Since June 1, there have been several hundred tax rate changes across the United States. In addition, more than two dozen states have updated or expanded their tax jurisdictional boundaries, assigning as many as six taxing authorities to a single street address in some states (state, county, city, special tax jurisdictions, etc.). When states change rates, Avalara adapts. Avalara has recently and dramatically updated their rate data in response to a sharp uptick in the number of the states’ changes in sales and use tax rates, jurisdictional changes and other revenue-enhancement moves.
In addition to rate and boundary changes, Avalara added 172 new taxability rules to its database, covering such items as a week-long “Show Me Green” sales tax holiday on certain energy-efficient products in Missouri, massages by unlicensed therapists in the five boroughs of New York City and software maintenance contracts in Utah. While there were a few tax holidays, such as a month-long suspension on sales tax for clothing items in Mississippi, most changes represented rate increases.Putting it in perspective
Avalara’s VP of Compliance, Mike Gardner, put these changes in perspective: “These changes are a good representation of exactly how complex and difficult sales tax compliance can be for businesses of all sizes. So far, the year 2010 has seen a remarkable number of taxability rules changes and other changes to sales and use taxes. While no clear cause-and-effect correlation has been unequivocally established, the states’ struggle to balance their budgets without taking the unpopular move of voting increases in income or property taxes seems to be reflected in the number of changes being made in the sales and use tax field. Whatever reason, in the face of near-constant change, an automated web-based solution like AvaTax is really the only way for companies to ensure that their calculations and collections are based on the most accurate, up-to-date information and thereby reduce their exposure to audits and penalties.”
Colorado leads the way
One of these major changes comes from Colorado – a state known for having some of the most complex tax jurisdictions in America. Some specific geographic locations in Colorado fall within as many as five distinct taxing jurisdictions. Effective immediately, more than 100 of these jurisdictions will be treated as state-administered.
To Russia, With Love
Other significant changes and updates include the enhanced integration of AvaTax with the current Melissa Data Address Validation Service, as well as adding full sales tax and VAT information for the Russian Federation and the Canadian Maritime Provinces.
US states which had significant changes in codes, rates or jurisdictions include:
• Updated Tax Codes: South Carolina, Utah, Alabama, Alaska, California, Mississippi, South Dakota, Texas
• Critical Nexus Changes: Texas, Colorado, Alabama (259 in Alabama)
• Twenty-six Sales Tax II Rate updates for 40 jurisdictions in 11 SST and 30 jurisdictions in 8 non-SST states
• Computer Software Maintenance: Rhode Island, California, Pennsylvania, Maryland, Missouri, Wyoming
• Boundary Updates: California, Louisiana, Oklahoma, Tennessee, Texas, Washington State
• ASP-Related Taxability Service Codes: All 50 states
• Embroidery Services: All 50 states
• Clothing: 20 Changes in New York; a sales tax holiday in more than 24 categories in Mississippi in the month of July
• Dry Cleaning & Laundering: Alabama, Arizona, California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Maine, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, New York, Pennsylvania, South Carolina, Texas, Virginia, Wisconsin, Wyoming
• Travel Expenses: Wyoming
• Medical-related Products: Oklahoma
• Food and Food Ingredients: Colorado, more than 40 foods and ingredients in Arizona
• Bottled Water: Washington
• Construction Services: Non-SST States
• Computer Software Maintenance: Maryland, Massachusetts, South Carolina
• Freight: Wisconsin
• Local Government Entities: Minnesota
• Taxability Supporting SST Testing
• Candy – More than 100 Categories: Washington
