YOUR BUSINESS MAY BE OPERATING IN MORE THAN ONE STATE….AND THAT MIGHT BE A BIG AND COSTLY SURPRISE TO YOU!!

        Why you might ask?

    Well let me tell you….since you asked.

    Each state has its own regime for corporate income tax, sales tax, use tax, and other revenue raisers. Typically, you are subject to a state’s taxes if you have a nexus to the state.  Nexus means having a substantial physical presence within a state, such as maintaining offices, warehouses, or a sales force. The presence may be permanent or temporary.

    However, as states look to expand their ability to tax, the concept of nexus is growing as well, and may cause you to become subject to a state’s taxes without any conscious decision on your part to transact business there. so, for example, merely traveling on business by airplane creates nexus in a number of states. And with the advent of online sales, a number of states have created “click-through nexus“, where online (remote) sellers with a certain level of sales are deemed to have sufficient nexus to collect sales tax in the state where the sales occur (the location of the buyer even though the seller is in another state).

    The 2016 Bloomberg BNA survey of State Tax Departments found some startling information that you should know about when it comes to nexus. (Note: You can download a complimentary copy of the survey, but you have to provide your email, name, company, and zip code).

    Key Findings From the Survey:

        • Using FedEx or UPS to deliver goods in another state can create sales tax nexus for remote sellers (this is so in 1 out of 4 states).
        • Because of the complicated tax rules, some businesses may be subject to double taxation (i.e., tax on the same income, sales, etc. in more than one state). While there may be some deductions or credits for taxes paid in one location against taxes in other, the write-offs may not fully account for the taxes.
        • Guidance on how pass-through entities (S Corporations, Partnerships) should apportion income to the states in which there is nexus is largely unclear; only 6 states have clear guidance rules.

    Bottom line

    Talk with your tax advisor to determine your business’s exposure to taxes in states that you may not think have a physical presence in. If you learn you will be treated as having a nexus elsewhere, then discuss ways to minimize your tax bill in any of these other states.

    ___________________________________________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com (or just click on the icon on right sidebar of this page).

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions (or just click on the icon on right sidebar of this page).

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).

    Categories: Business, Income Tax, Sales Tax

    Which Clothing Items are Exempt from Sales Tax in New York State?

    I just finished writing an article today (December 2, 2015) on our Facebook page
    (facebook.com/SolidTaxSolutions – or just click on the Facebook icon located in the right sidebar of this page) about certain qualifying items of clothing that are exempt from New York State sales tax and, for certain counties, exempt from local sales tax.

    So basically, clothing, footwear, and items used to make or repair exempt clothing sold for less than $110 per item or pair are exempt from the New York State 4% sales tax, the local tax in localities (New York City and 8 other counties) that provide the exemption, and the ⅜% Metropolitan Commuter Transportation District (MCTD) tax within exempt localities in the MCTD.

    The following two charts list examples of exempt and taxable clothing, footwear, and items used to make or repair exempt clothing (Happy Holiday Shopping!).

     

    Exempt Items
    Aerobic clothing
    Antique clothing (for wear)
    Aprons
    Arm warmers
    Athletic supporters
    Athletic or sport uniforms or
    clothing (but not equipment such as mitts,
    helmets and pads)
    Bandannas
    Bathing caps
    Bathing suits
    Beach caps and coats
    Belt buckles
    Belts/suspenders
    Bibs (baby)
    Blouses
    Boots (climbing, fishing, riding, ski,
    waders)
    Bridal gowns and veils (unless rented)
    Caps
    Coats and wraps
    Corset laces
    Coveralls
    Diapers (adult – including disposable)
    Diapers (children – including disposable)
    Dress shields
    Dresses
    Ear muffs
    Eyeglasses (prescription – including
    goggles, safety and sun glasses)
    Formal clothing (unless rented)
    Fur clothing
    Garters/garter belts
    Girdles
    Gloves (batting, bicycle, dress [unless
    rented], garden, golf, ski, tennis, work)
    Graduation caps and gowns (unless
    rented)
    Gym suits
    Hand muffs
    Handkerchiefs
    Hats
    Hosiery (pantyhose, peds, etc.)
    Insoles
    Jeans
    Jogging suits
    Lab coats
    Leg warmers
    Leotards
    Lingerie
    Pajamas
    Pants (slacks, jeans, etc.)
    Ponchos
    Prom dress (unless rented)
    Rain wear
    Receiving blankets
    Religious clothing
    Rented uniforms (unless formal wear/
    costume)
    Riding pants
    Robes
    Scarves
    Scout uniforms
    Shawls and wraps
    Shirts
    Shoes (ballet, bicycle, bowling,
    cleated, football, golf, jazz/dance, soccer,
    track, etc.)
    Shoe inserts
    Shoe laces
    Shoulder pads for dresses,
    jackets, etc. (but not athletic or sport
    protective pads)
    Shower caps
    Ski masks
    Sleepwear
    Slippers
    Sneakers
    Socks
    Sports clothing and uniforms (but not
    equipment such as mitts, helmets, and
    pads)
    Stockings
    Support hosiery
    Suspenders
    Sweat bands
    Sweat suits
    Ties/neckwear
    Tights
    Tuxedos (unless rented)
    Underwear
    Uniforms (occupational, military, scouting,
    sport)
    Wet and dry suits
    Yard goods and notions1
    Taxable Items
    Antique clothing (collectible, not for wear)
    Barrettes
    Bobby pins
    Costumes
    Crib blankets
    Elastic ponytail holders
    Goggles (nonprescription)
    Hair bows
    Hair clips
    Handbags and purses
    Headbands (sweatbands are exempt)
    Helmets (sport, motorcycle, bicycle, etc.)
    Ice skates
    In-line skates
    Jewelry
    Key cases
    Mitts (baseball fielder’s glove, hockey, etc.)
    Party costumes
    Personal flotation devices
    Protective masks (athletic, sport, or
    occupational)
    Roller skates
    Safety glasses (nonprescription)
    Sewing accessories (not an integral part of
    clothing such as chalk, instruction books,
    knitting needles, measuring tapes, needles,
    patterns, scissors, pins, thimbles)
    Shin guards and padding
    Shoulder pads (football, hockey, etc.)
    Sunglasses (nonprescription)
    Umbrellas
    Wallets
    Watch bands
    Watches
    Wigs
    Yard goods and notions1

     


    1 Note: Yard goods and notions (fabric, thread, yarn, buttons, snaps, hooks, zippers and like items) which are used or consumed to make or repair exempt clothing which become a
    physical component part of the clothing are generally exempt.

    ___________________________________________________________________________________________________

    Bruce – Your Host at The Tax Nook

    Our Firm’s Website: SolidTaxSolutions.com (or just click on the icon on right sidebar of this page).

    Other Social Media Outlets: Facebook.com/SolidTaxSolutions (or just click on the icon on right sidebar of this page).

    Twitter: Twitter.com/@SolidTax1040 (BTW, We Follow-Back).

    Categories: Sales Tax