The California Department of Tax and Fee Administration (Department) has given notice that it proposes to amend California Code of Regulations, title 18, section (Regulation) 1706, Drop Shipments. Regulation 1706, subdivision (c) provides that a drop shipper making a drop shipment must report and pay tax measured by the retail selling price of the property paid by the California consumer to the true retailer, unless the sale and use of the property are otherwise exempt. The proposed amendments clarify that marketplace sales are generally not drop shipment transactions and provide more guidance about how a person can overcome the presumption they are a drop shipper. Continue Reading ›
Five years and six interested parties meetings later, California is finally ready to proceed with the formal rulemaking process to adopt substantial amendments to its market-based sourcing rules. At the Franchise Tax Board’s September 9, 2021 meeting, FTB staff requested permission and received approval from its three-member Board to commence the formal regulatory process under California’s Administrative Procedure Act (APA) to amend California Code of Regulations, Title 18, section 25136-2 (Regulation 25136-2). Continue Reading ›
The West Virginia State Tax Department released new guidance, TSD-445, that clarified that streaming services are subject to sales and use tax in the state. The Department’s guidance distinguishes streaming services from digital products, which are specifically exempted under the law. The Department explains that streaming services are subject to a 6% state sales and use tax, in addition to up to 1% in municipal sales and use tax if applicable, because West Virginia taxes all services unless a specific exception or exemption applies. Under the Department’s interpretation, because “[t]here is no sales tax exemption regarding the provision of streaming services in West Virginia,” the services are subject to sales and use tax. The Department defines a “streaming service provider” to include “a supplier of entertainment (music, movies, video games, etc.) or other content delivered electronically, usually by an internet, satellite or cable connection to the subscriber’s computer, television, mobile device, or any other device suitable for accessing such content.” Streaming service providers without a physical presence in West Virginia will be subject to the tax if they meet West Virginia’s economic nexus thresholds of at least $100,000 of gross receipts or 200 or more transactions per year. Because the guidance defines a streaming service provider broadly, many businesses delivering content to subscribers electronically may be impacted by the Department’s recent guidance. Continue Reading ›
California’s Court of Appeal again held that a special tax measure placed on the local ballot as a citizen initiative required only a simple majority, not a supermajority, vote to pass.
Proposition G is a school parcel tax initiative that passed on San Francisco’s June 2018 ballot with 60.76% of the vote. The Proposition G school parcel tax is a special tax—in other words, the expenditure of its revenues is dedicated to a specific project or projects—and not a general tax, which revenues roll into the locality’s general fund. Here, the Proposition G school parcel tax funds are earmarked for educators’ salaries, staffing, professional development, technology, charter schools, and oversight of funding.
California’s Court of Appeal held a local sales tax ordinance (Measure K) was a general tax, not a special tax, and therefore its adoption did not require a two-thirds vote (supermajority) under California’s Constitution. A tax is “special” and therefore would require a two-thirds vote, when the expenditure of its revenues is dedicated to a specific project or projects. The plaintiffs argued that Measure K was a special tax because the funds were earmarked for the funding of the county’s public safety services and essential services. The Court of Appeal disagreed, concluding tax proceeds that are deposited in a separate account for unspecified “other essential services” could be used for any and all government services that qualify as an “essential service” and are therefore not dedicated to a specific project or purpose, indicative of a general tax. Thus, the court held Measure K was valid.