This Week in Sales Tax News

October 31, 2019

According to the October 29 Worcester Business Journal, a group of legislators and policy advocates is looking for ways to modernize Massachusetts state tax code, potentially taxing digital goods and services like music downloads or Spotify.

Gov. Michael Dukakis attempted to tax services in the early 1990s, only to see his successor, Gov. William Weld, successfully repeal the effort.

Though the new bill is still in the early stages, the group may be leaning toward revenue-neutral recommendations to try and offset changes like an expansion of the sales tax base with lower overall rates. The group’s goal is to produce a package of recommendations in the summer of 2020. More information on the latest Massachusetts sales tax developments can be found at:

Colorado May Vote on Bills to Improve Sales Tax Simplification

An article by Jeanne Davant in the Colorado Springs Business Journal on Tuesday refers to the introduction of bipartisan bills by the Colorado Sales and Use Tax Simplification Task Force that would prevent vendors from being penalized for errors made as a result of using the new state GIS database designed to help them navigate the state’s complex tax system. 

Task Force Chair Rep. Tracy Kraft-Tharp said, “Last session we tasked the state with creating a GIS database and software system to make the tax remittance process easy for businesses.”

“Today, we continued this work by advancing legislation to protect vendors from being liable for any errors made as a result of using the GIS database or third-party software applications that rely on the underlying GIS data.” 

The new system will help businesses navigate the various sales and use taxes across Colorado jurisdictions and accurately remit sales taxes. Businesses may also use third-party software to determine tax rates in jurisdictions across the country. 

The CO Department of Revenue must ensure that the information provided in the state database is 95 percent accurate according to the article. What remains to be understood is how sellers and tax automation service providers will be able to access this data to perform accurate real-time calculations. A copy of the draft bills can be found here:

Halloween tax on treats can be tricky 

It’s Halloween, so we had to include this story from PBS News Hour on Tuesday. Halloween shoppers may not realize the slight increase in their candy purchases due to some candy items classifying as groceries, and others not. For example, in Illinois, locals pay a higher state sales tax rate, 6.25 percent versus  1 percent on Reese’s, gummy worms and Hershey’s milk chocolate bars than on Twix, Twizzlers and Hershey’s Cookies ‘n’ Creme bars. The difference? Illinois, which lowers its sales tax rate from 6.25 percent to 1 percent for grocery purchases, does not consider the last three to be “candy” because flour is a listed ingredient. And those pumpkins you purchased? Depending on whether or not they are considered food or decorations, you may be taxed on those as well.

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