July 2014 Sales Tax Changes

July 1, 2014 is the start of a new fiscal year for all but a handful of states. As such, it brings with it many changes to sales and use tax rates, rules, and regulations. There are new exemptions, law clarifications, and boundary changes. Read on for a roundup of sales and use tax changes taking effect as of July 1, 2014.

Friendly advice: grab a cuppa and make yourself comfortable—the list is long.

Rate changes

The following states have some sort of sales tax rate change, effective July 1, 2014:

• Alabama: numerous local rate changes.
• Arizona: rate reduction for food for home consumption sold in Eloy.
• Arizona: rate change for operating a pipeline in the Chino Valley.
• Arkansas: numerous local rate changes; reduction in sales and use tax rate for electricity and natural gas used in manufacturing.
• Colorado: numerous local rate changes.
• Florida: indexed tax rate for asphalt increasing; reduced rate for electricity.
• Georgia: local rate change.
• Illinois: numerous local rate changes, in home rule and non-home rule localities.
• Kansas: numerous local rate changes.
• Minnesota: new transit sales and use tax for Becker County.
• Mississippi: local rate increase.
• Missouri: numerous local rate changes.
• New Mexico: numerous local rate changes.
• North Carolina: rate increase for bread, buns and rolls sold at bakery thrift stores.
• North Dakota: numerous local rate changes.
• Philadelphia: rate increase.
• Oklahoma: local rate changes.
• South Dakota: local rate changes.
• Tennessee: local rate increase.
• Texas: numerous local rate changes.
• Utah: rate, location code and service fee changes.
• Vermont: local rate change.

Exemptions

The following states have new exemptions, effective July 1, 2014:

• Arkansas: sales of utilities used for commercial grain drying and storage, first $50,000 of the purchase price of certain timber harvesting equipment, and dental appliances sold to or by certain dental professionals.
• Arkansas: exemption from gross receipts tax for sand and other proppants used to complete a new oil or gas well or to recomplete, redrill or expand an existing oil or gas well.
• California: partial exemption for manufacturing, research and development equipment (BOE advises manufacturers to get proof of qualification for the exemption “in writing”).
• Connecticut: numerous admissions charges and certain sales by and to community hospitals and credit unions.
• Florida: admissions to Major League Soccer events; charges to store lawfully impounded vehicles.
• Florida: sales of bicycle helmets, child restraint systems for vehicles, prepaid meal plans purchased by students enrolled at institutions of higher learning, and certain therapeutic veterinary diets obtained from licensed veterinarians.
• Indiana: blood glucose monitoring meters; and an existing aircraft parts exemption is extended to certain new situations (SB 367, section 10ff).
• Maine: certain sales of adaptive equipment that enables people with disabilities to drive.
• Maryland: the admissions and amusement tax exemption is expanded to many artists.
• Mississippi: aircraft used predominantly to transport passengers/property to offshore oil or natural gas rigs.
• Mississippi: qualifying businesses may purchase exempt from sales tax fuel used directly in certain operations, such as manufacturing and the production of poultry.
• New York: sales of certain medical equipment and services.
• North Carolina: sales of prepaid meal plans.
• Oklahoma: the exemption for tangible personal property sold by or to nonprofit parent-teacher associations or organizations, previously set to expire July 1, has been extended indefinitely.
• South Carolina: admissions to the South Carolina State Museum.
• Wisconsin: certain sales and storage or use of parts used to repair aircraft, and charges for the repair or servicing of certain aircraft.

Other changes

The following states are enacting other changes that impact sales tax, effective July 1, 2014:

• Arkansas: partial sales and use tax refund for labor costs and certain machinery and equipment or replacement parts purchased to modify, repair or replace existing manufacturing machinery and equipment.
• California: regulations clarifying how tax applies to sale or lease of prewritten computer programs and data processing take effect.
• California: BOE has the power to refuse to issue seller’s permits to persons/entities with outstanding final liabilities.
• California: change in pricing and taxation of food truck sales.
• Colorado: Marketplace Fairness and Small Business Protection Act takes effect, modifying and expanding sales and use tax nexus provisions.
• Colorado: filing change for persons and entities selling rooms and other accommodations.
• Colorado: file on time and get a discount.
• Florida: the definition of “prepaid calling arrangements” changes, effective July 1. Prepaid calling arrangements are subject to sales tax, which is collected at the time of sale and remitted by the seller (HB 5601, section 202.11, ff).
• Georgia: a civil rights museum (entitled to certain exemptions) is redefined; the exemption for certain delivery charges is clarified; the exemption for certain machinery used in manufacturing is extended.
• Idaho: the exemption and taxation of computer software and cloud computing services is clarified.
• Indiana: retail merchants are no longer required to collect sales tax on gasoline sales. Use tax on gasoline must be paid by qualified distributors, refiners or terminal operators.
• Indiana: sellers are allowed to “round the tax”.
• Kentucky: buyers of new cars can deduct the value of a trade-in from the value of the new vehicle when paying the 6% motor vehicle usage tax. This is already allowed for sales of used vehicles.
• Maryland: Anne Arundel County may authorize the City of Annapolis to collect revenue generated in Annapolis from the hotel tax.
• Maryland: the definition of a “transient charge” in Frederick County is changed.
• Missouri: canned software is subject to tax and customized software is exempt from tax, effective July 30, 2014.
• Nebraska: local boundary changes take effect, can impact rates.
• North Carolina: sales tax holidays for energy efficient products and clothing and school supplies are eliminated; numerous taxes and discounts on electric power are repealed.
• North Carolina: imposes sales tax on electricity and piped natural gas at the combined general rate (the excise tax and exemption are repealed).
• North Carolina: farmers must meet an annual gross income tax requirement of $10,000 from farming operations in the prior calendar year to qualify for sales tax exemptions for farmers.
• South Carolina imposes an accommodations tax rate of 7% plus applicable local sales and use taxes, and, there is a change to the tax on additional guest charges. A 5% sales tax is imposed on room service, laundering and dry cleaning services, in-room movies, telephone service and rentals of meeting rooms. The following items are exempt from the 5% tax, pursuant to HB 3561: “amenities, entertainment, special items in promotional tourist packages, telephone charges and other guest services.”
• Virginia: separately stated charges for equipment available for lease or purchase by a provider of satellite television programming for customers are subject to sales tax.
• Virginia: it is a Class 1 misdemeanor to use sales suppression devices (tax zappers).
• Washington State: numerous annexations, can impact rates.
• Wyoming: sales of certain repair services and certain digital products are subject to tax; change in sourcing sales tax on services.

Also in the news

Georgia’s Safe Carry Protection Act is not related to sales tax but it is interesting. Affectionately known as “Guns Everywhere,” the legislation allows Georgians with gun permits to carry their weapons into many more locations, including bars, churches, schools, and unsecured government buildings.

photo credit: Pardesi* via photopin cc