Subject Matter Experts

Dillon Tax Consulting provides tax advisory and compliance services and solutions to companies across all industries, ranging in revenue size from several hundred thousand dollars to multi-billion dollars. We are your subject matter experts regarding the following State & Local Tax matters:

  • Sales & Use Tax
  • Transaction Tax
  • Admissions/Meals Tax
  • Business License Tax
  • Gross Receipts Tax
  • Use & Occupancy Tax
  • Income/Franchise Tax
  • Capital Stock Tax
  • Personal Property Tax

Blog: Dillon Tax Consulting

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Cloud-based Services: “The Wild West” and the Cavalry

Michael T. Dillon, Esq., Dillon Tax Consulting LLC
11/8/2015

The New York Department of Taxation and Finance (Department) recently issued an Advisory Opinion providing their interpretation of yet another Taxpayer's provision of Software As a Service (SAaS).  In TSB-A-15(36)S, Taxpayer sought an Advisory Opinion from the Office of Counsel for the Department, as to the application of New York sales tax to its provision of a cloud-based software platform service delivered through four key offerings: (1) Line-Item IT billing, (2) budgeting and financial reporting, (3) service costing, and (4) business unit planning.  [TSB-A-15(36)S, New York State Department of Taxation and Finance, Sales Tax Advisory ...

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“What’s A Remote Seller To Do?” you ask. “Register and Collect,” states say.

by Michael T. Dillon Esq., Dillon Tax Consulting LLC
7/29/2015

Ohio is the most recent of states to have enacted a click-through nexus provision.  To date, 24 other states have adopted (by statute or otherwise) some form of either an affiliate nexus or a click-through nexus provision.

Under an affiliate nexus provision, a rebuttable presumption of nexus is typically established for an out-of-state seller that has an in-state affiliate selling similar products, storing inventory, or engaging in other activities that potentially assist the out-of-state entity in building or maintaining a marketplace in the state.  Under a click-through nexus provision, a rebuttable presumption of nexus is established for an out-of-state seller ...

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The Quill ‘Physical Presence’ Standard – A “Perfect Storm” Brewing

by Michael T. Dillon, Esq., Dillon Tax Consulting LLC
3/15/2015

Ever since, and even before, the U.S. Supreme Court’s landmark 1992 decision in Quill Corp. v. North Dakota, in which it affirmed the Commerce Clause ‘physical presence’ standard for sales tax nexus, Congress has continually grappled with the increasing sales tax revenue shortfalls and perceived unfair advantage that online and mail-order retailers have over brick and mortar retailers.  The ‘physical presence’ standard affirmed in Quill currently bars states from imposing sales tax compliance obligations on out-of-state retailers who lack a ‘physical presence’ with the state. 

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Try, Try Again ... Illinois Imposes a New and “Improved?” Affiliate Nexus Law

Michael T. Dillon, Dillon Tax Consulting LLC
2/10/2015

Effective January 1, 2015, out-of-state retailers are once again presumed to have sales tax nexus in Illinois if they satisfy the following criteria:

  • the out-of-state retailer has a contract with a person in Illinois;
  • under the contract, the person in Illinois refers potential customers to the retailer and the retailer pays to the person in Illinois a commission or other consideration based on the sale of tangible personal property by the retailer;
  • the person in Illinois provides to the potential customers a promotional code or other mechanism that allows the retailer to trace the purchases made by these customers;
  • the ...
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Will Net Neutrality Cost American Consumers More in Taxes?

1/18/2015

Net neutrality is the principle that Internet service providers and governments should treat all data on the Internet equally, not discriminating or charging differentially by user, content, site, platform, application, type of attached equipment, or mode of communication. There has been extensive debate about whether "Net neutrality" should be required by law. Proponents of "Net neutrality" say is it needed to promote fair competition and service, claiming telecom companies intentionally slow the traffic of certain applications and content providers, creating artificial scarcity and forcing consumers to purchase their services. Critics of such regulation claim that data discrimination is necessary in ...

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Recent Blog Articles

Recent Blog Articles

State Economic Nexus Standards

State Economic Nexus Standards

6/27/2018 12:00:00 AM EDT
a month ago

State Economic Nexus Standards

In the wake of the U.S. Supreme Court's decision in South Dakota v. Wayfair, states may now require remote sellers with no physical presence in a state to collect sales tax on sales of taxable products and services delivered to customers in that state.  This ruling does not simply affect online retailers, but all sellers of taxable goods and services who make sales into state in which they lack physical presence.  Attached as an informational reference tool is a listing of the states that have adopted some form of economic nexus standard.  For simplicity sake, we have categorized them as South Dakota Economic Nexus (meaning those states that have adopted economic nexus thresholds similar to those adopted by South Dakota, Alabama Economic Nexus (meaning all other states that have adopted economic nexus thresholds that vary form those adopted by South Dakota) and Marketplace Nexus (meaning those states that have adopted a broader nexus provision, addressing the obligations of remote sellers, marketplace facilitators (e.g., Amazon) and referrers (e.g., commissioned referral agents) that exceed the state's precribes economic nexus thresholds).  As noted, many of these states have adopted Notice and Reporting Requirements, which may impose obligations on a remote seller regardless of whether the seller exceeds the state's economic nexus thresholds.

Each of these states may have aspects of their laws that vary form the South Dakota law, which itself is still subject to consideration on remand from the US Supreme Court to the lower court for aspects of the the law not inconsistent with the Court's ruling in Wayfair regarding the physical presence rule.  As such, each of these state economic nexus standards may be subject to judicial scrutiny to the extnet they may impose an undue burden on interstate commerce.  Furthermore, states that have adopted these laws are only beginning to address the effective date that they intend to implement enforcement of the economic nexus standard in their state.  

State Notice & Reporting Requirements

A number of states have also adopted Notice & Reporting Requirements, which compel remote sellers, typically whose annual sales exceed a certain threshold - often as low as $10,000 - to elect to either (1) to collect and remit sales tax on sales to customers in the state, despite lacking a physical presence, or (2) to notify customers on their website and on each invoice of the customer’s use tax reporting obligation, and to provide annual information to each customer and to the Department of Revenue regarding all sales customers in the state.  Failure to do so results in penalties that typically are larger than the remote sellers sales in that state.  For your consideration, attached as an informational tool is a listing of the states that have adopted notice and reporting requirements.

As such, it is incumbent on every remote seller to proactively engage someone - externally or internally - to closely monitor these and every state regarding implementation and enforcement of these provisions.  Furthermore, every remote seller should implement processes to proactively monitor its sales activity - by revenue and transaction amount - both historically and prospectively, to ensure that they are meeting their obligations in each state and mitigating any historical exposure.  Lastly, to the extent that a remote seller has or had physical presence nexus in a state (eg., by virtue of inventory in a third party fulfillment center), that seller should engage an expert to discuss the options to register and/or negotiate resolution of historical liabilities. 

Wayfair: The U.S. Supreme Court Throws Out the Physical Presence Requirement for Sales Tax Nexus – What Does This Mean for Remote Sellers?

Wayfair: The U.S. Supreme Court Throws Out the Physical Presence Requirement for Sales Tax Nexus – What Does This Mean for Remote Sellers?

6/22/2018 12:00:00 AM EDT
a month ago

As I predicted in my March 24, 2018 article “The Future of the Quill Sales Tax “Physical Presence” Nexus Standard – Part Two”, yesterday the United States Supreme Court threw out the 51 year old physical presence sales tax nexus standard, when it rendered its decision in South Dakota v. Wayfair, Inc., et al., 585 U.S. __ (June 21, 2018).  At issue was whether South Dakota may require remote sellers to collect and remit sales tax without some additional connection in the State other than more than $100,000 in annual sales or more than 200 transactions.  The Supreme Court held that Quill Corp. v. North Dakota and National Bellas Hess Inc. v. Department of Revenue of Illinois -- which held that a state cannot require an out-of-state seller with no physical presence in the state to collect and remit sales taxes on goods the seller ships to consumers in the state -- are overruled, upheld the South Dakota nexus threshold, and remanded the case for further proceedings consistent with removal of the physical presence nexus standard.

The Future of the Quill Sales Tax “Physical Presence” Nexus Standard – Part Two

The Future of the Quill Sales Tax “Physical Presence” Nexus Standard – Part Two

3/24/2018 12:00:00 AM EDT
4 months ago

In Part One of this two-part article, we discussed the physical-presence requirement for sales tax nexus, as established by the U.S. Supreme Court in the 1992 case Quill Corp. v. North Dakota, 504 U.S. 298 (1992).  We also provided an overview of the Court’s decisions that led to the Quill physical-presence standard, Congress’s inability to change or overrule the decision through legislation, and state efforts to expand or ignore the physical-presence standard, through attributional and agency nexus theories, click-through and affiliate nexus provisions, use tax reporting and notification standards, and most recently, economic nexus standards. 

The Future of the Quill Sales Tax “Physical Presence” Nexus Standard – Part One

The Future of the Quill Sales Tax “Physical Presence” Nexus Standard – Part One

3/7/2018 12:00:00 AM EST
5 months ago

The United States Supreme Court is set to hear oral arguments on April 17, 2018, in South Dakota v. Wayfair, Inc. et. al. [South Dakota v. Wayfair Inc., et. al., 901 N.W.2d 754 (S.D. September 13, 2017); cert. granted (U.S. January 12, 2018)(No. 17-494)]  At issue is whether the Court should abrogate Quill's sales-tax-only, physical-presence requirement?

MTC Amnesty Program Provides Current Solution for Online Sellers Seeking to Resolve Sales Tax Compliance Nightmares

MTC Amnesty Program Provides Current Solution for Online Sellers Seeking to Resolve Sales Tax Compliance Nightmares

9/7/2017 12:00:00 AM EDT
11 months ago

If you’re an online seller using the Amazon FBA program to facilitate sales, there’s a lot to absorb and consider these days regarding sales tax compliance.  Depending on who you talk to, you may get different advice:

  1. Some attorneys, hungry to fight the legal issues in court (a highly costly endeavor with no guarantees), will advise that if your only activity in the state is inventory in an Amazon warehouse, you do not have to comply with that state’s sales tax laws ... that your inventory in an Amazon warehouse does not establish nexus in that state for sales tax purposes;
  2. They or others may advise that Amazon should collect the sales tax ... that Amazon is acting in an agent capacity on behalf of the FBA sellers and that the sales tax compliance responsibility should fall on Amazon’s shoulders (see South Carolina’s recent announcement espousing this theory);
  3. In contrast, other state tax experts, seeking to minimize your risk – including the author - will advise that your inventory in an Amazon warehouse in a state does establish the requisite sales tax nexus sufficient to require compliance with that state’s sales tax laws, and that arguably Amazon’s activities on behalf of FBA sellers establishes an agency nexus for the online sellers in those same states, regardless of the inventory, but bolstered by the presence of it;  
  4. These experts may also advise that even if Amazon were determined to have taken on the sales tax compliance obligations of its FBA sellers, that the FBA sellers likewise have the same compliance obligations (joint and several liability for both Amazon AND the FBA seller, if you will);
  5. Likewise, they or others may advise that in state auditors can and will hunt down Amazon FBA sellers, subject them to their state’s sales tax laws and assess them for historical liabilities relating to all prior periods in which they had inventory in an Amazon warehouse in the state (witness what California, Washington State and several other states are achieving in this regard). 

MTC Announces Voluntary Amnesty Initiative for Online Marketplace Sellers

MTC Announces Voluntary Amnesty Initiative for Online Marketplace Sellers

8/11/2017 12:00:00 AM EDT
1 years ago

The Multistate Tax Commission (MTC) has just announced a special tax amnesty program for unregistered online marketplace sellers that have established nexus and historical exposure as a result of storing inventory in third-party fulfillment centers that facilitate retail sales into the state (e.g., Amazon FBA program).  Under the program, eligible taxpayers may obtain amnesty from any past due sales/use tax, and if applicable, income/franchise tax liability, including interest and penalties, in connection with online retail sales activity in the participating states. 

Does the Sales Tax Nexus “Physical Presence” Standard Exist?

Does the Sales Tax Nexus “Physical Presence” Standard Exist?

2/22/2017 12:00:00 AM EST
1 years ago

U.S. Supreme Court Declines to Review Florida Sales Tax Imposed on Out of State Inventory Delivered to Out of State Customers

States Are Looking for Unregistered / Unpaid Sales Tax . . . Are You at Risk?

States Are Looking for Unregistered / Unpaid Sales Tax . . . Are You at Risk?

2/9/2017 12:00:00 AM EST
1 years ago

With New Years Day comes New Years Resolutions, some of which we keep, some of which we don’t, and some of which we fail to make because we aren’t even aware that one is needed.  The same holds true for your business.  Often times, “We Don’t Know What We Don’t Know”.  It’s my calling to educate companies about this, with regard to multistate sales tax, nexus and ways to minimize audit risk for your company.  Because with this New Year, state auditors are looking for your company as you read this.