowa• Mississippi


• New Mexico

• Pennsylvania• Vermont

States without local use tax that have local sales tax

Helpful Resource: https://www.salestaxinstitute.com/resources/rates


• Alabama

• Alaska

• Arizona

• Colorado


States with local use tax in some jurisdictions

•Missouri

• Oklahoma

•Wisconsin

9/13/2018



• Collection of Seller’s Use Tax • Interstate sales• Ship from and ship to locations different states

• Collect tax from ship to state

• Local use tax rate based on destination or ship‐to address


Gross Receipts Tax

• Tax on all Gross Receipts• Total consideration received

• Very few deductions •Many services subject to tax

• Hawaii & New Mexico


9/13/2018


Excise Tax

• Imposed on certain products such as fuel, white goods, tires, hazardous waste, tobacco, alcohol, soft drinks

• Usually have a stated revenue purpose• Imposed by Federal or State government

• Percentage of price or flat amount per unit


Excise Tax (cont.)

• Imposed on either manufacturer/wholesaler or retailer • Manufacturer/distributor: not separately stated but included in the selling price/sales tax base

• Retailer: separately stated and may or may not be subject to sales tax


9/13/2018


Use

• The storage, use or consumption of taxable property or services and includes the exercise of any right or power incident to the ownership of the property


Use (cont.)

• Louisiana and Nebraska include distribution in definition of use

• Temporary storage exclusion

• Converted inventory• Samples, donations, gifts

• Cost base (double check all exemptions)


9/13/2018


Consumer’s Use Tax

• Tax on storage, use, or consumption of a taxable item or service on which no sales tax has been paid

• Complementary to sales tax

• Purchases made outside the taxing jurisdiction, but used within


Consumer’s Use Tax (cont.)

• Payment of Consumer’s Use Tax • Tax on purchaser, self‐assessed• Due by the purchaser when the vendor didn’t collect sales tax• Local rate generally follows seller’s use tax rules• Some localities impose consumer’s use but not seller’s use tax

• Minimum dollar threshold


9/13/2018


Tangible Personal Property

• Personal property which can be seen, weighed, measured, felt, touched or anything that is perceptible to the senses

• Anything that isn’t real property• Some states may add items to the definition

• Computer software


Intangible Personal Property

• Generally includes stocks, contracts, mineral rights, patents, copyrights, and other similar items

•May be considered tangible if delivery on a tangible medium


9/13/2018


Real Property

• Land, buildings, fixtures, and structures affixed or attached to the land or buildings

• Temporary vs. Permanent Affixation to real property


Services

• Occupation or function of serving, repairing, or providing an activity to satisfy a public demand

• Incidental service or incidental property• States vary as to what is incidental• Services must be separately‐stated


9/13/2018


Questions?


Homework


9/13/2018


Homework

• Connect with the Class on LinkedIn• Join group if you haven’t yet• Introduce yourself in the welcome message if you haven’t

• Social Media follow Sales Tax Institute and Diane if you don’t already

• Connect with other classmates in LinkedIn


Get Social with Sales Tax Institute


@SalesTaxInst

/company/sales‐tax‐institute

/user/salestaxinstitute

Sales Tax Institute910 W. Van Buren, Suite 100‐321Chicago, IL 60607(312) 701‐1800

[email protected]/salestaxinstitute

https://twitter.com/SalesTaxInst

https://www.linkedin.com/company/sales-tax-institute/

https://www.facebook.com/salestaxinstitute/

https://www.youtube.com/user/salestaxinstitute

Documents

Sales Tax Jumpstart September 13, 2018 2.2 CPE …...She is a Certified Implementation Partner and Trainer with Thomson Reuters ONESOURCE Indirect Tax, a Certified Training and TDM