Completely Compliance:
Q4 2026

Updates by State

• Alabama: Birmingham’s Electronic Tax Filing & Payment Requirement Took Effect July 1, 2026
• California: New Tax Changes Coming for Certain Software
• Colorado: Timnath’s Sales Tax Vendor Fee Elimination Took Effect in August 2026
• Illinois: 2026 Remote Retailer Tax Amnesty Program
• Illinois: City of North Chicago Payment Update
• Maryland: Digital Advertising Tax Struck Down
• Massachusetts: What the “End of the Penny” Means for Sales Tax
• Minnesota: Accelerated Sales Tax Prepayments Reinstated for 2027
• Ohio: Commercial Activity Tax Transitions to OH:TAX eServices in December 2026
• Oregon: Weight-Mile Tax (WMT) Changes Coming in 2027
• Pennsylvania: Lawmakers Introduce Multiple Sales Tax Holiday Proposals
• Pennsylvania: Key Considerations for Philadelphia & Allegheny County Local Sales Taxes
• Puerto Rico: Treasury to Transition Municipal Sales Tax Filing to SURI
• South Carolina: Department of Revenue Transitions Sales XML Filing from BSWA
• Tennessee: Davidson County Reduces Taxes on Food & Food Ingredients

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Alabama: Birmingham’s Electronic Tax Filing & Payment Requirement Took Effect July 1, 2026

Written by: Shantol Lerche

The City of Birmingham has announced that online filing, payment processing, and account management services are now available through its tax portal, and electronic filing became the required method beginning July 1, 2026.

Under Birmingham Ordinance No. 26-3, taxpayers must use the city’s online system to file returns, make payments, and update account information for business licenses and several city-administered taxes. The transition is part of the city’s effort to streamline tax administration, improve processing efficiency, and provide taxpayers with easier access to their accounts.

Paper Filing & Mailed Payments  

As of July 1, 2026, the city of Birmingham no longer accepts paper forms or mailed payments. Businesses and taxpayers that fail to file and pay electronically or in person after this date may be subject to additional penalties and applicable interest charges. City officials encourage taxpayers to establish their online accounts to avoid disruptions and ensure compliance. Business owners, tax professionals, and other taxpayers should take time to verify their account information, obtain any required account numbers and PINs, and familiarize themselves with the online portal.

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California: New Tax Changes Coming for Certain Software

Written by: Christina L Stainbrook

Beginning January 1, 2027, California will expand its definition of tangible personal property to include certain digital products. The change brings retail sales of prewritten computer software within the scope of sales and use tax, whether the software is delivered on physical media, transferred electronically, or accessed remotely. It also affects prewritten software offered as a service (SaaS). Custom software and digital products that represent services other than SaaS are exempt under the new law.

Digital books, music, movies, video games, and certain cloud infrastructure are outside the law’s definition of a digital product.

Sellers should review their software offerings, California registration obligations, and how they determine the location of a sale or use for local and district tax purposes. The CDTFA also identifies a threshold that may shift tax liability to a purchaser: when a retailer’s electronically transferred or remotely accessed digital product sales to that purchaser exceed $5 million in the current or preceding calendar year, the purchaser may need a Use Tax Direct Payment Permit.

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Colorado: Timnath’s Sales Tax Vendor Fee Elimination Took Effect in August 2026

Written by: Andrea Morrison

The Town of Timnath, Colorado, has announced the elimination of its sales tax vendor fee, effective with the August 2026 sales tax filing period. As a result, vendors are no longer permitted to retain a vendor fee or collection allowance when filing Timnath sales tax returns.

Beginning with returns for the August 2026 period and forward, all sales tax collected on behalf of the town must be remitted in full. According to Timnath, this change aligns the town’s sales tax administration with the state of Colorado’s elimination of the vendor fee.

Teams preparing or reviewing Timnath sales tax filings should ensure that any calculations, filing procedures, and client expectations are updated accordingly.

For additional information, please visit the Town of Timnath’s Sales Tax FAQ page.

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Illinois: 2026 Remote Retailer Tax Amnesty Program

Written by: Claire Ashcraft

Remote retailers–businesses with no physical presence in Illinois–may qualify for the Illinois Remote Retailer Tax Amnesty Program if they have unpaid sales tax for reporting periods January 1, 2021, through June 30, 2026. They must also meet the required tax remittance threshold. This program helps remote retailers comply with Illinois sales tax law through simple tax rates and a streamlined application process, and waives penalties and interest.

To apply for the program, electronically file the Remote Retailer Amnesty Application through MyTax Illinois between August 1, 2026, and October 31, 2026. Payment must be made in full when filing the application, unless a payment plan is requested and approved.

Any remote retailers not registered with the Illinois Department of Revenue (IDOR) must register and have a MyTax Illinois login. Allow enough time for registration processing and account activation before submitting the application and payment by October 31, 2026. Processing time typically takes one to two business days.

For assistance, please get in touch with the IDOR’s Central Registration Division (CRD) by phone at (217) 785-3707 or by email at rev.crd@illinois.gov.

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Illinois: City of North Chicago Payment Update

Written by: Claire Ashcraft

The city of North Chicago no longer accepts in-office payments as of August 2026. All local tax filings and payments will be handled through Localgov.org. Businesses can register through the website and submit returns online.

The following North Chicago taxes can be filed online:

• Hotel and Motel Tax
• Storage Facility Accommodation Tax
• Municipal Motor Fuel Tax
• Food and Beverage Tax
• Gaming Terminal Push Tax 

For questions and assistance with Localgov.org, please contact customer service at (877) 842-3037. For questions about this change, please contact the city at (847) 596-8600.

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Maryland: Digital Advertising Tax Struck Down

Written by: Shantol Lerche

Maryland’s first-in-the-nation digital advertising tax has been struck down by the Maryland Tax Court, which ruled that the tax violates the federal Internet Tax Freedom Act (ITFA). The court found that Maryland unfairly taxed digital advertising services while comparable forms of traditional advertising, including print, radio, television, and billboard advertising, were not subject to a similar statewide tax. The decision came in response to challenges brought by Apple, Google, and Peacock TV.

The digital advertising tax, enacted in 2021, applied to large companies with at least $100 million in global annual revenue and was projected to generate up to $250 million annually for Maryland’s education initiatives. State officials reported that more than $535 million had been collected under the tax through July 2026, though those funds have been held separately pending the outcome of ongoing litigation. The court ordered the state to refund the taxes collected, plus interest, although an appeal could delay any repayments.

Maryland Comptroller Brooke Lierman and legislative leaders expressed disappointment with the ruling and signaled their intent to continue defending the law, arguing that it modernizes the state’s tax system and ensures large technology companies contribute fairly to public services. Business groups and industry advocates, however, hailed the decision as confirmation that states cannot impose discriminatory taxes on internet-based services. With Maryland now facing the possibility of significant refunds and the loss of a key revenue source, the case is expected to remain closely watched as it moves through the appeals process.

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Massachusetts: What the “End of the Penny” Means for Sales Tax

Written by: Shantol Lerche

When the U.S. Mint produced its final penny on November 12, 2025, businesses across the country began to experience the practical effects of a one cent coin disappearing from everyday circulation. The resulting shortage of pennies has led many retailers to round cash transactions to the nearest five cents, raising new questions about how sales tax should be calculated when the amount actually paid differs slightly from the calculated total.

In Massachusetts, this shift prompted an important compliance issue: how to properly handle sales tax when transactions are rounded. To address this, the Massachusetts Department of Revenue (DOR) issued Directive 26-1 in May 2026, providing clear guidance to retailers and tax professionals. The directive clarifies that sales tax must always be calculated based on the exact sales price, to the cent, regardless of how the final cash payment is rounded. Rounding applies only to the total amount paid in cash and does not affect the amount of tax owed or reported. 

Under this framework, even when a retailer rounds a transaction up or down to the nearest nickel, the calculated sales tax remains unchanged. The tax continues to be based on the true underlying sales price, and any difference resulting from rounding is treated as a separate payment adjustment. Importantly, this adjustment does not constitute additional taxable revenue and should not be included in sales tax calculations or reporting.

For businesses, this guidance has practical implications for both systems and accounting procedures. Point‑of‑sale systems must be configured to calculate tax accurately to the cent before applying any rounding adjustments to the final cash total. If rounding is applied prematurely or incorrectly, it could lead to discrepancies in tax reporting and increase the risk of audit issues. Over time, rounding differences will accumulate across transactions. Businesses should therefore track these differences as rounding gains or losses, ensuring they are recorded separately from taxable sales.

Directive 26‑1 also emphasizes the importance of transparency and consistency in business practices. Retailers are encouraged to clearly disclose their rounding policies to customers and to apply those policies uniformly across all cash transactions. This helps prevent confusion, ensures fairness, and maintains consumer trust as cash handling practices evolve.

Although the penny may be fading from everyday use, its absence introduces meaningful operational and compliance considerations. Massachusetts’s guidance ensures that, even as currency practices change, the principles governing sales tax remain consistent. By maintaining the requirement that tax be calculated precisely and independently of payment rounding, Directive 26‑1 preserves the integrity of the state’s sales tax system while allowing businesses to adapt to a post‑penny environment.

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Minnesota: Accelerated Sales Tax Prepayments Reinstated for 2027

Written by: Andrea Morrison

Minnesota businesses with significant sales tax liabilities should prepare for the return of accelerated sales tax prepayments beginning in June 2027. Under legislation enacted in 2025, certain taxpayers will be required to remit a portion of their June sales tax liability before the end of the month rather than waiting until the normal filing due date.

The accelerated payment requirement applies to businesses that had annual Minnesota sales and use tax liability of $250,000 or more during the previous state fiscal year. Affected taxpayers must remit an estimated payment equal to 5.6% of their June sales tax liability no later than two business days before June 30. Any remaining June tax liability will continue to be due on August 20. The new requirement is effective for taxes remitted after May 31, 2027.

The legislation also introduces a penalty for noncompliance. Taxpayers who fail to make the required accelerated payment may be subject to a 10% penalty on the unpaid portion of the required prepayment. According to Minnesota legislative materials, the reinstated accelerated payment requirement is expected to generate additional state revenue by shifting a portion of sales tax collections from the following fiscal year into the current fiscal year. Similar accelerated June payment requirements have been used in Minnesota in prior years.

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Ohio: Commercial Activity Tax Transitions to OH:TAX eServices in December 2026

Written by: Andrea Morrison

The Ohio Department of Taxation is expanding its OH:TAX eServices platform, with Commercial Activity Tax (CAT) accounts scheduled to transition from the Ohio Business Gateway (OBG) to OH:TAX on December 7, 2026. As part of this fourth system release, OH:TAX eServices will also support additional tax types, including the Financial Institutions Tax (FIT), horse racing, kilowatt-hour, motor fuel, and municipal net profit taxes.

OH:TAX eServices provides taxpayers with a centralized, secure platform to manage their tax accounts. Users can file returns, make payments, check refund statuses, update account information, access filing and payment history, receive and respond to tax notices electronically, communicate with tax agents through web messaging, and access live chat and real-time screen-sharing assistance.

To prepare for the transition, filers should establish an OHID if they do not already have one. Each filer should maintain their own OHID login, and those who already have an OHID can continue using their existing credentials. Taxpayers who currently have access to CAT accounts through OBG do not need to take any action, as their account access will transfer automatically. Users are also encouraged to set up Multi-Factor Authentication (MFA) to enhance account security and ensure a smooth transition to the new platform.

For further updates, please visit the OH:TAX eServices website.

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Oregon: Weight-Mile Tax (WMT) Changes Coming in 2027

Written by: Andrea Morrison

Oregon is implementing significant changes to its Weight-Mile Tax (WMT) system as part of House Bill 3991, signed on November 7, 2025. These updates are designed to modernize the tax structure, simplify compliance, and align transportation funding with system usage. The WMT changes will take effect on July 1, 2027, regardless of other delayed provisions in the legislation.

Simplified Tax Structure

A central feature of the reform is the simplification of the WMT system. Currently, carriers must navigate a complex structure with numerous rate tables and weight configurations. Beginning in 2027:

• The number of tax rate tables will be reduced from 85 to 10
• Vehicles will be taxed based solely on their registered weight, eliminating the need to report multiple weight configurations or axle variations
• The $5 vehicle suspension fee will be eliminated

These changes are intended to make reporting more straightforward and reduce administrative complexity for both motor carriers and the Oregon Department of Transportation (ODOT).

Rate Adjustments & Equity

In addition to simplification, the law introduces adjustments to WMT rates and related fees. These updates aim to create a more equitable system based on findings from the state’s Highway Cost Allocation Study.

While some carriers may see increases and others decreases, the overall goal is to maintain fairness across the industry and ensure users pay proportionally for roadway use.

Operational & Reporting Changes

Under the new system:

• Carriers will report mileage using a single tax rate tied to registered weight
• Tracking of axle count, configuration changes, or weights above 80,000 pounds (except for special permit cases) will no longer be required
• Reporting deadlines will remain unchanged, but forms and procedures will be updated

To prepare, carriers must complete a Mandatory One-Time Amendment (MOTA) in spring 2027 to confirm or update vehicle weights in the system.

Benefits to Carriers

The modernization effort is expected to deliver several benefits:

• Easier compliance and reduced paperwork
• Streamlined reporting and recordkeeping
• Improved audit efficiency
• Clearer regulatory language and processes

Oregon’s WMT changes represent a major shift toward a simpler, more transparent taxation system for motor carriers. By reducing complexity and aligning rates with actual roadway use, the state aims to improve efficiency while maintaining a fair funding structure for transportation infrastructure. Carriers should begin preparing now for the transition ahead of the July 1, 2027 implementation date. For information on all of this, please visit the CCD Modernization Projects page.

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Pennsylvania: Lawmakers Introduce Multiple Sales Tax Holiday Proposals

Written by: Shantol Lerche

Pennsylvania lawmakers have introduced a series of bills aimed at creating new sales tax holidays and targeted exemptions designed to reduce costs for families, promote outdoor and recreational activities, and support patriotic traditions. The proposed legislation spans a wide range of consumer goods, from children’s items and baby products to bicycles, holiday-related purchases, and firearms. While none of the proposals have been enacted to date, together they reflect growing legislative interest in using temporary sales tax relief to address affordability concerns and stimulate consumer spending.

Firearms & Ammunition: Six-Month Sales Tax Holiday

House Bill 2447, sponsored by Rep. Chad Reichard (R‑90), would establish a six-month sales tax holiday for the purchase of firearms and ammunition. If enacted, the proposal would temporarily exempt qualifying purchases from Pennsylvania’s sales and use tax for half of the year.

Bicycles, E‑Bikes, & Safety Equipment

House Bill 2448, introduced by Rep. Parke Wentling (R‑7), would create a sales tax holiday for bicycles, electric bicycles, helmets, and other bicycle-related parts and accessories. The proposal is intended to encourage outdoor recreation, promote environmentally friendly transportation alternatives, and improve public health by making cycling more affordable for Pennsylvania residents.

Children’s Toys, Instruments, & Books

House Bill 2451, sponsored by Rep. Thomas Kutz (R‑87), proposes a six-month sales tax holiday for children’s toys, musical instruments, and children’s books. The bill is designed to provide financial relief to families, particularly those with school-aged children, while supporting educational development and enrichment through play, music, and reading.

Baby Furniture & Essential Infant Items

In a companion proposal, Rep. Kutz also introduced House Bill 2452, which would create a sales tax holiday for baby furniture, crib mattresses, and strollers. The measure targets some of the high-cost items commonly purchased by new and expanding families, with the goal of reducing the financial burden associated with early childhood care and safety.

Fourth of July Celebrations

House Bill 2453, sponsored by Rep. Roman Kozak (R‑14), would establish a sales tax holiday for items that families commonly purchase to celebrate the Fourth of July. While the bill language would determine the specific eligible items, the intent is to make holiday celebrations more affordable and to support seasonal retail activity tied to Independence Day.

Flag Poles & Accessories Exemption

In a related proposal, House Bill 2454, also introduced by Rep. Kozak, would create a permanent sales tax exemption for flag poles, brackets, and related accessories. The measure aims to promote patriotic expression by removing the sales tax on items used to display the American flag and other flags.

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Pennsylvania: Key Considerations for Philadelphia & Allegheny County Local Sales Taxes

Written by: Shantol Lerche

A significant change to Pennsylvania’s local sales tax rules was enacted through Act 21 of 2026. Under the new law, vendors selling taxable products or services to customers in Philadelphia or Allegheny County must collect the applicable local tax based on the customer’s location rather than the seller’s location. Historically, local sales tax was generally sourced based on the point of sale, meaning the seller’s location determined whether the local Philadelphia or Allegheny tax applied. Under the revised rules, local tax is sourced to the destination where the product or service is delivered or received. This change aligns local sales tax sourcing with Pennsylvania’s existing state sales tax sourcing methodology.

Applicable Tax Rates

The following rates now apply to taxable transactions delivered into these jurisdictions:

• Pennsylvania state sales tax: 6%
• Philadelphia local sales tax: 2% (combined rate of 8%)
• Allegheny County local sales tax: 1% (combined rate of 7%)

These are the only local sales taxes currently imposed in Pennsylvania.

Impact on Businesses

The new destination-based sourcing rules expand collection obligations for many businesses. Vendors with Pennsylvania sales tax collection responsibilities must now determine whether taxable goods or services are delivered to customers located in Philadelphia or Allegheny County and collect the appropriate local tax accordingly. For example:

• A retailer located outside Philadelphia that ships taxable goods to a Philadelphia customer must collect the additional 2% Philadelphia local tax
• A seller located in Allegheny County that delivers taxable goods to a customer outside Allegheny County generally would not collect the local Allegheny tax if the destination is outside the county

Businesses should review their tax engines, invoicing systems, and ERP configurations to ensure they correctly identify customer delivery locations and apply the appropriate local rates.

Effective Date & Enforcement

Act 21 became law on July 12, 2026, and applies retroactively to tax years beginning after December 31, 2025. However, the Pennsylvania Department of Revenue announced that it will not begin enforcing the new sourcing requirements until October 1, 2026, to provide businesses time to update their systems and compliance processes. Because of the retroactive effective date, businesses may need to evaluate whether prior transactions during 2026 created uncollected local tax liabilities or reporting adjustments.

State Sales Tax & Use Tax Rules Remain Unchanged

The sourcing change affects only local Philadelphia and Allegheny County sales tax rules. Pennsylvania’s statewide 6% sales tax rules remain unchanged. Taxable sales of tangible personal property and certain services continue to be subject to state sales tax.

Similarly, Pennsylvania’s use tax rules remain in effect. When sellers do not collect the required tax, purchasers remain responsible for remitting use tax on taxable items used in Pennsylvania. Residents and businesses in Philadelphia owe an additional 2% local use tax, while those in Allegheny County owe an additional 1% local use tax.

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Puerto Rico: Treasury to Transition Municipal Sales Tax Filing to SURI

Written by: Zachary McCauley

Beginning July 1, 2026, merchants using Puerto Rico’s Unified Internal Revenue System, known as SURI, will see a new tax account labeled “Sales and Use – Municipal” in the account summary area. The addition is part of the Puerto Rico Department of the Treasury’s rollout of a centralized process for reporting and paying the 1% municipal sales and use tax for municipalities that participate in the Municipal Finance Corporation, commonly known as COFIM.

The updated process will first apply to the July 2026 filing period. Taxpayers will be able to file the revised Monthly Sales and Use and Imports Tax Return beginning August 1, 2026, through the “Sales and Use – State” account. The revised return will incorporate the calculation of the municipal tax for participating municipalities, changing how merchants manage state and municipal sales tax obligations within SURI.

What the New Municipal Account Allows

The new “Sales and Use – Municipal” account is intended only for payments to participating municipalities. Filing activity will remain tied to the revised monthly return available through the state sales and use tax account, while municipal payment activity will be handled separately through the new municipal account.

Non-Participating Municipalities

The integration does not apply to Bayamón, Carolina, Guaynabo, Mayagüez, or San Juan. Businesses with registered locations in any of these municipalities should continue to follow the filing and payment procedures established by each municipality. For those locations, the monthly SURI return will not calculate the municipal sales and use tax.

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South Carolina: Department of Revenue Transitions Sales XML Filing from BSWA

Written by: Shantol Lerche

The South Caroline Department of Revenue (SCDOR) is notifying taxpayers and tax preparers that it will no longer partner with BSWA for processing sales, use, accommodations, and max tax returns. This change affects all filers who currently use BSWA SecureNet to submit returns through the Sales XML filing program.

Important Transition Dates

BSWA SecureNet stopped accepting returns after 5:00 PM EDT on September 30, 2026. Any returns submitted after this deadline will not be processed through BSWA. Beginning October 2, 2026, at 10:00 AM EDT, taxpayers can now upload Sales XML returns directly through MyDORWAY, the SCDOR’s free online tax portal, available at MyDORWAY.dor.sc.gov.

What Will Change?

Once the Sales XML filing program transitions to MyDORWAY: 

• Existing sales taxpayers who previously filed XML returns through BSWA will automatically have access to file Sales XML returns in MyDORWAY 
• Filers will be required to log in to their MyDORWAY account to submit XML files 
• MyDORWAY will provide immediate confirmation once an XML file has been successfully submitted 
• The SCDOR will only accept XML files that contain valid sales tax account file numbers 
• XML files containing invalid sales tax account file numbers will be rejected by MyDORWAY 

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Tennessee: Davidson County Reduces Taxes on Food & Food Ingredients

Written by: Christina L Stainbrook

Effective November 1, 2026, Davidson County, Tennessee, will reduce its local sales tax rate on qualifying food and food ingredients from 2.25% to 1.75%.

The reduced rate applies throughout Davidson County, including cities within the county such as Berry Hill, Belle Meade, Oak Hill, Forest Hills, and Goodlettsville. The 4% Tennessee state sales tax rate on food and food ingredients remains unchanged, resulting in a combined state and local rate of 5.75% on qualifying purchases. Other tangible personal property and taxable services will continue to be subject to Davidson County’s 2.25% local rate.

The reduced rate is limited to items that meet Tennessee’s definition of “food and food ingredients” and does not apply to alcoholic beverages, tobacco, candy, dietary supplements, or prepared food. Beginning with the November 2026 sales and use tax return, due December 20, affected taxpayers will report qualifying food sales on a new line of the return. The Tennessee Department of Revenue will provide additional reporting instructions directly to impacted taxpayers.

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