Stay informed on tax compliance developments throughout each quarter of the year with our Completely Compliance blog series. The information included in this post summarizes the second quarter of 2022.
The Small Business Relief and Revitalization Act of 2022 was signed by Governor Ivey in February. As part of the act, the threshold for estimated payments has increased from $2,500 to $5,000. The change was effective May 1, 2022. Taxpayers will be notified by the state if they are affected by the change.
Signed into law in April, SB22-032 will affect local business license practices in two stages. Effective July 1, 2022, local taxing jurisdictions will be prohibited from charging license fees primarily to remote sellers. After July 1, 2023, the local taxing jurisdictions will be prohibited from requiring application of a license.
Colorado has implemented a new fee for delivery of tangible personal property subject to sales and use tax by a motor vehicle. Since July 1, 2022, retailers collected $0.27 and it must be separately stated on the invoice or receipt. The fee applies for owned vehicles or if a third-party delivery vehicle is used. The fee is remitted on the same filing frequency as the state sales and use tax return. Any retailer that is already registered with the state will automatically be registered to remit the fee.
Civil penalties may now be assessed on refund claims for sales and use tax. HB 1118 was signed into Act and will be effective July 1, 2022. The penalties will be broken down as follows:
The penalties apply to refund claims of $5,000 or more. The state will notify the claimant if the refund penalty applies and provide a minimal timeframe to correct it.
For the first time, a sales tax exemption period or “holiday” has been established on the sale of children’s books. The exemption runs for an extended period of time in comparison to the back-to-school holiday already in place. The exemption began on May 14 and will end on August 14, 2022. In general, any book with an age range of 12 years old or younger will qualify and includes audiobooks and books on CD. Remote sales are included in the exemption as long as the sale was accepted during the timeframe allotted.
In addition, the Disaster Preparedness Sales Tax Holiday will begin May 28 and run through June 10, 2022. Eligible items include batteries, coolers, radios, and types of waterproof sheeting. In addition to these items, pet evacuation supplies are also included in the holiday. Products include cat litter, pet food, beds, and carriers. Price thresholds are applicable.
Freedom Week is a sales tax holiday on outdoor activity sales and admissions to gear up for Independence Day celebrations. Eligible items include admissions to various events, snorkels, coolers, water skis, paddle boards, water bottles, and bike helmets. The holiday will extend from July 1 through July 7, 2022. This is the second year for the holiday.
The Energy Star holiday will run from July 1, 2022 through June 30, 2023. Products include washers and dryers, refrigerators, and water heaters. There are thresholds that apply but these products can be purchased sales tax free.
To broaden the age range for clothing and apparel, the state has also established an exemption period for younger children purchases. The purchases include baby and toddler clothing, diapers, and shoes of children five years old or younger. It does not include accessories. The period starts July 1, 2022 and goes through June 30, 2023.
Trade tools will also get a sales tax holiday in Florida as well. Items included in the holiday are work boots and gloves, toolboxes, books, and safety goggles. The holiday runs from September 2 through September 9, 2022.
Impact-resistant doors and windows will have a sales tax holiday from July 1, 2022 through June 30, 2024.
Finally, the back-to-school holiday will commence on July 25 and run through August 7, 2022. Thresholds and only certain products apply.
After overriding the Governor’s veto, Kentucky legislation passed HB 8. The bill will enable a tax amnesty program for all taxes administered by the Department of Revenue. The program will run from October 1, 2022 through November 29, 2022. It will cover any liabilities accrued between October 1, 2011 and December 1, 2021. Penalties and 50% of interest will be waived. More information will be provided when the Department announces the program.
The annual accelerated payment that is due in June is no longer required. Due to a budget surplus, the payment requirement was dissolved. You can file your June period return normally.
Signed by the Governor on April 19, LB984, amongst other changes, will increase the filing discount to 3% of the first $5,000 remitted each month. The change is effective October 1, 2022.
Recently, North Carolina changed how they calculate penalties on late payments. To date, the late payment penalty was 10% regardless of how late the payment was made. Effective July 1, 2022, the penalties will change to 2% for each month the penalty was late up to a maximum 10% penalty.
Effective November 1, 2022, e-Tides, the state’s online filing, payment, and renewal system, will be replaced with myPATH. While some features will be available without a login, in order to gain full access to the tax account a new login will need to be created. Instructions are available here.
Effective June 27, the state of South Carolina will no longer mail paper notices. Instead, notices can be accessed through the MyDORWAY online system. Businesses with current MyDORWAY accounts will automatically opt-in to the paperless notices. Businesses without accounts will need to be set up on the new system. In addition, the state is offering a document upload system through MyDORWAY as well.
Signed into Act on April 20, 2022, SB 533 repeals the current soda tax in West Virginia effective July 1, 2024.
The listing for 2022 upcoming Sales Tax Holidays are available from the Federation of Tax Administrators (FTA) and provides the current dates for the sales tax holidays by state.