In case you missed it: Last week in Allyn Tax News


Kansas Local Corrected Sales and Use Tax Rates

The Kansas Department of Revenue has released corrected Kansas Information Guides to accurately reflect the combined state and local tax rates in Chautauqua County. Previously, the ministry has not announced any changes in this county. However, effective April 1, 2022, Chautauqua County will reduce its rate to 1%, therefore the combined state and local rate will drop from 8.5% to 7.5%. Tax rates in various other localities will also decrease by 1%, due to this decrease. Read more about these changes here:

https://www.ksrevenue.gov/pdf/edu960422.pdf#search=EDU-96

New Mexico launches automated tools available to help taxpayer pay gross receipts tax

The Department of Tax and Revenue has made available two new data tools that will make it easier for businesses to comply with destination sourcing rules for gross receipts tax reporting. A tool is an application programming interface (API) that can be integrated into e-commerce or other web applications to automate the matching of street addresses with GRT tariffs and location codes. The other is a web service that will allow users to upload bulk files of addresses which are then matched to location codes and GRT tariffs. An explanation of the tools and their use is available on the GIS Data Files and Tools page at tax.newmexico.gov. To find the tools from the site’s home page, open the “Companies” menu and choose “Data files and GIS tools” in the “Online services” column.

Washington sales and use tax on the sale of pet medications

An online retailer of pet health products has been denied retail exemptions by the Administrative Review and Hearings Division (ARHD). Since pet prescription drugs are tangible personal property, they are subject to retail sales tax, unless an exemption applies. Although Washington allows an exemption for prescription drugs for human use, this does not include pets. Specifically, when drugs, drugs or other substances, excluding veterinary services, are retailed to consumers, they are exempt. Also, in this case, the Department of Revenue had the right to calculate the local sales tax liability for the taxpayer, since the taxpayer did not keep accurate records of where the goods were shipped when sold.

Arkansas sales and use tax on machinery and equipment used indirectly during manufacturing

The use tax was imposed on a taxpayer on machinery and equipment since the purchases were not used directly in the manufacturing process. The taxpayer argued that the purchases were used in the production of raw materials during the manufacturing process, so they should be exempt. However, the Arkansas Department of Finance and Administration deemed this a step away from the direct process. The taxpayer then said the purchases were for pollution control, but there was no documentation proving the prevention of air or water pollution. The purchase was also not allowed to qualify for an exemption as replacement machinery because not all machinery needed to perform a vital task was physically replaced, as required by the exemption for replacement machines.

Colorado: Credit card company not eligible for sales tax refund

The Colorado Court of Appeals determined that a commercial credit card company was not eligible for a refund of sales tax paid by retailers for purchases made by customers with the private label credit card retailers. When the buyers defaulted, the retailers wrote off those sales as bad debt and the remitted sales tax can be deducted from the retailers’ tax liability, as permitted by Colorado law.

For this reason, the credit card company argues that as the external finance company for these purchases, it acts as a part of the retailer and is therefore entitled to a refund of the sales tax paid on behalf of the purchases in fault. The court found that CC is not a retailer and did not pay any sales tax to the Department for the purchases in question. The retailer and CC Corporation did not work together as a “unit” and therefore CC Corporation is not eligible for the sales tax rebate credit.

At-Home Covid-19 Testing in Minnesota: Taxable or Exempt?

The Minnesota Department of Revenue has released an explanation of the taxation of COVID-19 home test kits. COVID-19 tests purchased by an individual and whose results are provided at home will be subject to sales and use tax. However, if the COVID-19 test is purchased by an individual but then sent to a laboratory to determine the results, that transaction is not subject to sales and use tax.

Although it may seem very confusing, the reason is that the person who buys the test that will be sent to a laboratory is ultimately buying the service provided by the laboratory, and the test itself is only incidental. This type of transaction is called a “bundled transaction” in the tax world. Bulk transactions can be tricky and difficult to understand.

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