AccurateTax.com https://www.accuratetax.com Take the Guesswork out of Sales Tax Fri, 15 Jun 2018 01:16:59 -0400 en-US hourly 1 https://wordpress.org/?v=4.9.6 https://www.accuratetax.com/wp-content/uploads/2017/01/cropped-favicon_large-144x144.png AccurateTax.com https://www.accuratetax.com 32 32 Financial Concepts Your Teen Should Understand https://www.accuratetax.com/blog/financial-concepts-teen-understands/ Tue, 12 Jun 2018 14:32:16 +0000 https://www.accuratetax.com/?p=5241 Financial Concepts Your Teen Should Understand

Eighty-four percent of teens rely on their parents to teach them money management, but 34% of parents don’t discuss financial issues with their offspring. This can lead to poor financial decisions by teens. It’s important for parents to prepare their kids for the real world by going over various financial concepts that can prevent them from making serious financial mistakes. Let’s go over the concepts you need to talk about with your teen. Checking Accounts A checking account is key to financial responsibility for teens. Explain how checking accounts work, including the fees associated with these accounts. Teach your teen... Read More

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Financial Concepts Your Teen Should Understand

Eighty-four percent of teens rely on their parents to teach them money management, but 34% of parents don’t discuss financial issues with their offspring. This can lead to poor financial decisions by teens. It’s important for parents to prepare their kids for the real world by going over various financial concepts that can prevent them from making serious financial mistakes.

Let’s go over the concepts you need to talk about with your teen.

Checking Accounts

A checking account is key to financial responsibility for teens. Explain how checking accounts work, including the fees associated with these accounts. Teach your teen about writing checks, using a debit card, and recording everything. Make sure the child understands that failing to record something could lead to an overdraft and overdraft fees.

Don’t just explain checking accounts to your child. Have your child set up a checking account early to learn fiscal responsibly. Monitor the account at first to make sure your teen is recording every item, even those packs of gum.

Credit Cards and Interest

When your teen turns 18, he or she will begin receiving credit card offers. Many teens don’t understand how credit cards work, and because of that, they overspend. This comes down to not understanding minimum payments and interest.

Unsavvy teens believe if they spend $1,000 on their credit cards, they can pay it off quickly by paying $20 a month. In reality, if they only make the minimum payment, it will take six years to pay back that debt if the interest rate is at 12 percent.

Use a payment calculator to show your teen how much credit cards actually cost. When your teen is ready for a credit card, consider adding him or her to your own account so you can monitor the spending for a while. This could save your child a huge headache and a lot of heartache in the future.

Taxes

As an adult, you understand that taxes are a way of life, but your child may not – make sure they are prepared before heading into the real world.

Your child drives on roads and visits parks, sees police and fire stations on the road and likely attends public school. Explain that these services are covered by taxes.

Break it down so your child understands that sales taxes are paid whenever he or she purchases an item, and state and federal taxes are paid out of paychecks. It’s important that your child understands how the tax process works to avoid over or underpaying taxes.

Insurance Plans

Right now, your child is on your health and auto insurance plans, so they don’t have to think twice about making payments or heading to the doctor. That won’t always be the case, though. Your child needs to understand what insurance is and why it is important.

Explain that they will give money to insurance companies, so the companies will cover expenses if something happens. For instance, tell your child that they will pay auto insurance premiums, so the insurance company will cover them if an accident occurs.

Also, explain how bundling insurance policies helps people save money. In addition, go over the expenses he or she can incur without insurance. For example, an emergency surgery could cost hundreds of thousands of dollars without insurance.

Emergency Funds

Explaining emergency funds is probably the most important lesson you can teach your teen. Working adults should have at least six months of income in a savings account. That way, they can dip into the account in case anything happens.

Explain to your child this money will help in the case of:

  • Loss of employment
  • Medical emergency
  • Home repairs
  • Unplanned travel expenses

It’s Time to Have the Financial Talk with Your Teen

Don’t wait another moment. It’s time to have the financial talk with your teen so he or she will be ready for the real world. If your child has smart money sense, he or she will make it far in this world.

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Important Sales Tax Dates for June 2018 https://www.accuratetax.com/blog/important-sales-tax-dates-june-2018/ Tue, 29 May 2018 02:18:19 +0000 https://www.accuratetax.com/?p=5230 June is here, bringing warmer weather, summer vacation, and new sales tax dates. Browse the list below to find due dates for every state, no matter how often you’re required to file. Alabama Monthly Taxes Due 6/20 Arizona Monthly Taxes Due 6/20 Arkansas Monthly Taxes Due 6/20 California Monthly Taxes Due 7/2 (Normal date of 6/30 falls on a weekend) Colorado Monthly Taxes Due 6/20 Connecticut Monthly Taxes Due 7/2 (Normal date of 6/30 falls on a weekend) District of Columbia Monthly Taxes Due 6/20 Florida Monthly Taxes Due 6/1 (Late after 6/20) Georgia Monthly Taxes Due 6/20 Hawaii Monthly... Read More

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June is here, bringing warmer weather, summer vacation, and new sales tax dates. Browse the list below to find due dates for every state, no matter how often you’re required to file.

Alabama
Alabama
Monthly Taxes Due 6/20
Arizona
Arizona
Monthly Taxes Due 6/20
Arkansas
Arkansas
Monthly Taxes Due 6/20
California
California
Monthly Taxes Due 7/2 (Normal date of 6/30 falls on a weekend)
Colorado
Colorado
Monthly Taxes Due 6/20
Connecticut
Connecticut
Monthly Taxes Due 7/2 (Normal date of 6/30 falls on a weekend)
District of Columbia
District of Columbia
Monthly Taxes Due 6/20
Florida
Florida
Monthly Taxes Due 6/1 (Late after 6/20)
Georgia
Georgia
Monthly Taxes Due 6/20
Hawaii
Hawaii
Monthly Taxes Due 6/20
Idaho
Idaho
Monthly Taxes Due 6/20
Illinois
Illinois
Monthly Taxes Due 6/20
Indiana
Indiana
Monthly Taxes Due 6/20 if amount owed is over $1000
7/2 (Normal date of 6/30 falls on a weekend) if amount owed is $1000 or less
Iowa
Iowa
Monthly Taxes Due 6/20
Semi-Monthly Taxes Due 6/11 (Normal date of 6/10 falls on a weekend)
6/25
Kansas
Kansas
Monthly Taxes Due 6/25
Kentucky
Kentucky
Monthly Taxes Due 6/20
Louisiana
Louisiana
Monthly Taxes Due 6/20
Maine
Maine
Monthly Taxes Due 6/15
Maryland
Maryland
Monthly Taxes Due 6/20
Massachusetts
Massachusetts
Monthly Taxes Due 6/20
Michigan
Michigan
Monthly Taxes Due 6/20
Minnesota
Minnesota
Monthly Taxes Due 6/20
Mississippi
Mississippi
Monthly Taxes Due 6/20
Missouri
Missouri
Monthly Taxes Due 6/20
Quarter-Monthly Taxes Due 6/4 (for last quarter-month of May), 6/11, 6/18, 6/25
(Normal dates 6/3 and 6/10 fall on a weekend)
Nebraska
Nebraska
Monthly Taxes Due 6/20
Nevada
Nevada
Monthly Taxes Due 7/2 (Normal date of 6/30 falls on a weekend)
New Jersey
New Jersey
Monthly Taxes Due 6/20
New Mexico
New Mexico
Monthly Taxes Due 6/25
New York
New York
Quarterly Taxes Due 6/20
Monthly Taxes Due 6/20
North Carolina
North Carolina
Monthly Taxes Due 6/20
North Dakota
North Dakota
Monthly Taxes Due 7/2 (Normal date of 6/30 falls on a weekend)
Ohio
Ohio
Monthly Taxes Due 6/25 (Normal date of 6/23 falls on a weekend)
Oklahoma
Oklahoma
Monthly Taxes Due 6/20
Pennsylvania
Pennsylvania
Monthly Taxes Due 6/20
Rhode Island
Rhode Island
Monthly Taxes Due 6/20
South Carolina
South Carolina
Monthly Taxes Due 6/20
South Dakota
South Dakota
Monthly Taxes Due 6/20
Tennessee
Tennessee
Monthly Taxes Due 6/20
Texas
Texas
Monthly Taxes Due 6/20
Utah
Utah
Monthly Taxes Due 7/2 (Normal date of 6/30 falls on a weekend)
Vermont
Vermont
Monthly Taxes Due 6/25
Virginia
Virginia
Monthly Taxes Due 6/20
Washington
Washington
Monthly Taxes Due 6/25
West Virginia
West Virginia
Monthly Taxes Due 6/20
Wisconsin
Wisconsin
Monthly Taxes Due 7/2 (Normal date of 6/30 falls on a weekend)
Wyoming
Wyoming
Monthly Taxes Due 7/2 (Normal date of 6/30 falls on a weekend)

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How Ecommerce Companies Should Handle Returns https://www.accuratetax.com/blog/wcommerce-handle-returns/ Tue, 22 May 2018 18:53:16 +0000 https://www.accuratetax.com/?p=5220 How Ecommerce Companies Should Handle Returns

Returns are a necessary part of any ecommerce business. Business 2 Community reports that customers return 30 percent of all online orders while they return only 8.89 percent from brick and mortar stores. It’s especially true when the buyer is sending a gift. While you can’t do anything about hurt feelings, a company that handles returns well with a clear policy can keep customers loyal even when they have trouble. Here are some things to keep in mind when you’re handling ecommerce returns. A Policy for Handling eCommerce Returns Businesses used to see returns as only a problem. It costs... Read More

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How Ecommerce Companies Should Handle Returns

Returns are a necessary part of any ecommerce business. Business 2 Community reports that customers return 30 percent of all online orders while they return only 8.89 percent from brick and mortar stores. It’s especially true when the buyer is sending a gift. While you can’t do anything about hurt feelings, a company that handles returns well with a clear policy can keep customers loyal even when they have trouble. Here are some things to keep in mind when you’re handling ecommerce returns.

A Policy for Handling eCommerce Returns

Businesses used to see returns as only a problem. It costs money to sell something and then take it back. Increasingly, however, businesses see their returns policy as a way to attract and retain customers. According to a survey by Red Stag Fulfillment, 66 percent of customers check an online retailer’s return policy before they buy anything. They want to know how much of a hassle it will be to return something if they buy, and they’re more likely to take the leap when it’s easy.

What do you need for a good returns policy? Your policy should be:

  • Clear: Confusing policies drive customers away and they mean more phone calls, costing you more money.
  • Convenient: A convenient process will increase customer satisfaction so they’ll buy from you again. Pre-printed return labels are great for this.
  • Generous: It’s a good idea to have a time limit for your return policies, but customers love it when you give them a short extension.

Make sure that you clearly state what you’re willing to do for a return. Focus on the details so customers know exactly what to expect. Clearly state at what times you give refunds, exchanges, store credit or charge restocking fees. These details can be the difference between a satisfied customer and an angry one.

Have A Return Merchandise Authorization (RMA) Procedure

Nothing bogs down a business like reinventing the wheel. If you have three different staff members setting up returns in three different ways, everyone will get confused, and it will be harder to see what went wrong when something does. It’s especially important for eCommerce, because you’re probably creating your RMA online. Here are some important things every RMA procedure, and tech solution, should do:

  • Gatekeeping: Even the most generous return policy has limits, and your procedure should ensure that only the right items are returned.
  • Information capture: Capture the information about why the item is being returned which can give valuable insight into your customers.
  • Automation: You don’t want to tie up employees when computers can do the work for you.
  • Workflow: Create a standardized workflow and process for every return. It allows you to analyze your process and change it to increase efficiency or customer service.
  • Data: Without understanding what’s happening in your returns process, you won’t detect problems or be able to increase efficiency. Make sure your process produces enough data to analyze.

Returns and Accounting Issues

Handling returns can create all sorts of accounting and tax problems. Sales tax is a complicated prospect for ecommerce businesses. You have to figure out whether you collect tax, the tax rate, and any exceptions, like tax holidays, for each state in which you have nexus. If you’re doing free returns, taxes aren’t a huge problem. When you refund the cost of the item, you also refund the sales tax.

It becomes more complex when you charge a restocking fee, and each state has different rules. Here are some examples:

  • Massachusetts refunds all sales tax even when you have a restocking fee. However, there is no refund at all if the return happens more than 90 days after the purchase.
  • Washington charges sales tax on restocking fees separately.
  • Colorado keeps the whole sales tax if the business charges a restocking fee.

While restocking fees can help you recoup some of the cost of a return that is not your fault, it can make tax reporting a complicated mess. If you charge restocking fees, make sure you are on top of every state’s regulations in which you have a presence.

Returns can be a hassle for ecommerce businesses, and they cost a lot of money. They can also come with complicated tax problems, too. But customers expect, even demand, easy convenient returns policies from their online retailers. Without one, you may save some money, but you might lose customers in the long run. A good plan for returns can help limit the cost while making sure your customers keep coming back.

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Important Sales Tax Dates for May 2018 https://www.accuratetax.com/blog/important-sales-tax-dates-may-2018/ Mon, 30 Apr 2018 02:07:19 +0000 https://www.accuratetax.com/?p=5227 April showers bring May flowers…and May sales tax dates, too! Find every due date for every state right here in a handy list. Great no matter how often you file, or in how many states you have nexus. Our handy list makes it easy. Alabama Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend) Arizona Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend) Arkansas Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend) California Monthly Taxes Due 5/31 Colorado Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a... Read More

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April showers bring May flowers…and May sales tax dates, too! Find every due date for every state right here in a handy list. Great no matter how often you file, or in how many states you have nexus. Our handy list makes it easy.

Alabama
Alabama
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Arizona
Arizona
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Arkansas
Arkansas
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
California
California
Monthly Taxes Due 5/31
Colorado
Colorado
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Connecticut
Connecticut
Monthly Taxes Due 5/31
District of Columbia
District of Columbia
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Florida
Florida
Monthly Taxes Due 5/1 (Late after 5/21)
Georgia
Georgia
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Hawaii
Hawaii
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Idaho
Idaho
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Illinois
Illinois
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Indiana
Indiana
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend) if amount owed is over $1000
5/31 if amount owed is $1000 or less
Iowa
Iowa
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Semi-Monthly Taxes Due 5/10
5/25
Kansas
Kansas
Monthly Taxes Due 5/25
Kentucky
Kentucky
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Louisiana
Louisiana
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Maine
Maine
Monthly Taxes Due 5/15
Maryland
Maryland
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Massachusetts
Massachusetts
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Michigan
Michigan
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Minnesota
Minnesota
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Mississippi
Mississippi
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Missouri
Missouri
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Quarter-Monthly Taxes Due 5/3 (for last quarter-month of April), 5/10, 5/18, 5/25
Nebraska
Nebraska
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Nevada
Nevada
Monthly Taxes Due 5/31
New Jersey
New Jersey
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
New Mexico
New Mexico
Monthly Taxes Due 5/25
New York
New York
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
North Carolina
North Carolina
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
North Dakota
North Dakota
Monthly Taxes Due 5/31
Ohio
Ohio
Monthly Taxes Due 5/23
Oklahoma
Oklahoma
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Pennsylvania
Pennsylvania
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Rhode Island
Rhode Island
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
South Carolina
South Carolina
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
South Dakota
South Dakota
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Tennessee
Tennessee
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Texas
Texas
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Utah
Utah
Monthly Taxes Due 5/31
Vermont
Vermont
Monthly Taxes Due 5/25
Virginia
Virginia
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Washington
Washington
Monthly Taxes Due 5/25
West Virginia
West Virginia
Monthly Taxes Due 5/21 (Normal date of 5/20 falls on a weekend)
Wisconsin
Wisconsin
Monthly Taxes Due 5/31
Wyoming
Wyoming
Monthly Taxes Due 5/31

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What Does the GDPR Mean for Your Ecommerce Business? https://www.accuratetax.com/blog/gdpr-your-ecommerce-business/ Mon, 23 Apr 2018 12:30:00 +0000 https://www.accuratetax.com/?p=5213 What Does the GDPR Mean for Your Ecommerce Business?

If you make international sales through your ecommerce business, you may have heard of the General Data Protection Regulation (GDPR) recently enacted by the European Union, but you might not really understand how it will impact you. However, with the GDPR going into effect on May 25, 2018, it’s important to be aware of the new requirements it will put in place concerning the ways you collect data from your customers and the steps you’ll need to take to ensure the security of that data. What Is the GDPR? The GDPR is a new regulation that governs the collection, storage... Read More

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What Does the GDPR Mean for Your Ecommerce Business?

If you make international sales through your ecommerce business, you may have heard of the General Data Protection Regulation (GDPR) recently enacted by the European Union, but you might not really understand how it will impact you. However, with the GDPR going into effect on May 25, 2018, it’s important to be aware of the new requirements it will put in place concerning the ways you collect data from your customers and the steps you’ll need to take to ensure the security of that data.

What Is the GDPR?

The GDPR is a new regulation that governs the collection, storage and use of customer data by any companies doing business within the European Union. That includes businesses based in EU countries, of course, but it also applies to companies based elsewhere who sell to EU customers.

Under the GDPR, data is defined as any IP addresses, bank details, social media posts, photos, or identifying numbers, such as Social Security Numbers or National Insurance numbers. The collection of this data must always be opt-in, and that option must be clearly stated. Further, a “reasonable” level of security must be provided to any stored data, and there must be a clear and straightforward process in place for customers to delete their accounts along with any personal data that’s been stored.

The GDPR describes three main categories of actors in any transaction involving collection and storage of data. These include the Data Subject, defined as the customer, user or employee who is providing the personal data, as well as the Data Controller, which is the merchant providing the goods or services. The third category outlined is the Data Processor, and this consists of all third-party companies involved in the transaction, including Shopify, MailChimp, UPS, and other similar providers.

Merchant Responsibilities

In order to comply with these regulations, sellers must ensure not only that they are following the new directives, but also that any data processers they use are doing so as well. Further, there must be clear processes in place that outline how the security of customer data is to be ensured.

On the front end, any place where data is collected must provide for a straightforward way for customers to opt in, and any third-parties that will have access to the data being collected must be listed. For larger companies, the regulation requires the appointment of a Data Protection Officer whose job is to monitor systems and report any misconduct or data breaches as they occur.

Under the GDPR, cookies are also considered personal data, and so it’s necessary to acquire clear permission from the customer to use them during a transaction. Because some cookies, such as those used to track what’s been added to an online shopping cart, are necessary to ensure a smooth user experience, it’s possible to ask the customer to give or revoke permission for each type of cookie individually.

Ensuring Compliance

The GDPR will impose stiff fines and other penalties for non-compliance. This makes it even more important that you ensure you have proper systems in place, and that your Data Processers do also. In anticipation of the implementation of the GDPR, Shopify has already taken steps to ensure compliance, and other large service providers likely have as well. As a seller, though, it’s your responsibility to check the processes for anyone who may be processing your customers’ data, including your mail delivery systems, accounting software, and other service providers.

The main goals of the GDPR are to give customers more control over what data is collected and to ensure that the data that is collected is kept securely. That means that encryption for all communication and transactions is required, and it also means that you should always err on the side of caution in choosing your language for use in opt-in data collection situations. Consulting with a lawyer is an important step to take to make sure you’re compliant ahead of the GDPR going into effect.

Looking Ahead

The rising awareness among consumers about the dangers of having so much unsecured data floating around is likely to drive the implementation of similar regulations to the GDPR in other parts of the world in the future. Taking steps to ensure your compliance is essential if you want to continue to do business in any EU country, or if you anticipate doing so in the future. Enacting these types of safeguards also helps to protect you from exposure to liability in the event of a data breach, which can be devastating financially and in terms of the reputation of your business.

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Cryptocurrency 101 https://www.accuratetax.com/blog/cryptocurrency-101/ Sat, 14 Apr 2018 17:26:07 +0000 https://www.accuratetax.com/?p=5206 Cryptocurrency 101

With the explosion in the usage of various cryptocurrencies lately, it’s becoming more and more important to understand exactly how they work and how they are being used. While it’s common to assume that a cryptocurrency can be treated just like any other type of currency, the truth is a bit more complicated, and it can have significant tax-related ramifications for anyone who uses them or accepts them as payment. What Is Cryptocurrency? There are several types of cryptocurrency available, with the most popular being Bitcoin. Alternative varieties include Litecoin, Etherium, Zcash, Dash, and Ripple, among others. All of these... Read More

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Cryptocurrency 101

With the explosion in the usage of various cryptocurrencies lately, it’s becoming more and more important to understand exactly how they work and how they are being used. While it’s common to assume that a cryptocurrency can be treated just like any other type of currency, the truth is a bit more complicated, and it can have significant tax-related ramifications for anyone who uses them or accepts them as payment.

What Is Cryptocurrency?

There are several types of cryptocurrency available, with the most popular being Bitcoin. Alternative varieties include Litecoin, Etherium, Zcash, Dash, and Ripple, among others. All of these operate within the same type of basic framework that relies on cryptography to verify transactions. This ensures that the same units of currency can’t be spent multiple times, thereby establishing the value of that currency.

That value can fluctuate, however, in a manner similar to that of a traditional currency but much more dramatically. That’s partly because there is a limit to the number of units of each currency that can be in circulation. So the more people who are holding these units, and the closer the number in circulation gets to the cap, the more valuable each unit becomes.

Of course, there are a number of other factors that go into determining the value of any given cryptocurrency at a given point in time, but the basic structure for each is the same. There had been several previous attempts to create a virtual currency, but all had failed due in large part to their reliance on a company or other large entity to serve as a guarantor of the transactions. The cryptographic model eliminated the need for that guarantor, and so Bitcoin was able to flourish.

Uses and Trends

Cryptocurrency can be used to make purchases, or it may be acquired as an investment. Although the number and types of places you could use cryptocurrency were limited at first, there are even apps now that make it possible to pay in cryptocurrency at a brick-and-mortar store. Investing in cryptocurrency is another common practice, made more attractive by the dramatic spike in the value of Bitcoin in particular recently.

In October of 2013, one Bitcoin was worth about $150, and it increased shortly thereafter to almost $1,000. The value then hovered in the hundreds of dollars for the next couple of years before suddenly rising dramatically, spiking at close to $20,000 in December of 2017. Since then, Bitcoin has settled back down, with a value as of this writing around $8,000 per unit (you can check the current value of Bitcoin and other cryptocurrencies here). That demonstrated volatility has made it and other cryptocurrencies look like attractive investments to some, despite the potential for incurring large losses as well.

Cryptocurrency and Taxes

Another aspect of dealing in cryptocurrency that many people are not aware of before investing in it is the fact that, for tax purposes, the US government considers cryptocurrency to be property rather than currency. This may seem like an insignificant distinction, but it actually has a direct and dramatic impact on the tax bill you may receive if you’ve been using cryptocurrency.

That’s because, when cryptocurrency is viewed as property, making a purchase with it actually becomes two transactions. The first involves converting the cryptocurrency to traditional currency, and the second involves completing the purchase with the traditional currency. These are steps you may not be aware you are taking, but as far as the IRS is concerned, they occurred. Thus, you are responsible for paying capital gains tax on the first transaction and possibly sales tax on the second, depending on the item purchased.

Investing in cryptocurrency is risky as well, especially if you only plan on holding it for a short period of time. Any cryptocurrency you sell after holding it for less than a year will cause your profits to be taxed as income. If you do hold the cryptocurrency for more than a year before selling it, your profits will be considered long-term capital gains, and so be taxed at a lower but still significant rate.

This is a dramatically different process than that involved in converting between traditional currencies, and due to the volatile nature of cryptocurrency value, it’s very possible for you to wind up with a tax bill that’s much higher than the current value of the currency you’re holding. Similarly, converting from one cryptocurrency to another is two transactions rather than one for tax purposes, leading to the same types of potential pitfalls and high tax bills as using cryptocurrency to purchase goods.

The popularity and versatility of cryptocurrency mean that it’s likely not going away any time soon. That makes it an essential element to understand, both as a consumer and as a retailer, and while it’s possible to deal in cryptocurrency profitably, it’s important to know exactly what you’re working with so that you’re not overwhelmed when your tax bill arrives.

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Important Sales Tax Dates for April 2018 https://www.accuratetax.com/blog/important-sales-tax-dates-for-april-2018/ Wed, 28 Mar 2018 14:37:40 +0000 https://www.accuratetax.com/?p=5199 April is the dreaded month when everyone’s income tax return is due, but don’t let that distract you from sales tax due dates! We’re here to help by providing a list of all sales tax due dates for each state, as outlined below. While you’re here, don’t forget to check out the rest of our blog to learn more about online sales tax and ecommerce. Alabama Quarterly Taxes Due 4/20 Monthly Taxes Due 4/20 Arizona Quarterly Taxes Due 4/20 Monthly Taxes Due 4/20 Arkansas Quarterly Taxes Due 4/20 Monthly Taxes Due 4/20 California Quarterly Taxes Due 4/30 Monthly Taxes Due... Read More

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April is the dreaded month when everyone’s income tax return is due, but don’t let that distract you from sales tax due dates! We’re here to help by providing a list of all sales tax due dates for each state, as outlined below. While you’re here, don’t forget to check out the rest of our blog to learn more about online sales tax and ecommerce.

Alabama
Alabama
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Arizona
Arizona
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Arkansas
Arkansas
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
California
California
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/30
Colorado
Colorado
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Connecticut
Connecticut
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/30
District of Columbia
District of Columbia
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Florida
Florida
Quarterly Taxes Due 4/2, Late after 4/20 (Normal date of 4/1 falls on a weekend)
Monthly Taxes Due 4/2, Late after 4/20 (Normal date of 4/1 falls on a weekend)
Georgia
Georgia
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Hawaii
Hawaii
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Idaho
Idaho
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Illinois
Illinois
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Indiana
Indiana
Monthly Taxes Due 4/20 if amount owed is over $1000
4/30 if amount owed is $1000 or less
Iowa
Iowa
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/30
Semi-Monthly Taxes Due 4/10
4/25
Kansas
Kansas
Quarterly Taxes Due 4/25
Monthly Taxes Due 4/25
Kentucky
Kentucky
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Louisiana
Louisiana
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Maine
Maine
Quarterly Taxes Due 4/16 (Normal date of 4/15 falls on a weekend)
Monthly Taxes Due 4/16 (Normal date of 4/15 falls on a weekend)
Maryland
Maryland
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Massachusetts
Massachusetts
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Michigan
Michigan
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Minnesota
Minnesota
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Mississippi
Mississippi
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Missouri
Missouri
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/30
Quarter-Monthly Taxes Due 4/3 (for last quarter-month of March), 4/10, 4/18, 4/25
Nebraska
Nebraska
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Nevada
Nevada
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/30
New Jersey
New Jersey
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
New Mexico
New Mexico
Quarterly Taxes Due 4/25
Monthly Taxes Due 4/25
New York
New York
Monthly Taxes Due 4/20
North Carolina
North Carolina
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/20
North Dakota
North Dakota
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/30
Ohio
Ohio
Monthly Taxes Due 4/23
Oklahoma
Oklahoma
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Pennsylvania
Pennsylvania
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Rhode Island
Rhode Island
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/20
South Carolina
South Carolina
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
South Dakota
South Dakota
Monthly Taxes Due 4/20
Tennessee
Tennessee
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Texas
Texas
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Utah
Utah
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/30
Vermont
Vermont
Quarterly Taxes Due 4/25
Monthly Taxes Due 4/25
Virginia
Virginia
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Washington
Washington
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/25
West Virginia
West Virginia
Quarterly Taxes Due 4/20
Monthly Taxes Due 4/20
Wisconsin
Wisconsin
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/30
Wyoming
Wyoming
Quarterly Taxes Due 4/30
Monthly Taxes Due 4/30

The post Important Sales Tax Dates for April 2018 appeared first on AccurateTax.com.

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2018 Sales Tax Holidays by State https://www.accuratetax.com/blog/sales-tax-holidays/ Tue, 27 Mar 2018 13:01:52 +0000 https://www.accuratetax.com/?p=5186

While sales tax holidays are a nice treat for consumers, they can make the arduous task of keeping track of sales tax for your ecommerce business even more of a headache. Fortunately, they only come around a few times a year, but of course, every state does things a little differently. That means that you need to know whether you’re required to participate or only strongly encouraged, whether the tax holiday applies to local taxes or only the state sales tax, and what items specifically are included. There are currently 15 states with at least one sales tax holiday scheduled... Read More

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While sales tax holidays are a nice treat for consumers, they can make the arduous task of keeping track of sales tax for your ecommerce business even more of a headache. Fortunately, they only come around a few times a year, but of course, every state does things a little differently. That means that you need to know whether you’re required to participate or only strongly encouraged, whether the tax holiday applies to local taxes or only the state sales tax, and what items specifically are included.

There are currently 15 states with at least one sales tax holiday scheduled for 2018, and they generally fall into one of three categories. The most common sales tax holidays are timed to coincide with back-to-school shopping, while second amendment and weather preparedness holidays are regularly scheduled in a few states as well.

As the dates of the sales tax holidays, as well as which states have them and what they’re for, can change from one year to the next, we’ve compiled an updated list for 2018 of state sales tax holidays currently on the books.

StateTypeDatesDetails
AlabamaWeather PreparednessFebruary 23 – 25, 2018
  • Local sales and use tax may apply.
  • Retailers are required to participate and are not allowed to charge tax on items that are including among the exemptions.
  • Includes items such as batteries, radios, self-powered lights, sheets/tarpaulins, plywood, food storage cooler, first aid kits, and fire extinguishers. See complete list of exempt items.
  • More Information
AlabamaBack to SchoolJuly 20 – 22, 2018
  • Local sales and use tax may apply.
  • Retailers are required to participate and are not allowed to charge tax on items that are including among the exemptions.
  • Exempts most general-use clothing priced at $100 or less (shirts, pants, shorts, socks, etc). Accessories, protective equipment, and sports equipment is specifically not exempt.
  • Exempts computers, software, and school-related computer supplies priced at $750 or less
  • Exempts non-commercial purchases of school supplies priced at $50 or less (such as pens, paper, binders, etc)
  • Exempts non-commercial purchases of books priced at $30 or less
  • See complete list of exempt items
  • More Information
ArkansasBack to SchoolAugust 4 – 5, 2018
  • Local sales tax also does not apply.
  • Exempts most general-use clothing priced at $100 or less (shirts, pants, shorts, socks, etc).
  • Exempts most general-use clothing accessories priced at $50 or less (jewelry, watches, briefcases and handbags, etc).
  • Exempts purchases of certain school supplies (only specific items listed)
  • Exempts purchases of certain school art supplies (only specific items listed)
  • Exempts purchases of books related to school or a course of study such as textbooks and reference books
  • See complete list of exempt items
  • More Information
ConnecticutBack to SchoolAugust 19 – 25, 2018
  • Exempts general clothing and footwear priced at $100 per item, or less. Certain items are excluded, such as jewelry, sports uniforms, protective equipment, accessories, and insoles.
  • More Information (from 2017)
FloridaWeather PreparednessJune 1 – 7, 2018
  • Reusable ice packs under $10
  • Portable self-powered light source powered by battery, solar, hand-crank, or gas (includes candles, flashlights and lanterns) – under $20
  • Gas or diesel fuel container (includes LP gas and kerosene containers) under $25
  • Batteries (AAA-cell, AA-cell, C-cell, D-cell, 6-volt, 9-volt) including rechargeable batteries $30 or less
  • Coolers and ice chests (food-storage; nonelectrical) $30 or less
  • Bungee cords $50 or less
  • Ground anchor systems $50 or less
  • Two-way or weather band radios (powered by battery, solar, or handcrank) $50 or less
  • Ratchet straps $50 or less
  • Tarpaulins (tarps) $50 or less
  • Tie-down kits $50 or less
  • Visqueen, plastic sheeting, plastic drop cloths, and other flexible waterproof sheeting $50 or less
  • Portable generators $750 or less
  • More Information
IowaBack to SchoolAugust 3 – 4, 2018
  • Exempts general clothing and footwear priced at $100 or less. Certain items are excluded, such as jewelry, watches, protective equipment, umbrellas, skis and skates, and more.
  • Local sales tax is not collected during the tax-free weekend
  • The exemption only occurs on Friday and Saturday – never Sunday
  • Representative items that are exempt
  • More Information (from 2017)
LouisianaWeather PreparednessMay 26 – 27, 2018
  • Reduces sales tax to only 3% for qualifying items
  • Includes items generally use during a hurricane, such as candles, flashlights, radios, batteries, food storage, shutters, and generators
  • More information (from 2017)
LouisianaBack to School / GeneralAugust 3 – 4, 2018
  • Reduces the sales tax rate by 2% for all tangible personal property less than $2500
  • Local taxes still apply unless the local jurisdiction also exempts their portion of the total sales tax
  • More information (from 2017)
LouisianaSecond AmendmentSeptember 7-9, 2018
  • Reduces the sales tax rate by 2% for firearms, ammunition and hunting supplies
  • Local taxes still apply unless the local jurisdiction also exempts their portion of the total sales tax
  • More information (from 2017)
MarylandEnergy StarFebruary 17 – 19, 2018
  • Exempts Energy Star Products, including
    • Air conditioners
    • Washers and dryers
    • Furnaces
    • Heat pumps
    • Boilers
    • Solar water heaters (which are always tax-exempt)
    • Standard size refrigerators
    • Dehumidifiers
    • Programmable thermostats
    • Compact fluorescent light bulbs
    • Light-emitting diode (LED) light bulbs
  • Under the Seller’s Privilege provision, retailers selling other items that don’t qualify for the tax exemption, may still sell these items tax-exempt and absorb the cost of the tax. Certain rules apply.
  • More Information
MarylandBack to SchoolAugust 12 – 18, 2018
  • Exempts clothing and footwear priced at $100 or less per item.
  • Under the Seller’s Privilege provision, retailers selling other items that don’t qualify for the tax exemption, may still sell these items tax-exempt and absorb the cost of the tax. Certain rules apply.
  • More Information (from 2017)
MississippiBack to SchoolJuly 27 – 28 2018
  • Exempts clothing priced at $100 or less per item.
  • Exempts footwear priced at $100 or less per item, but excludes skates, skis, etc.
  • Accessories (watches, jewelry, wallets, umbrellas, etc) are NOT exempt
  • Certain cities may elect not to participate
  • More Information (2017) – this document includes a list of eligible and non-eligible items
MississippiSecond AmendmentAugust 31 – September 2, 2018
  • Exempts firearms, ammunition and certain hunting supplies
  • General hunting supplies and animals used for hunting are not exempt
  • Certain cities may elect not to participate
  • More Information (2017) – this document includes a list of eligible and non-eligible items
MissouriEnergy StarApril 19 – 25, 2018
  • Exempts the following appliances if they are Energy Star certified: Clothes washers, clothes dryers, water heaters, dishwashers, air conditioners, furnaces, refrigerators, freezers, and heat pumps
  • Trash compactors, conventional ovens, ranges and stoves are not currently certified as Energy Star compliant, and therefore do not qualify. However, if the Energy Star label should be applied in the future, these items would become exempt during the holiday.
  • Local jurisdictions may elect to participate or not. See the link below for cities which will and will not participate.
  • More Information (2017)
MissouriBack to SchoolAugust 3 – 5, 2018
  • Exempts clothing having a taxable value of $100 or less
  • Exempts school supplies, as long as the total purchase does not exceed $50
  • Exempts computer software with a taxable value of $350 or less
  • Exempts personal computers with a taxable value of $1,500 or less
  • Exempts computer peripheral devices, not to exceed $1,500
  • Exempts graphing calculators not to exceed $150
  • The sales tax holiday may not apply to any retailer when less than two percent of the retailer’s merchandise offered for sale qualifies for the sales tax holiday. However, the retailer must provide the taxpayer a refund of the sales tax paid if the customer requests one.
  • Local jurisdictions may elect to participate or not. See the link below for cities which will and will not participate.
  • More Information (2017)
New MexicoBack to SchoolAugust 3 – 5, 2018
  • Exempts clothing or shoes priced at less than $100 per unit.
  • Exempts desktop, laptop, tablets or notebook computers priced at $1,000 or less
  • Exempts related computer hardware priced at $500 or less.
  • Exempts school supplies for use in standard, general-education classrooms priced below $30, $100, or $200 per unit, depending on the type of supplies
  • Certain exclusions apply in all groups.
  • More Information (2017)
OhioBack to SchoolAugust 3 – 5, 2018
  • Exempts clothing priced at $75 or Less
  • Exempts school supplies priced at $20 or Less
  • Exempts instructional materials priced at $20 or Less
  • More Information
OklahomaBack to SchoolAugust 3 – 5, 2018
South CarolinaBack to SchoolAugust 3 – 5, 2018
  • Exempts clothing priced at $100 or Less
  • Exempts school supplies priced at $100 or Less
  • Exempts computers priced at $1,500 or Less
  • Certain items are excluded, such as (but not limited to) rentals, mattresses, cameras, uniforms, sports equipment, and more. See the list here
  • More Information (from 2017)
TennesseeBack to SchoolJuly 27 – 29, 2018
  • Exempts most clothing, school supplies, and computers
  • Clothing and schools supplies must be individually priced at $100 or less to be exempt.
  • Computers must be priced at $1500 or less to qualify for the exemption.
  • More Information
TexasWeather PreparednessApril 28 – 30, 2018
  • Exempts portable generators priced at $3000 or less
  • Exempts hurricane shutters and emergency ladders priced at $300 or less
  • Exempts Batteries (AAA cell, AA cell, C cell, D cell, 6 volt or 9 volt), first aid kits, fuel containers, ground anchor systems and tie-down kits, hatchets and axes, mobile telephone batteries and chargers, nonelectric coolers and ice chests for food storage, nonelectric can openers, portable self-powered light sources (hand cranked flashlights), portable self-powered radios, including two-way and weather band radios, reusable and artificial ice products, smoke detectors, fire extinguishers and carbon monoxide detectors, tarps and other plastic sheeting priced at $75 or less
  • More Information
TexasEnergy Star and Water Efficient ProductsMay 26 – 28, 2018
  • Exempts the following Energy Star products: air conditioners with a sales price of $6000 or less; refrigerators with a sales price of $2000 or less; ceiling fans, incandescent and fluorescent light bulbs, clothes washers, dishwashers, and dehumidifiers
  • Exempts products such as toilets, faucets, shower heads, and irrigation controls that cary the WaterSense label or logo.
  • Exempts certain water conserving products like mulch, rain barrels, and plants, but only if the products are for use on residential property
  • More Information about Water Efficient Products Sales Tax Holiday
  • More Information about Energy Star Sales Tax Holiday
TexasBack to SchoolAugust 10 – 12, 2018
  • Exempts clothing and footwear priced at less than $100
  • Exempts backpacks used by elementary and secondary students priced at less than $100. Wheeled backpacks are included as long as they can also be worn with straps on a person’s back. Luggage is excluded.
  • Exempts personal purchase of school supplies. (Businesses must provide an exemption certificate to avoid sales tax.)
  • Retailers may not advertise that they will pay customers’ sales tax on non-exempt items. However, they may advertise that the selling price includes sales tax.
  • More Information
VirginiaBack to School / Energy Star /

Weather Preparedness

August 3 – 5, 2018
  • Exempts clothing and footwear costing less than $100 per item
  • Exempts school supplies costing less than $20 per item
  • Exempts portable generators costing less than $1000, gas-powered chainsaws costing less than $350, and chainsaw accessories and other hurricane preparedness items costing less than $60
  • Exempts qualifying Energy Star or WaterSense products for home use that cost less than $2500 each
  • More Information (from 2017)
WisconsinBack to SchoolAugust 1 – 5, 2018
  • Exempts clothing, if the sales price of any single item is $75 or less
  • A computer purchased by a consumer for the consumer’s personal use, if the sales price of the computer is $750 or less
  • School computer supplies purchased by the consumer for the consumer’s personal use, if the sales price of any single item is $250 or less
  • School supplies, if the sales price of any single item is $75 or less
  • More Information

States Without Sales Tax Holidays

The following states do not currently have a planned sales tax holiday: Arizona, California, Colorado, District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Pennsylvania, Rhode Island, South Dakota, Utah, Vermont, Washington, West Virginia, and Wyoming.

Some of these used to have sales tax free weekends/holidays but cancelled them in recent years:

  • Massachusetts cancelled their sales tax holiday in 2016, because they felt it had become too expensive.
  • North Carolina cancelled theirs in 2014, and although legislators considered adding it back in 2016, it did not pass.

Georgia and several of the states listed above as not having a have had various sales tax holidays in the past and may again pass legislation to approve them for 2018. At this time, however, there are no firm sales tax holidays in these states. (We will update this page as legislation passes and additional holidays are approved.)

Other states are considering new sales tax holidays.

  • Indiana – Bills in both houses of the state legislature last year would have created a tax-free weekend in Indiana for items like clothing and school supplies. Those bills failed to become law, but it’s an idea that has recently been in circulation.
  • Nebraska – Sen. Rick Kolowski of Omaha has introduced LB361 that would create a back-to-school sales tax holiday, aiming to keep shoppers from heading to Iowa to make their purchases. (Iowa currently has a sales tax holiday.) The bill would exempt clothing and footwear.
  • New Mexico – This state is actually looking to get rid of their tax holiday.
  • Rhode Island – Rep. Joseph Solomon Jr. (D-Warwick), has tried repeatedly to create a tax-free weekend for back-to-school shopping. Similar measures failed in both 2015 and 2016. The proposal would exempt most tangible personal property under $2500 from sales tax.
  • Tennessee – Tennessee currently has a back-to-school tax holiday, but is considering adding a second-amendment tax holiday as well. It is currently stuck in committee in the senate and has been placed behind the budget in the house.
  • Texas – Although Texas already has three sales tax holidays, Sen. Brandon Creighton of Conroe has proposed a bill to exempt guns and most hunting supplies for a period just before the start of hunting season for several years in a row.
  • Virginia – Senator Scott Surovell wants to extend the back-to-school tax free weekend to include computers. Note that this holiday is assumed but not yet official as of this writing.
  • Washington – House Bill 1457 from Rep. Morgan Irwin would establish a back-to-school sales tax holiday for the state of Washington. If passed, it will exempt clothing items that don’t exceed $100 and school supplies of $10 or less from sales tax during the holiday.

Tips for Retailers

In order to make sure you track your sales accurately during these sales tax holidays, you need to know whether or not you are required to participate in the sales tax holidays, and plan accordingly. This includes modifying tax calculations on your website or in-store as needed, and classifying exempt items properly. The use of sales tax software like our TaxTools product can help simplify the process and help you make sure you’re in compliance with tax holiday laws and regulations.

Breaking it Down

If you analyze the list above, you’ll notice that there are really only 4 main types of tax holidays. These are:

  • Back to School Sales Tax Holidays – These are the most common across the board. The holiday generally happens just before school-age children are set to return to the classroom in the fall. What gets exempted from sales tax differs somewhat by state, but it generally includes school supplies, clothing, shoes, and sometimes computers and software.
  • Energy Star Appliance Sales Tax Holidays – This holiday encourages consumers to decrease their use of energy resources by purchasing appliances that are more energy or water efficient.
  • Second Amendment Sales Tax Holidays – Despite the political divide over gun rights, several states exempt these items from sales and use tax with a holiday. In general, these occur just before the start of hunting season.
  • Severe Weather Preparedness Sales Tax Holidays – This type of holiday exempts items that people would need when power goes out, severe storms hit, or during other types of emergencies. Think batteries, flashlights, and power generators.

The post 2018 Sales Tax Holidays by State appeared first on AccurateTax.com.

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Understanding Sales Tax for Streaming Services https://www.accuratetax.com/blog/sales-tax-streaming-services/ Tue, 13 Mar 2018 20:23:00 +0000 https://www.accuratetax.com/?p=5172 sales tax on streaming services

How does sales tax apply to streaming services like Netflix, Spotify, and other similar services? The rise and expansion of the internet has vastly changed the way many sectors of the economy work. From facilitating ecommerce to allowing for the download of digital media, this technology has greatly expanded the reach of all types and sizes of businesses. It has also fundamentally changed the way many people access things like music and movies, and just like in other areas, this has created problems for states concerning sales tax collection. Moving Away from Physical Goods It used to be that, if... Read More

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sales tax on streaming services

How does sales tax apply to streaming services like Netflix, Spotify, and other similar services?

The rise and expansion of the internet has vastly changed the way many sectors of the economy work. From facilitating ecommerce to allowing for the download of digital media, this technology has greatly expanded the reach of all types and sizes of businesses. It has also fundamentally changed the way many people access things like music and movies, and just like in other areas, this has created problems for states concerning sales tax collection.

Moving Away from Physical Goods

It used to be that, if you wanted to hear the newest song by your favorite artist or check out the latest hot movie, you would go out and buy a physical product like a CD or DVD. As technology advanced, however, it became possible to purchase these products in digital form online and download them directly to your computer or mobile device.

Over time, states have adapted to this change, with some expanding the definitions of tangible personal property in their sales tax laws to include software and media delivered digitally. With these types of goods, however, the purchaser receives full and permanent rights to the personal use of the product, just as they would have had they bought physical media that contained the product. The streaming services like Netflix and Spotify that have arisen more recently present issues that are not so clear-cut.

What Makes Streaming Services Different?

In order to understand the difference between digital downloads and streaming subscription services, it’s helpful to take a look at how both kinds of purchases work. With a digitally-downloaded purchase, whether it’s an ebook, album or movie, you take final possession of the product. Signing up for a streaming subscription, however, allows you to access a wide range of movies or music, but only for as long as you keep the subscription active.

Another difference between digitally downloaded purchases and those accessed through streaming services is that with the latter, you don’t have ultimate control over what is available for you to watch or listen to. Netflix, for example, adds and removes TV shows and movies all the time, and so your subscription only provides access to whatever the service decides to make available.

There are some parallels to this type of consumption of media before the rise of the internet. Video rental stores like Blockbuster, for instance, allowed you to come in and pick out a movie you would pay to rent. This didn’t generally involve a monthly membership charge, but it was a way to pay for something you only had temporary access to, and it was usually covered under state sales tax statutes.

How Tax Can Be Applied to Streaming Services

When state sales tax laws were first written, the economy was dominated by sales of physical goods. Services have now assumed the leading role, however, and many states have adjusted to this by adding them to sales tax statutes. With streaming services now on the rise, states are beginning to look at how they can apply taxes to these types of purchases as well.

Several states including Florida, North Carolina, Pennsylvania and Washington currently tax streaming services under existing sales tax laws. This approach has not received pushback from Netflix in particular, although different approaches in other states, particularly those that try to expand taxes on utilities or communications services to streaming services, have not fared as well.

Setting up an entirely separate tax that only applies to streaming services creates problems as well, as the 1998 Internet Tax Freedom Act prevents state and local governments from imposing taxes that unfairly target internet-based businesses. Trying to conflate streaming with pay TV services has not held up to legal scrutiny either, as a Kentucky law oriented in this way was struck down by the courts.

Trends Moving Forward

Just as with most businesses related to the internet, it’s expected that states will keep trying to find a way to tax streaming services, especially as they proliferate and continue to cut into sales of movies and music albums that are already subject to state sales tax. The best and most legally-sound approaches seem to be those taken by Washington and Pennsylvania, which modified their existing sales tax laws to cover streaming.

These two states did this in somewhat different ways, with Washington stipulating that the tax applied to the actual item that was paid for rather than the way it was accessed. So, if you access any given movie or album through a service that you pay for, whatever you pay is subject to sales tax. In Pennsylvania, the state simply modified existing sales tax law to include streaming services.

Because these subscriptions are not terribly expensive, the good news for consumers is that, even if your state adopts a tax on streaming services, it likely will only raise your bill about a dollar per month. However, because of its great potential in terms of a revenue stream for states, it is likely that many more states will find a way to tax streaming services in the near future.

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Washington’s New Marketplace Facilitator Sales Tax Law https://www.accuratetax.com/blog/marketplace-facilitator-sales-tax-law/ Wed, 28 Feb 2018 20:30:29 +0000 https://www.accuratetax.com/?p=5160 Marketplace Facilitator Sales Tax Law

One of the most confusing and frustrating issues to deal with as an online seller is the question of sales tax. Understanding when you have an obligation to collect sales tax from your customers is a challenge, and in part, that’s because even tax and legal experts don’t always agree. One constant in the debate, however, is the fact that states are continuing to search for ways to collect sales tax from online sales. One new addition to this dynamic is the recently enacted Marketplace Facilitator Law in Washington state. What Is the Marketplace Facilitator Law? The Marketplace Facilitator Law... Read More

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Marketplace Facilitator Sales Tax Law

One of the most confusing and frustrating issues to deal with as an online seller is the question of sales tax. Understanding when you have an obligation to collect sales tax from your customers is a challenge, and in part, that’s because even tax and legal experts don’t always agree. One constant in the debate, however, is the fact that states are continuing to search for ways to collect sales tax from online sales. One new addition to this dynamic is the recently enacted Marketplace Facilitator Law in Washington state.

What Is the Marketplace Facilitator Law?

The Marketplace Facilitator Law was signed in July 2017, and it went into effect on January 1, 2018. It stipulates that the responsibility for collecting and remitting sales tax for online purchases by customers in Washington state falls on the company supporting the marketplace rather than on the individual sellers.

This has prompted Amazon and Etsy, among others, to begin collecting and remitting sales tax to Washington on any sales made through their platform by third party sellers to customers in the state. Of course, the marketplace facilitator still has to have a nexus established in the state in order for the law to apply to them, and the criteria for this are outlined in the legislation.

There are a number of benefits for both sides from this new approach, including the fact that, for sellers, everyone making a sale is operating on a level playing field. One reason many sellers resisted charging sales tax to customers other than those in their home state is that they were afraid they’d be operating at a disadvantage if their competitors did not add the tax. The increased purchase price for their customers might drive that business elsewhere.

This is on top of the fact that it’s immensely challenging for small online sellers to stay on top of the myriad regulations regarding sales tax rates, nexus and the taxability of goods from one state to the next. It’s also a huge hassle for states to try and track down non-compliant sellers and collect back taxes from them. It’s much more straightforward on all fronts if the selling platform handles all of this, and that’s what the new law in Washington is tapping into.

Other Approaches

In other states, the emphasis of late has been to go after the individual sellers in an attempt to make it seem worthwhile for them to register with the state to collect and remit sales tax themselves. Along these lines, a judge in Massachusetts recently issued an order directing Amazon to disclose information about sellers who use its platform, but the resources required to track down and collect from these individuals are considerable.

Another approach was recently presented by a multistate tax commission, which offered an amnesty program to sellers that would forgive any back sales tax payments they owed in exchange for a commitment that they would collect sales tax going forward. However, only about 850 sellers have signed up so far, bringing the effectiveness of this approach into question.

The Question of Nexus

One thing that is certain is that these types of trends will continue moving forward. States have lost significant sales tax revenue thanks to the growth of online selling, and the share that represents of total retail sales will only continue to increase over time. There are a number of economic nexus laws now winding their way through the courts in the hopes of eventually overturning the Supreme Court decision in Quill Corp v North Dakota, which is what current interpretations of nexus as a physical presence are based on.

That ruling stipulated that an actual physical presence in a state was required for the establishment of nexus in that state. Nexus is what gives the state government the right to levy taxes on a business, and so without it, no taxes could be enforced. In some states, this included the use of specific print advertising materials or individuals acting as affiliates, but since the growth of the online marketplace has changed selling dynamics so dramatically, the laws as they are written are difficult to stretch to accommodate the current circumstances.

Amazon Fulfillment Centers

One point of contention among sellers, particularly those who use Fulfillment by Amazon, is whether or not having their products stored in an Amazon fulfillment center in a particular state creates a nexus for them in that state. Many feel, and have been advised by tax professionals, that because they have no control over where their products are stored, and because they do not own the facility, that there is no nexus. Many states disagree.

With the imposition of the Marketplace Facilitator Law, Washington has done away with this aspect of the debate for sales made within its borders. Since it’s Amazon who owns the warehouses, and because the company is based in the state anyway, it absolutely has a nexus, and so sales tax laws may be applied to it. Several other states including Arizona and Minnesota already consider the marketplace to be the seller for sales tax purposes when it comes to online sales, and so it seems likely that some other states may begin to move in that direction as well.

The post Washington’s New Marketplace Facilitator Sales Tax Law appeared first on AccurateTax.com.

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