Completely Compliance:
Q3 2026

Updates by State

• Alabama: State Grocery Tax Paused Under Act 2026‑604
• Arizona: How Penny-rounding Law Affects Cash Transactions (House Bill 2938)
• California: Local Prepaid Mts Collection Act Extended to 2031
• Colorado: Update on Pif Return Reporting Requirements for Copperleaf MD #1
• Illinois: Find Prior-year Tax Materials in the New Tax Archive
• South Dakota: Department of Revenue Transitions to Electronic Account Notifications

Alabama: State Grocery Tax Paused Under Act 2026‑604

Written by: Shantol Lerche

The state of Alabama announced a temporary suspension of the state portion of its grocery sales tax on food items, providing short-term tax relief for consumers during a defined two‑month window. Under Act 2026‑604, the state sales and use tax on qualifying food purchases was suspended from May 1 through June 30, 2026. During this period, eligible grocery items were exempt from Alabama’s state grocery tax, slightly lowering the total cost at checkout for households across the state.

While this suspension offered immediate savings, its scope was limited. Local city and county sales and use taxes on food remained fully in effect, meaning shoppers still saw some tax applied depending on their locality. For retailers, the change primarily affected state-level tax calculation and reporting, requiring updates to point‑of‑sale systems to ensure the state tax was not collected during the suspension period but resumed accurately on July 1, 2026. Overall, the measure reflected a targeted, temporary cost‑of‑living relief effort, rather than a permanent change to Alabama’s grocery tax structure.

Arizona: How Penny-rounding Law Affects Cash Transactions (House Bill 2938)

Written by: Rachael Dugan

A new requirement that impacts how cash transactions are handled by Arizona businesses was signed into law, effective March 12, 2026.

Businesses that don’t use pennies, or don’t have pennies available at the point of sale, will be required to use rounding for cash transactions. The final cash transaction total will be rounded up or down to the nearest 5-cent increment, depending on the last digit of the dollar amount (i.e., a total of $1.02 rounds down to $1.00; a total of $1.03 rounds up to $1.05; a total of $1.07 rounds to $1.05; and a total of $1.08 rounds to $1.10).

This doesn’t affect the way taxes are collected or reported. All taxes and fees must be calculated and remitted based on the transaction amount before rounding is applied. Approved vendor software must calculate gross income based on the full pre-rounding transaction amount, including all taxable items, fees, and charges, and not the rounded cash amount paid by the customer. The amount by which the POS system rounds a cash transaction up or down is disregarded for TPT reporting purposes. For transactions rounded under this law, gross receipts for TPT purposes are equal to the pre-rounding amount shown on the invoice, not the rounded cash amount collected.

Sellers are required by law to post a mandatory customer notice at the point of sale: “Cash transactions are rounded to the nearest five-cent increment pursuant to state law.”

The enforcement and oversight of the law fall under the Weights and Measures Service Division. Any questions a vendor or their clients may have about the rounding compliance should be directed to the Arizona Department of Agriculture.

No adjustments, discounts, or offsets related to cash rounding may appear in any tax calculation field, gross income field, or tax deduction field on a TPT return. Only the cash exchange at the register is affected by this new rounding law. For more helpful information, visit the Arizona Penny-Rounding FAQ.

California: Local Prepaid Mts Collection Act Extended to 2031

Written by: Christina Stainbrook

California Assembly Bill 330 (AB 330) extends the sunset date of the Local Prepaid Mobile Telephony Services (MTS) Collection Act. Originally set to expire on January 1, 2026, the Act will now remain in effect through January 1, 2031. The legislation ensures the continued collection of prepaid mobile telephony surcharges that fund critical local emergency services.

Under the Act, retailers selling prepaid mobile services are required to collect applicable surcharges that support emergency response systems, including 911 and the 988 Suicide & Crisis Lifeline. With the extension in place, retailers should plan to continue compliance with these collection and remittance requirements for the next five years.

Colorado: Update on Pif Return Reporting Requirements for Copperleaf MD #1

Written by: Andrea Morrison

Effective immediately, businesses submitting Public Improvement Fee (PIF) returns for Copperleaf MD #1 should be aware of an important change in reporting requirements. Deductions for sales made through third‑party facilitators will no longer be permitted on PIF returns.

Additionally, any deductions claimed under “sales to other licensed dealers for the purpose of taxable resale” must be supported by proper documentation.

Returns submitted without the required backup will be processed without these deductions, which may result in a balance due on the account.

To avoid delays or unexpected balances, businesses are encouraged to review their reporting processes and ensure all submissions comply with the updated guidelines.

If you have any questions regarding these changes or need assistance with your PIF reporting, please reach out to your CLA representative for support.

Illinois: Find Prior-year Tax Materials in the New Tax Archive

Written by: Claire Ashcraft

The Tax Archive is a research library run by the Illinois Department of Revenue (IDOR). It stores older, less frequently used tax materials, helping taxpayers and professionals find historical documents and forms not on the main IDOR site.

The archive includes searchable collections of:

• Prior year tax forms and instructions
• Informational bulletins and compliance alerts issued in prior years
• Legal research documents, such as administrative hearings and letter rulings
• Annual reports and other historical statistics related to taxes
• Other archived publications and resources relating to various tax subjects

Use the site’s search function to find content by keyword or browse by category. These documents are provided for reference or research purposes and may be outdated in comparison to the current information available on the main IDOR website.

South Dakota: Department of Revenue Transitions to Electronic Account Notifications

Written by: Shantol Lerche

The South Dakota Department of Revenue (DOR) is modernizing business communications by replacing mailed Statement of Account notices with electronic notifications. Beginning in July, businesses that file and pay taxes electronically will be gradually transitioned to the department’s digital systems, improving efficiency, timeliness, and taxpayer service.

This transition will apply to several key types of account communications, including:

• Missing or unfiled tax returns
• Outstanding account balances
• Credits remaining on accounts

To ensure uninterrupted access to important tax notifications, the DOR is asking all affected businesses to verify the email address associated with their EPath account. Business owners and authorized users can confirm or update their information by following these steps:

1. Log in to your EPath account
2. Select “Change Profile”
3. Choose “Email Reminder”
4. Confirm or update your email address

Maintaining an accurate email address is essential to receiving timely alerts about account activity and obligations.

Looking Ahead

This shift reflects the South Dakota Department of Revenue’s continued focus on streamlining processes and improving how it connects with taxpayers. Moving to electronic notifications allows the department to deliver information more quickly while reducing reliance on paper.

Businesses are encouraged to review and update their contact details now to stay informed. Keeping your information current will help ensure you receive important updates promptly and manage your account with confidence.