Happy New Year! We hope you were able to enjoy the holiday season with loved ones, and are ready to tackle 2021. For us, January means the busy report filing season. Our AutoFile team has been hard at work filing all of those annual, semi-annual, quarterly, and monthly reports due this month, while our Regulatory team is heads-down focused on tracking all of the new form changes released this month and ensuring they are built and tested in the product in time for February filings. Our Development team has started working on several major projects this quarter that we’d like to share with you as well:
- Module 1 of our new ShipCompliant Data Dashboard, which will showcase items needing immediate attention in your account, transactions month to date, and an overview of reports due this month including progress toward completion
- DtC cider excise tax and shipper reports
- PRO renewal submission efficiencies (starting with Oklahoma)
- SST model 1 new subscription offering
On the regulatory maintenance side of the house, we will also be working toward supporting three major changes in the coming months:
Colorado Sales & Use Tax System (SUTS)
- Colorado has implemented an optional sales and use tax filing system known as SUTs that is currently operational.
- We believe this new system will improve the filing experience for remote sellers as the XML file has proven difficult to manage since its implementation in 2019.
- The Colorado Department of Revenue has not required Sales and Use Tax account holders to switch to this new filing system at this time, but those that register with SUTS system will be able to complete their remote seller sales and use tax reporting obligations and may discontinue reporting sales and use taxes through their Revenue Online account.
- In contrast to the current online filing system in Colorado (Revenue Online), this new system includes the addition of certain locally administered jurisdictions that have opted in the program. This means users that sign up for SUTS may have obligations in participating local jurisdictions. Participating local jurisdictions may be viewed here.
- The new system also makes use of an excel spreadsheet for reporting sales made to all state-administered jurisdictions and locally administered jurisdictions as opposed to the XML file available through Revenue Online.
Texas Single Local Use Tax Rate
- The Texas Comptroller of Public Accounts has provided an alternative reporting and tax collection option for Remote Sellers with nexus obligations in Texas.
- This alternative option enables Remote Sellers to collect a single local use tax rate as opposed to collecting sales taxes based on the jurisdiction tax rate of their destination address on shipments into the state. The single local use tax rate consists of a flat 1.75% local use tax rate and a 6.25% state rate for a combined 8.00% tax on all transactions into Texas.
- In order to support this flat rate option, ShipCompliant will have a new Tax Preference and Report available starting with the January filing period due in February. It should be noted that Texas does not require remote sellers to utilize this option and existing functionality with ShipCompliant supports remote seller reporting and collection obligations in full compliance with Texas requirements.
- The applicable Tax Preference will be the “Single Local Use Rate” and the applicable report is the “Texas Single Local Use Tax Report.” The new report will be available on a monthly frequency and will be required to be filed online.
- If you are a remote seller that chooses to collect the single local use tax, you must notify the Comptroller’s office in writing of your election using Form 01-799, Remote Seller's Intent to Elect or Revoke Use of Single Local Use Tax Rate (PDF) by email or mail. The effective date must be on the beginning date of a reporting period.
Illinois Remote Seller Nexus
- Illinois has imposed remote seller nexus requirements effective January 1, 2021 applicable to out-of-state retailers that sell at least $100,000 or have 200 or more separate transactions into Illinois during the previous 12 months.
- Sales made by wineries that are shipped directly to Illinois customers will also contribute to these threshold standards for determining nexus.
- Based on this new law in Illinois, we have created a new Tax Preference called “Economic Nexus” and plan to develop an updated local schedule (ST-2) that allows remote sellers to detail the local jurisdiction they sell to. This will be reflected in the existing report “Illinois ST-1 and ST-2 Sales and Use Tax Return.”
Thank you, as always, for your continued business and partnership. We look forward to a successful 2021 with you!
For detailed notes on monthly compliance and maintenance updates, we encourage you to visit our release notes in the Sovos Portal.