Month: February 2009

California to Slash and Burn Amazon As Well

Taking its cue from New York, California introduced legislation to require online retailers with no physical presence to collect sales tax for sales into the state. The California bill, Assembly Bill 178, resembles a similar New York statute that, thus far, has passed constitutional muster at least with the local judiciary.

States have been seeking to get their claws into Amazon and similar retailers for a decade. States argue that the increased prevalence of Internet merchants and their cannibalization of sales by brick-and-mortar local merchants has reduced sales tax revenues.

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Additional States Require Pass-Through Entity Withholding

The states of Massachusetts and Illinois recently enacted withholding requirements for flow-through entities. These states joined a score of states that enacted similar measures to prevent nonresident partners, members and shareholders from avoiding their personal filing requirements.

The current list of states with similar withholding requirements include: California, Colorado, Georgia, Indiana, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, Virginia, and Wisconsin.

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States Increasingly Audit for Unclaimed Property

Because of the political hurdles typically constraining states from raising taxes, many have turned to raising revenues via laws already on the books. While audit fears generally cause companies to comply with other tax laws, many are unaware of their business’s obligations regarding unclaimed property, also referred to as “abandoned property”.

Because of the political hurdles typically constraining states from raising taxes, many have turned to raising revenues via laws already on the books. While audit fears generally cause companies to comply with other tax laws, many are unaware of their business’s obligations regarding unclaimed property, also referred to as “abandoned property”.

Many states in the past selectively enforced such laws, concentrating on financial institutions where abandoned accounts, safety deposit boxes, and uncashed dividend checks produced significant bangs for their audit bucks. Increasingly; however, states have turned to other sources, such as hospitals, and have increased enforcement against companies with large or transient payrolls that may fail to report uncashed payroll checks.

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