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

sales tax

Sales Tax: Strategic Thinking as Your Business Plans for 2024

Michael T Dillon, Dillon Tax Consulting LLC
11/21/2023

As 2023 comes to an end, lets recap a few important sales tax changes and offer insight into what taxpayers can expect for 2024:

 

·      Economic Nexus Transaction Counts – Initially, more than half of the states adopting economic nexus thresholds included a transaction count element as part of the threshold, meaning that a remote seller would be deemed to have sales tax nexus with a state if sales exceeded either the revenue threshold or the transaction count threshold.  Not only are the transaction counts arbitrary and more burdensome to track for remote sellers, but they have an outsized impact on small ...

read more

2021 Sales Tax Highlights and Advice for 2022

11/12/2021

As 2021 comes to an end, lets recap a few important sales tax changes and offer insight into what taxpayers can expect for 2022:

  • Economic Nexus – As of July 2021, two states, Florida and Kansas, have sales tax economic nexus. While both measures impose a safe harbor threshold of $100,000 in annual sales, below which remote sellers do not have to register to collect sales tax, the measures have distinct measurement criteria for determining whether a remote seller has sales tax nexus.  You can learn more about both measures in the linked Economic Nexus chart on our website.
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Maryland imposes sales and use tax on the sale of software and digital products

Michael T. Dillon, Esq.
3/9/2021

Maryland will begin imposing sales tax on the sale of digital products, starting March 14, 2021.  This is an abrupt change in tax policy for a state that has historically steered away from imposing sales tax on electronically delivered and remotely accessible software, digital products, and cloud-based data and information services.  These changes may be found primarily in Maryland Tax Code Sections 11-101(h) and 11-101(n).

The Comptroller’s office has published guidance on HB 932 21st Century Fairness Act which imposes sales and use tax on the sale of digital products.  The guidance can be found here:

 

read more

City of Chicago Economic Nexus “Safe Harbor”, effective July 1, 2021

Michael T. Dillon, Esq.
1/26/2021

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-four (44) states (all except Florida and Missouri) have adopted economic nexus provisions for sales tax compliance purposes.  Even the Alaskan local jurisdictions have gotten in on the action, adopting an intergovernmental agreement to establish a Commission that will provide governance over a streamlined, single-level administration of sales tax collection and remittance. 

read more

Economic Nexus Update: July 8, 2020 – TN, LA, IL

7/8/2020

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-four (44) states have adopted economic nexus provisions for sales tax compliance purposes.  The biggest trends right now continue to be that states are revising their thresholds and also adopting marketplace nexus provisions.

Recently enacted Tennessee and Louisiana legislation imposes compliance obligations on marketplace facilitators.  In addition, recent Tennessee legislation reduces the economic nexus threshold for remote sellers and remote marketplace facilitators, while Louisiana and Illinois have changed or reiterated the compliance obligations impacting remote ...

read more

Where States Will Turn for Revenue in Response to Declining Sales Tax Collections?

Michael T. Dillon, Esq.
5/27/2020

The Current State of Things

As I predicted in my March 25th post, Sales Tax Strategies During the Economic Disruption of the COVID-19 Outbreak, every state is revising its FY 2020 revenue forecasts in response to declining tax collections for March and April.  [https://www.ncsl.org/research/fiscal-policy/coronavirus-covid-19-state-budget-updates-and-revenue-projections637208306.aspx]  As reported by the National Conference for State Legislatures, some examples of these shortfalls include:

  • FloridaOffice of Economic & Demographic Research reported sales tax collection came in $12.4 million or .58% below monthly estimates. 
  • Illinois: Current fiscal year general fund revenues were revised to $2.7 billion ...
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Economic Nexus Update: July 2, 2019 – CO, CT, IL, ME, NY

7/2/2019

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-three (43) states have adopted economic nexus provisions for sales tax compliance purposes.  The biggest trends right now are that states are revising their thresholds and also adopting marketplace nexus provisions.

Recently enacted New York legislation increases the economic nexus threshold for remote sellers and remote marketplace providers, while Connecticut reduces its threshold.  Colorado codifies its Department’s rules and Maine and Illinois adopt marketplace facilitator provisions.

We highlight some of these below:

  1. States Adopt ...
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Economic Nexus Update – AZ, MD, OK, MN

6/5/2019

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-three (43) states have adopted economic nexus provisions for sales tax compliance purposes.  Arizona and Oklahoma are most recent states to enact an economic nexus provision for remote sellers.

Since last reporting on this subject in early May, we have also seen two (2) more states choosing to impose sales tax compliance obligations on marketplace providers or facilitators, with this number now at twenty-eight (28) states.  Furthermore, recently enacted Minnesota legislation changes the economic nexus ...

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Economic Nexus Update – CA, NY, SC, IN, UT

Michael T. Dillon, Esq., Dillon Tax Consulting LLC
5/16/2019

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-two (42) states have adopted economic nexus provisions for sales tax compliance purposes.  The most compelling change for states that have adopted economic nexus is that California has enacted Assembly Bill 147, which increases the economic nexus threshold for remote sellers to $500,000 in annual sales from the previously adopted $100,000 threshold, and removes the transaction count threshold.

Since last reporting on this subject in mid-April, we have also seen five (5) more ...

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Economic Nexus Update – ID, RI, KY, VA, AR, NM, WV, WY, ND, HI

4/19/2019

Since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-two (42) states have adopted economic nexus provisions for sales tax compliance purposes.  With the state legislative sessions in full swing, we are seeing the predictions become a reality.  The most compelling change is the expected upswing in the number of states choosing to impose sales tax compliance obligations on marketplace providers or facilitators, with this number now at twenty-one (21) states.  We highlight some of these below:

 

  1. States Will Adopt Economic Nexus – ID, VA, AR, NM

  • Idaho – Beginning June ...
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The Future of the Quill Sales Tax “Physical Presence” Nexus Standard – Part Two

Michael T. Dillon, Esq., Dillon Tax Consulting LLC
3/24/2018

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. 

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

Michael T. Dillon, Esq., Dillon Tax Consulting LLC
3/7/2018

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?

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

Michael T. Dillon, Esq., Dillon Tax Consulting LLC
9/7/2017

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 ...
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MTC Announces Voluntary Amnesty Initiative for Online Marketplace Sellers

Michael T. Dillon, Esq., Dillon Tax Consulting LLC
8/11/2017

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. 

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

Michael T. Dillon, Esq., Dillon Tax Consulting LLC
2/22/2017

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

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Sales Tax on Cloud-computing: Rulings Also Mean More Uncertainty and Unpredictability

Michael T. Dillon, Esq., Dillon Tax Consulting LLC
12/13/2016

A number of sales tax decisions in Tennessee, Indiana and Illinois serve to remind us all of the uncertainty involving cloud computing transactions, and the importance to seek guidance from tax practitioners regarding your specific facts.  While each taxpayers’ facts involved the access to and/or provision of cloud-based services, the transactions for each were unique, as were the States and their analysis / conclusions.  One state decided that the taxpayer’s cloud-computing transactions were taxable, whereas the other states determined that the cloud-based transactions were not taxable sales.  These rulings, while pertinent to the taxpayers at issue, only add to ...

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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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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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Recent Blog Articles

Recent Blog Articles

Sales Tax Update – December 2023

Sales Tax Update – December 2023

12/12/2023 12:00:00 AM EST
2 months ago

Online commerce provides the ideal environment for wholesale transactions and drop-shipments.  You can literally have no employees or inventory – just a website and you are in business.  BUT – if you are the wholesaler, every sale you make is considered a retail transaction by taxing authorities, and is subject to applicable sales tax, unless and until you can prove that it is exempt from sales tax (that is, present a valid resale exemption certificate).  This means that the wholesaler is subject to sales tax nexus rules, and is responsible to either (1) collect and remit sales tax, OR (2) collect, verify and maintain applicable resale exemption certificates.

Sales Tax: Strategic Thinking as Your Business Plans for 2024

Sales Tax: Strategic Thinking as Your Business Plans for 2024

11/21/2023 12:00:00 AM EST
3 months ago

As 2023 comes to an end, lets recap a few important sales tax changes and offer insight into what taxpayers can expect for 2024:

 

·      Economic Nexus Transaction Counts – Initially, more than half of the states adopting economic nexus thresholds included a transaction count element as part of the threshold, meaning that a remote seller would be deemed to have sales tax nexus with a state if sales exceeded either the revenue threshold or the transaction count threshold.  Not only are the transaction counts arbitrary and more burdensome to track for remote sellers, but they have an outsized impact on small businesses and sellers with high volume / low price point sales per transaction.  For example, a business with an average sale of $20 can exceed a state’s 200 transaction threshold with only $4,000 in sales. This point has been made and observed by The General Accounting Office’s November 2022 “Report to Congressional Requesters, Remote Sales Tax, Federal Legislation Could Resolve Some Uncertainties and Improve Overall System”.  As of August 2023, Louisiana became the latest in a growing number of states that have dropped the transaction count from their sales tax economic nexus threshold.  South Dakota dropped its transaction count effective July 2023, in addition to 8 other states that had previously adopted a transaction count as part of their nexus threshold (CA, CO, IA, ME, MA, ND, WA, WI).  You can learn more about both measures in the linked Economic Nexus chart on our website.  The Streamlined Sales Tax (SST) Governing Board, and its State and Local Advisory Council also seek to remove the transaction count component from SST states, as a best practice

2022 – the Year of the Sales Tax Audit

2022 – the Year of the Sales Tax Audit

12/8/2021 12:00:00 AM EST
2 years ago

2022 is expected to bring heightened enforcement and increased sales tax audit activity for remote sellers.  Charles Maniace, a vice president at the tax software firm Sovos, states that “States are now truly ready to [start] being fairly aggressive in their enforcement against existing online sellers.”  [Forbes, Sales Taxes in 2022 – Issues to Watch for Online Retailers, by Liz Farmer (November 30, 2021)]

2021 Sales Tax Highlights and Advice for 2022

2021 Sales Tax Highlights and Advice for 2022

11/12/2021 12:00:00 AM EST
2 years ago

As 2021 comes to an end, lets recap a few important sales tax changes and offer insight into what taxpayers can expect for 2022:

  • Economic Nexus – As of July 2021, two states, Florida and Kansas, have sales tax economic nexus. While both measures impose a safe harbor threshold of $100,000 in annual sales, below which remote sellers do not have to register to collect sales tax, the measures have distinct measurement criteria for determining whether a remote seller has sales tax nexus.  You can learn more about both measures in the linked Economic Nexus chart on our website.

State Economic Nexus Standards

State Economic Nexus Standards

7/4/2021 12:00:00 AM EDT
2 years ago

State Economic Nexus Standards - UPDATED AS OF 8/1/23

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.  

 

State Marketplace Facilitator Compliance Standards - UPDATED AS OF 8/1/23

Since Washington State first adopted a requirement that marketplace providers must collect and remit sales tax directly to the Department for all sales made on their marketplace, all states have chosen to impose sales tax compliance obligations on marketplace providers or facilitators. Attached as an informational reference tool is a listing of the states that have adopted some form of a marketplace facilitator nexud and compliance standard.  Though the deifnition of a marketplace facilitator must be determined on a state by state basis (and is beyond the scope of this article), typically a marketplace facilitator is a business that provides a forum or platform on which third party sellers can advertise and sell their products, and on which the marketplace also provides billing and collection (directly or indirectly), or sets prices, or provides inventory storage and/or fulfillment services, among other things. The more recent trend among states, including California, is to adopt a broader definition of “marketplace facilitator”, including any business that lists a marketplace seller’s items for sale on their platforms.

 

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.

 

WHAT YOU MUST KNOW

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. 

Maryland imposes sales and use tax on the sale of software and digital products

Maryland imposes sales and use tax on the sale of software and digital products

3/9/2021 12:00:00 AM EST
2 years ago

Maryland will begin imposing sales tax on the sale of digital products, starting March 14, 2021.  This is an abrupt change in tax policy for a state that has historically steered away from imposing sales tax on electronically delivered and remotely accessible software, digital products, and cloud-based data and information services.  These changes may be found primarily in Maryland Tax Code Sections 11-101(h) and 11-101(n).

The Comptroller’s office has published guidance on HB 932 21st Century Fairness Act which imposes sales and use tax on the sale of digital products.  The guidance can be found here:

 

City of Chicago Economic Nexus “Safe Harbor”, effective July 1, 2021

City of Chicago Economic Nexus “Safe Harbor”, effective July 1, 2021

1/26/2021 12:00:00 AM EST
3 years ago

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-four (44) states (all except Florida and Missouri) have adopted economic nexus provisions for sales tax compliance purposes.  Even the Alaskan local jurisdictions have gotten in on the action, adopting an intergovernmental agreement to establish a Commission that will provide governance over a streamlined, single-level administration of sales tax collection and remittance. 

Economic Nexus Update: July 8, 2020 – TN, LA, IL

Economic Nexus Update: July 8, 2020 – TN, LA, IL

7/8/2020 12:00:00 AM EDT
3 years ago

As we have previously reported, since the U.S. Supreme Court’s landmark decision in South Dakota v. Wayfair, 585 U.S. __ (June 21, 2018), forty-four (44) states have adopted economic nexus provisions for sales tax compliance purposes.  The biggest trends right now continue to be that states are revising their thresholds and also adopting marketplace nexus provisions.

Recently enacted Tennessee and Louisiana legislation imposes compliance obligations on marketplace facilitators.  In addition, recent Tennessee legislation reduces the economic nexus threshold for remote sellers and remote marketplace facilitators, while Louisiana and Illinois have changed or reiterated the compliance obligations impacting remote sellers and marketplace facilitators in these states.