’Tis the season for sales tax bills – Wacky Tax Wednesday

There’s more to winter than the holidays. For lawmakers in many states, ’tis the season to introduce legislation for the upcoming session. It’s always interesting to see what they’re focusing on, especially since there are usually one or two doozies that typically don’t make it very far.

Bills for the 2024 legislative season are starting to roll in. 

New York may boost small businesses

A couple of interesting ideas have surfaced in New York. There’s a proposal to reduce the sales tax rate for small businesses in the state from 4% to 2.5%. Another bill would require new businesses to take a sales tax education course. I look forward to seeing what happens with both of these.

Florida may provide more sales tax exemptions (both permanent and temporary)

The governor of Florida has included several sales tax changes in his budget recommendations for fiscal year 2024 to 2025. If he gets his way, Florida will increase the sales tax collection allowance, provide a sales tax exemption for over-the-counter pet medications, and offer the following sales tax holidays in 2024:

  • Two back-to-school sales tax holidays, one in the spring and one in the fall 
  • Two disaster preparedness sales tax holidays
  • A three-month “freedom summer” sales tax holiday
  • A seven-day “tool time” sales tax holiday

Florida typically has multiple sales tax holidays, but as it has no annually recurring tax-free periods, it starts with a clean slate each year. For the past few years, Florida has decided to have multiple, overlapping sales tax holidays — and it looks like that trend is set to continue in 2024.

Gov. DeSantis also wants to provide a one-year exemption on taxes, fees, and assessments for homeowners insurance policies, a permanent exemption for flood insurance policies, and a tax credit for “businesses that employ Floridians with unique abilities.”

Wisconsin may exempt admissions to the State Fair

In Wisconsin, a bill introduced December 8, 2023, would establish a sales tax exemption for the sale of admissions to the Wisconsin State Fair at State Fair Park.

Most admissions to amusement, athletic, entertainment, or recreational places or events are subject to Wisconsin sales tax, but the legislative reference bureau observes that current law “provides exemptions for the sale of admissions by a gun club that is a nonprofit organization and by a nonprofit organization to participate in any sports activity in which more than 50% of the participants are 19 years of age or younger.”

Exactly what that has to do with the Wisconsin State Fair is unclear to me. Only about 25% of the people attending the Wisconsin State Fair between 2017 and 2019 were under the age of 20. But there it is.

States look to replenish dwindling transportation funds

Gas guzzlers like my beloved 1965 Volvo will probably always be on the roads, but the growing predominance of electric and hybrid vehicles are reducing the need for fuel. Heck, I’m even thinking of converting my sweet little Volvo to electric.

States are taking a number of different tactics to refill the transportation funds that are suffering due to declining fuel sales. Colorado and Minnesota have enacted retail delivery fees, and New York and Washington are considering them. 

A bill put forward in Tennessee would allocate all sales tax generated from retail sales of new or used motor vehicles and new or used tires to the dwindling state highway fund. Washington state introduced a similar bill last session, though it failed to gain any traction.

Florida HB 107 would impose additional annual license fees on electric vehicles and plug-in vehicles. Revenue generated by these fees would fund state and local transportation expenditures. 

As the months unfold, we’ll likely see more — and more creative — bills along these lines.

A sampling of bills that didn’t become law in 2023

Every year, lawmakers across the country throw bills at the wall like spaghetti to see what sticks. Inevitably, many of these fall to the floor and into obscurity.

In early 2023, some Maine lawmakers introduced a bill to “Protect Maine People from Inflation by Exempting Gold and Silver Coins and Bullion from the State Sales and Use Tax.” It died. There was also an unsuccessful proposal to establish a seasonal sales tax in Maine

A bit farther south, the hilltown community of Charlemont, Massachusetts, tried to set a 3% tax on the tickets for guided and unguided commercial recreational activities in the town. Had it been enacted, Charlemont would have administered the tax rather than the Massachusetts Department of Revenue. That would have been extremely unusual for The Bay State.

On the national level, the Fair Tax Act of 2023 sought to 1) abolish the IRS and 2) establish a national sales tax of 23% in 2025 (to be adjusted in subsequent years). “Instead of adding 87,000 new agents to weaponize the IRS against small business owners and middle America, this bill will eliminate the need for the department entirely by simplifying the tax code,” said Georgia Rep. Earl L. “Buddy” Carter, who cosponsored the bill as his first act as a member of Congress. President Biden promised to veto the bill if it ever made it to his desk, which it didn’t.

There’ll be more wacky tax news in 2024 at the Avalara Tax Desk

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