The (Pink) Sales Tax

March 2020

Recently, the Washington Senate voted to exempt feminine hygiene products from the state’s sales and use tax. The matter is now being considered by the Washington House of Representatives. Washington is currently 1 of the 31 states that do not specifically exempt these products. This type of sales tax is often referred to as the “tampon tax” or the “pink tax”.

In Ohio, this issue was particularly contentious last year. With women accounting for 51% of the population, certain non-medically necessary male products being exempt and the tax generating over $4,000,000 in sales tax revenue each year, there was a lot of debate. Ultimately, the Governor signed a bill ending the tax calling it “common-sense tax reform.”

But the Pink Tax isn’t the only sales tax facing criticism. Many economists argue that sales tax on items that the entire public use disproportionately cost low income individuals because the richest individuals can better absorb these costs.

As states end certain sales taxes, they lose the revenue the taxes generate. And as tax revenue is lost, states need to replace the lost income somehow. All of this brings us back to the biggest change to sales tax in decades: The Supreme Court ruling in Wayfair v. South Dakota. This ruling allows state governments to force businesses to collect and remit their sales tax even if the business does not have a physical presence in their state through economic nexus. This is especially beneficial because it allows state governments to ensure sales tax is being collected and remitted properly without auditing its own voting public – the states simply audit the businesses that sell to its own voting public instead.

States have a longer reach than ever when it comes to sales tax and since almost every state that has a sales tax has passed legislation related to economic nexus, the states appear ready to begin auditing out-of-state businesses.

Alternatively, many businesses are not ready. The businesses need to determine if they have nexus with a state that forces them to file returns, then they need to determine if their sales are subject to tax in that state, then they need to collect the tax at the proper tax rate and finally they need to remit the tax by filing the proper returns. If you own or operate a business, it’s easy to see how this issue can be overwhelming when you’re trying to run a business.

If you need help with sales tax in any state, contact us! There’s no sales tax issue we can’t help you with!

Success Story

Reopening Cases AFTER They are Deemed Fixed & Final…It CAN be Done!

Sales Tax Defense LLC represented a business that received a fixed and final bill that they never received the initial notice for. We were able to obtain all the detailed information to prove the notice was never properly mailed and have the case re-opened so the assessment could be disputed.

Using the information obtained from the Tax Department and additional information provided by the client, Tax Defense was then able to negotiate back and forth with the auditor, reduce the amount of tax owed and get penalty abatement/interest reduction which saved the client approximately $110,000!” title=”Sales Tax Payment Plans”>payment plan with the Tax Department to pay the remaining liability in manageable amounts.