Changes in Sales Tax Laws

September, 2020

While the law may be slow to change and evolve, eventually it does. COVID-19 is taking a toll on the economy and sales tax collections have substantially decreased. From April to August, New York’s sales tax revenue was down billions from the same period last year. As a result, we predict there may be some upcoming changes in sales tax laws and possibly sales tax rates in order to compensate for the loss in revenue.

Some states have already increased sales tax, and other taxes, in different areas. Some such increases are:

  • Halifax County, Virginia increased its local sales tax rate by 1% beginning July 1, 2020.
  • Kentucky established a vapor products tax which went into effect on August 1, 2020.
  • California increased its excise tax on motor vehicle fuel as of July 1, 2020.
  • Virginia doubled its tax on cigarettes which began on July 1, 2020.
  • Louisiana began requiring remote sellers and marketplace facilitators to begin collecting state and local sales tax as of July 1, 2020.
  • Connecticut reinstated its 10-cent-per-bag fee on single-use plastic bags as of July 1, 2020.

With states responding to decreased revenue and larger budget deficits, what will we see in the near future? Sales Tax Defense is here if you or your client need to review the taxability of any products or services. Feel free to contact us!

Success Story

After Four Years We Have our Advisory Opinion

Sales tax laws can be grey and confusing. While our firm offers professional advice and expertise on sales tax, sometimes a taxpayer wants a definitive, “straight from the horse’s mouth” answer to whether a service or product is subject to sales tax. In such a case, an Advisory Opinion can be requested which is binding guidance from the Tax Department’s Office of Counsel. Our firm requests Advisory Opinions on behalf of our clients and we requested one back in 2016. After four long years (and dozens of follow up calls and letters), we finally received our response!

We were able to inform our client that online advertising services are not subject to sales tax but when selling software to customers to assist with advertising services, the software is subject to sales tax. With the Advisory Opinion, the client has conclusive, written guidance on what to charge sales tax on and what is exempt from sales tax. This guidance also binds the Tax Department and prevents them from charging our client sales tax on his online advertising services.

If you or your client is looking for prospective guidance on sales tax, contact Sales Tax Defense! We are here to help!