MISSOURI/ILLINOIS UPDATE ON INTERNET SALES TAX

Eddie Quigg, CPA, JD

Illinois

The nationwide legal battle over collecting sales taxes on internet sales moved a step closer to possible U.S. Supreme Court resolution when the Illinois Supreme Court recently upheld a lower court decision that struck down the Illinois law that required online retailers to collect sales tax on in-state internet-based sales generated by their affiliates.

 The most well known example of internet-based selling is Amazon Associates. A typical situation is a blog site (the Amazon Associate a/k/a affiliate) that evaluates products and provides a link to Amazon’s site -- if Amazon sells the product the Associate gets an “advertising fee.” Before the recently enacted law was voided, Amazon was required to collect sales tax on sales generated from their Illinois Amazon Associates. No more.

In March, New York’s highest court upheld a similar law, causing Amazon to file a petition with the U.S. Supreme Court, which might now consider the case in order to resolve the conflict between the Illinois and New York decisions. In the meantime, each state is free to pass similar laws and have their courts rule on the issue.

And to further confuse matters, Congress is considering the Marketplace Fairness Act which would require tax collection by all online sellers who meet certain criteria, e.g. more than $1 million in internet sales. The Bill has passed the Senate and is currently stalled in the House.

Missouri

Missouri Associates/affiliates can breathe a sigh of relief after Governor Jay Nixon vetoed a bill which contained two measures designed to increase sales tax collection by internet retailers. The first is the multi-state Streamlined Sales and Use Tax Agreement, under which 24 states have agreed to modify sales tax laws to make it easier to collect sales taxes across the states. The second is the federal Marketplace Fairness Act, discussed above. An effort to override the veto failed to get the necessary number of votes, although the sponsor of the bill vowed to fix the legislation next year.

For now Missouri does not have any laws which authorize the collection of internet sales unless the retailer has traditional nexus to Missouri, which generally means a “brick and mortar” physical presence in the state.

Conclusion
 

While both Illinois and Missouri retailers and consumers are currently in a sales-tax-free zone for internet-based transactions, this status might be short-lived as momentum continues  to build on both the national and state level to make these transactions subject to sales tax.

Please call or e-mail your Purk & Associates contact if you have any questions, or would like further information on this topic.

Megan Madden, CPA

Donation Time!

It’s that time of year…  While most retail stores are stocking shelves in preparation for the holiday season, many non-profits are trying to secure donations by the end of the year. 

Historically, most donors (corporations and individuals) make their major contributions just before the end of the year.  If you are thinking of making a large donation, this is a good time to meet with your tax preparer for guidance. 

If you are a non-profit, whether you operate based on a calendar year-end or fiscal year-end, this is an important time for you to get back in line with your budgeted revenue.  This is the time to consider annual appeals, grant-writing, or getting in touch with prior donors. 

When soliciting donations, it also helps if you can offer tax credits to donors.  Remember, when soliciting donations, to be clear on what you are looking for.  For instance, if you have a major planned purchase for building repairs or computers or just need supplies, tell your donors what you need. 

Some prefer to write a check, while others prefer to donate in-kind items.  Also, annual appeals are a good time to ask volunteers to help stuff letters or make phone calls.  As always, remember to send out IRS required donor acknowledgement letters to all donors that contribute $250 or more. 

For more information on these or other ideas, give us a call to set up a time to discuss.