Tag Archives: tax and benefits challenges

ILN Today Post

New federal tax law spurring state action in the form of legislative mitigation, plaintiff coalitions

In early January, Governing revealed that 25 states are facing budget shortfalls going into 2018, but “[t]hat’s better than the 31 shortfalls [that the government relations firm MultiState] found last January.” The states with high concentrations of oil and natural resource states, mostly in the Midwest and the Northeast, are hardest hit.

The piece noted that for some, like Rhode Island and Vermont, lawmakers should be able to resolve the discrepancies relatively easily. But others, like New York, “may have to consider significant changes to solve their fiscal problems.” New York faces a large deficit, as we described in our piece this week covering Gov. Cuomo’s budget speech.

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Vermont: First-of-its kind legislation would regulate and tax blockchain, cryptocurrency, and financial technology

Last week, we addressed states’ ongoing interest in legalizing marijuana despite steps that Attorney General Jeff Sessions has taken to prosecute it at the federal level. Vermont is set to be the next state to legalize recreational weed, but the first to do so via legislation, making it a bit of a trailblazer. The tiny jurisdiction is showing its stripes in a different context this week, by considering legislation that would tax blockchain, cryptocurrency, and financial technology.

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United States Supreme Court will hear South Dakota’s case addressing tax obligations of out-of-state retailers

To the delight of the state of South Dakota, the United States Supreme Court accepted its case, South Dakota v. Wayfair, on Jan. 12, 2017. The crux of this lawsuit is the legal permissibility of South Dakota’s spring 2016 law, SB 106, which has a purpose to “provide for the collection of sales taxes from certain remote sellers.” Ultimately, SB-106’s objective is to challenge the U.S. Supreme Court’s 1992 decision in Quill Corp. v. North DakotaQuillbanned states from requiring out-of-state retailers to collect sales taxes on products they ship into those jurisdictions, absent some minimal contact or physical presence.

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Tax revenues from marijuana legalization in jeopardy, but states continue to legalize

According to a Jan. 5, 2018 Pew Research Center survey, as of last October, 61 percent of Americans support the legalization of marijuana. This is up a bit from a year ago, when that figure was 57 percent, but almost double what it was in 2000, 31 percent.

The Pew survey found that support varies widely between different groups. For example, millennials (born between 1980-1994), Gen-Xers (born between 1965-1979), and baby boomers (born between 1946-1964) support legalization at rates of 70 percent, 66 percent and 56 percent respectively. In contrast, 58 percent of the silent generation, those born between mid- 1925 and 1945, oppose legalization, while only 35 percent favor it.

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Illinois: Population continues to decline, eroding tax base

At the end of December, Pew Charitable Trusts reported on new U.S. Census Bureau estimates revealing that between July 2016 and July 2017, eight states lost population; “[i]f the estimates hold up, it would be the first time in 30 years that so many states lost residents in a single year.” The states are Alaska, Hawaii, Illinois, Louisiana, Mississippi, North Dakota, West Virginia and Wyoming.

The December report follows a February 2017 piece pointing to population losses in Connecticut, Illinois, Mississippi, New York, Pennsylvania, Vermont, West Virginia and Wyoming between 2015 and 2016. This puts Illinois, Mississippi, West Virginia and Wyoming as the four states that have seen consistent population declines since 2015.

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Ohio: Lawmakers pass legislation regulating daily fantasy sports contests

On Dec. 5, 2017, the Ohio House of Representatives approved a measure, House Bill 132, which legalizes daily fantasy sports (DFS), by a vote of 92 to 3. The week prior, on Nov.29, 2017, it passed the Senate, 25 to 4. Cleveland.com reported that the legislation had support within the community, from, among others, the Cleveland Indians, which has marketing partnership with DraftKings, a fantasy sports website.

When we last addressed action on DFS regulation in Ohio , we described Sen. William Coley’s effort, by way of Senate Bill 356, to classify these kinds of games as those of chance. Most states that have legalized DFS have gone out of their way to define them instead as games of skill. Thus, the Legal Sports Report opined that SB 356 would have “shut down pretty much the entire DFS industry as currently situated…”

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Deadline for online tax amnesty initiative extended due to high demand

In August, we described the Multistate Tax Commission (MTC)’s temporary amnesty program, known as the Online Marketplace Seller Voluntary Disclosure Initiative. It offers online sellers the chance to become compliant with various states’ nexus laws without punishment for past non-compliance.

The initiative allows sellers to register for future tax collections immediately, while avoiding back taxes, interest and penalties. The original amnesty registration period was from Aug. 17 – Oct. 17, 2017, but the MTC extended the end date to Nov. 1, 2017.

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Ohio: Department of Taxation updates its nexus standards

In September 2001, the Ohio Department of Taxation issued an information release describing the standards it would apply to determine whether an out-of-state seller is required to collect Ohio’s use tax. The department periodically updates this information, as it did this month to address the changes that were included in the budget bill for fiscal year 2018-19, H49.

The original Information release, ST 2001-01, contains two amendments to the safe harbor exceptions, pursuant to which the department will not require an out-of-state seller to collect and remit Ohio’s use tax from its Ohio customers. There are 16 such exceptions, all addressing the nature of the out-of-state seller’s contacts with the state that will trigger the safe harbor. For example, if the out-of-state seller has an agency relationship with a telemarketer for the purpose of solicitation of customers in other states, then there is no tax collection and remittance obligation. Likewise, when the out-of-state seller merely conducts meetings in this state with suppliers of goods or services, there is no nexus.

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Oregon: Newest frontier for soda tax

In early April, organizers in Multnomah County, Oregon, where the city of Portland is located, began the process for enacting an ordinance that would impose a .015 cent per fluid ounce excise tax on “the privilege of distributing sugar-sweetened beverage products.” The proceeds from the tax would be put toward the Children’s Health and Education Fund, and dedicated to funding projects that serve children in low-income families and communities of color in the county that:

  • Expand access to early childhood education and early literacy initiatives
  • Increase physical activity and physical fitness of children
  • Improve the nutrition of children
  • Improve the dental health of children
  • Reduce health disparities of children

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Ohio: Cuyahoga County considers a plastic bag tax

According to Pew Charitable Trusts, Hawaii was the first jurisdiction to address the threat that litter poses to the environment, by way of a ban on the use of plastic bags at retail checkouts. Hawaii’s ban occurred county by county, with Honolulu County being the last of the four to do so, in the spring of 2012, which took effect on July 1, 2015. In 2012, there had not yet been any state-wide measures, but cities and counties were taking action. For instance, in 2007, San Francisco became the first city to regulate the use of bags at checkout when it imposed a $.10 tax on paper bags. And in 2009, Washington DC passed a $.05 cent tax on disposable paper and plastic carryout bags.

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