Thursday, February 23, 2012

MD makes a minor form replacement

The Maryland Comptroller of the Treasury has replaced form MW507 with form MW507M (Exemption from Maryland Withholding Tax for a Qualified Civilian Spouse of a U. S. Armed Forces Servicemember) to be used beginning with tax year 2011. Affected taxpayers who have already filed Form MW507 for 2011 should contact their employers to obtain and complete Form MW507M, which will be effective retroactive to the date that Form MW507 was filed.

Wednesday, February 22, 2012

VA deems provision of an all digital 'product' not subject to sales tax

Services provided by the taxpayer that were accessed by its customers online and delivered to the customers electronically were not subject to the Virginia retail sales and use tax because no tangible personal property was transferred as a result of these transactions. The transactions were deemed a provision of services.

Tuesday, February 21, 2012

PA cracks down on remote sellers re: sales tax

In December the department issued a tax bulletin that explains existing sales tax nexus law for remote sellers and clarifies the law and the department’s authority to require e-commerce and other out-of-state sellers to collect sales tax.

Examples of maintaining a place of business in the Commonwealth include, but are not limited to:

(1) A remote seller storing its property or the property of a representative at a distribution or fulfillment center located within the Commonwealth, regardless if the center also stores property of third parties that is distributed from the same location.

(2) A remote seller who has a contractual relationship with an entity or individual physically located in Pennsylvania whose website has a link that encourages purchasers to place orders with the remote sellers. The in-state entity or individual receives consideration for the contractual relationship with the remote seller.

(3) A remote seller utilizing affiliates, agents and/or independent contractors located in Pennsylvania who will provide repair, delivery or other service relating to tangible personal property sold by the remote seller to Pennsylvania customers.

(4) A remote seller’s affiliates, agents and/or independent contractors provide service(s) within the Commonwealth (including, but not limited to storage, delivery, marketing or soliciting sales) that benefit, support and/or complement the remote seller’s business activity.

(5) A remote seller’s employee(s) regularly travel(s) to Pennsylvania for any purpose related to the remote seller’s business activity.

(6) A remote seller who accepts orders that are directly shipped to Pennsylvania customers from a Pennsylvania facility which is operated by a remote seller’s affiliate, agent or independent contractor.

(7) A remote seller who regularly solicits orders from Pennsylvania customers via the website of an entity or individual physically located in Pennsylvania, such as via click-through technology.

Thursday, February 9, 2012

Reminder: If You Worked in DE but lived in another state...

Delaware does not maintain reciprocity agreements with other states and, therefore, nonresidents who work in Delaware must still file a Delaware tax return. Likewise, Delaware residents who work out of state are required to file a return with Delaware AND with the state where they worked.

Tuesday, February 7, 2012

Miscellaneous 2011 MD Tax Return Changes

Libraries and Post Offices – The Comptroller’s Office will no longer supply area post offices and libraries with tax booklets. Each library will receive a CD Rom of all of our forms if requested.

Splitting a direct deposit – Taxpayers can now have a tax refund deposited into multiple bank accounts by using Form 588.

New Dependent Form 502B - Form 502B will be a required form to be attached to Form 502 to determine what exemption you are entitled to claim. Taxpayers claiming more than two exemptions must use Form 502.

Increased pension exclusion - Maryland's maximum pension exclusion, which is available to qualifying taxpayers 65 or older, increased from $26,100 to $26,300 for tax year 2011.

Nonresident Form 505SU/502SU - This year, other certain subtractions for which taxpayers may qualify will be reported on Form 505SU/502SU. If multiple subtractions apply, taxpayers should be sure to indicate all of them on Form 505SU/502SU and attach it to the Form 505/502.

Local Tax Rate Increase - For tax year 2012, Anne Arundel County has decreased their local tax rate to 2.49% and Queen Anne's County has increased their local tax rate to 3.20%. Please note the change on the Form 502D.

Friday, February 3, 2012

Proposed Legislation: Mobile Workforce State Income Tax Simplification Act

This federal bill was never put to a vote in the last session but hopefully it will reappear. If passed, then as of the January after enactment, an employee's wages would not be subject to personal income tax or withholding and reporting requirements in any state other than the employee's state of residence and a state in which the employee is present and performing employment duties for more than 30 days during a calendar year. Currently each state makes its own rules about how many days are allowed with some at 1 day.

The general rule is that employees owe taxes to the state where services are performed vs. the state where the employer is located or where they reside. The world is shrinking and many business owners/employers, especially those headquartered in small states, can no longer afford to turn down work across state borders. Registering as an employer and allocate a few day’s or a few week’s wages to another state is burdensome. This brings about quarterly and annual payroll tax from filing requirements (which stay in place until you submit more forms to close the accounts) and the need for the employees to file personal income tax returns for each state. In some cases, a DE contractor may do one 2-3 week job in each PA, MD, NJ, and VA in a year. The costs for employment form prep (registration, wage reporting, and closing the account after the job is complete) could be $600 per state and employees may pay $60 per additional state attached to their personal tax returns.
Write your Congressperson and ask him/her to support this bill!

Wednesday, February 1, 2012

The following DE Gross Receipts Tax Rates Decreased Effective January 1, 2012

• The license fee for occupations requiring licenses has decreased to 0.4023% of aggregate gross receipts.

• The contractors’ license fee has decreased to 0.6537% of aggregate gross receipts.

• The manufacturers’ license fee is now 0.1886% of aggregate gross receipts.

• The wholesalers’ license fee is 0.4023% of aggregate gross receipts.

• The additional petroleum product wholesalers’ license fee has decreased to 0.2514% of taxable gross receipts from the sale of petroleum or petroleum products.

• The food processors wholesalers’ license fee has decreased to 0.2012% of aggregate gross receipts.

• The commercial feed dealer wholesalers’ license fee is now 0.1006% of aggregate gross receipts.

• The retailers’ license fee is 0.7543% of aggregate gross receipts.

• The transient retailers’ license fee has decreased to 0.7543% of aggregate gross receipts.

• The restaurant retailers’ license fee has decreased to 0.6537% of aggregate gross receipts.

• The farm machinery retailers’ license fee is now 0.1006% of aggregate gross receipts.

• The leasing use tax rate is 2.0114% of the rent paid on a lease of tangible personal property.

• The lessors’ license fee has decreased to 0.3017% of lease rental payments received.

• The grocery store retailers’ license fee is now 0.33% of aggregate gross receipts. The application of two different rates has been discontinued.