News and announcements

If you’re a craft fair vendor, you probably need to collect sales tax

Repost from Avalara

From Seattle to Miami, craft shows, festivals, and fairs are ramping up for the holidays. As vendors prepare to sell everything from art and jewelry to housewares and beyond, many still have questions about how to handle sales tax at craft fairs. If you plan to sell at a craft fair, you may be wondering when to charge tax, which products get taxed, how to handle tax in different states. The truth is, if you plan to make sales at a craft fair, you likely have to collect sales tax. Do you have the info you need to do that in the right way? Read on for answers to some of the most frequently asked questions about taxing craft fair sales.

 Should I collect sales tax?

The answer to this question is often, yes. Most states require individuals and businesses that make taxable sales to register, collect, and remit state and local sales tax, even when the sales are temporary (e.g. craft fair sales).

However, there are a few exceptions to that rule. For example, no state sales tax permit is required in states without a general sales tax: Alaska, Delaware, New Hampshire, Montana and Oregon. Alaska and Montana still allow local tax, so make sure you check on local sales tax requirements in those states.

In Arizona, event promoters can run all vendor sales through their sales tax license. In those cases, even though the promoters will remit tax to the state, individual vendors still have to charge and collect the right amount of tax.

In a nutshell, tax requirements for short-term or temporary vendors vary from state to state. It’s important to get informed before setting up shop in any state or in a new location in your home state. Tax experts at state departments of revenue can be a great resource. Tax automation software can also help. It automatically calculates the proper amount of tax for each location and makes filing easy.

How do I handle sales tax if I sell in multiple states?

We know sales tax policies vary by state. So don’t assume that what works in one state will work in others.

In some states, such as Ohio, one license/sales tax permit allows a vendor to sell in multiple locations. Yet other states, such as California and New York, require a separate sales tax license or permit for each location within the state. Illinois requires vendors traveling to one or more events to register with the Department of Revenue as a “changing location” filer. In addition, vendors may also have to comply with specific city or county requirements.

Then there are the tricky home rule states, like Colorado, Illinois, Louisiana, and West Virginia. In these states, local jurisdictions, like cities and towns, can regulate sales and use tax themselves. Because of that, different cities in the same state can have different tax rules and rates. If you sell in a home rule municipality, you may have to obtain a special seller’s permit and remit the state portion of tax to the state and the local portion of tax to the city. Learn more about home rule here.

Once you register to do business in a state, you have to collect and remit the correct amount of state and applicable local sales tax on all taxable sales. State rates are constant statewide. However, the total rate you have to charge can vary by location because local rates often differ. For example, the combined sales tax rate is 10% in La Mirada, California but 7.5% in Ventura County, California. Furthermore, different locations in one city can have different rates — Denver, Colorado, has more than a dozen rates. To see combined rates for your locations, register for this free, interactive sales tax map.

What crafts or food items are taxable?

Most items sold at arts and craft fairs are taxable in most states with a sales tax; if you’ve collected tax on your products in six states, there’s a good chance you’ll have to collect it in the seventh state. However, there are sometimes surprising exceptions to that rule. For example, Rhode Island provides an exemption for sales of work by writers, composers and artists residing in and conducting business in the state. Most clothing is exempt in Massachusetts, but any individual item of clothing costing more than $175 is taxable on the amount over $175, and “apparel designed solely for athletic or protective use is taxable.” Clothing costing less than $110 per item is exempt from New York State sales tax, but only exempt from local sales tax in certain jurisdictions. To keep vendors on their toes, Connecticut periodically changes its tax policy on clothing. You get the picture.

The taxation of food can be even more complex. Prepared food, such as restaurant meals and concessions, is generally taxable. Fresh fruits and vegetables are generally exempt. But sometimes the taxability of certain foods depends on whether or not utensils are provided; sometimes it depends on the percentage of “prepared food” sold by the establishment; and sometimes it’s even more quirky. For example, in New York, a bagel sold uncut and cold is exempt but a bagel sold sliced and toasted is taxable. In California, “food products” are generally exempt but effervescent water, which many would consider a food product, is taxable. And when it comes to figuring out how candy is taxed, it’s often necessary to read the list of ingredients.

Sales tax rates for food can also be different than sales tax rates for other taxable goods and services in the state. For example, Missouri provides a reduced rate of state tax for all food that may be purchased with food stamps, which includes fresh produce, breads, dairy products and meats but does not include “food that will be eaten in the store;” several municipalities in Alaska exempt non-prepared foods during the long winter but tax them during the summer (when hungry tourists invade the state); and a growing number of states and cities are imposing a special tax on sodas and other sugary beverages.

Should sales tax be included in the price? Which states allow this and which don’t? Is it required to be marked if it is included?

Some states permit businesses to absorb the tax (pay it themselves instead of passing it on to the consumer). And some states allow businesses to include tax in the selling price, provided the policy is clearly visible to consumers. However, it is against the law to absorb tax or include it in the selling price in other states.

As always with sales tax, policies vary from state to state. For example, aside from a few “limited exceptions for sales of admissions or concession sales of prepared food,” sellers in Nebraska are “not permitted to advertise or imply in any way that the sales tax, or any part of the sales tax, will be assumed or absorbed by the seller or that the sales tax will not be added to the selling price.”  Yet it’s legal for Washington sellers to advertise the price as including sales tax, provided tax is separately stated on the invoice or receipt. The safest bet in many cases is to keep the sales tax separate.

What solutions are there?

Sales tax can be crazily complex, but don’t let that tax dissuade you from selling your wares at craft shows, flea markets, and holiday bazaars nationwide. Download Everything You Wanted to Know About Nexus to help you understand your obligations.

Having sales tax automated in your financial applications or billing systems can also remove any uncertainty you have about sales tax and make sure you are complying with the rules for collecting and remitting sales tax wherever you do business.

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The First Computer “Bug”

Did you ever wonder why a problem with a computer is called a bug?  Well, according to Admiral Grace Hopper of the US Navy, it happened on September 9, 1945.  Back then, computers took up an entire room and there were many tubes.  So on that day, a moth flew into the room and into the wires/tubes and shorted the circuits.  In the official log, the moth was actually taped to the page and the computer problem was notated as being “caused by the bug”.

Admiral Hopper was one of the first programmers on the Harvard Mark I computer in 1944.  The term “bug” had been used before in engineering projects, but this is the first recorded computer bug in history.  Just imagine if they had use the word moth when describing the original problem?  Would we be “de-mothing” computer programs today?

WAC Solution Partners- Midwest Office to Host 2nd Annual Food Drive

The Midwest office in conjunction with their suite-mates, Proceed Innovative and Undo Identity Theft is hosting their second annual food drive.

The office (also known as 200 N. Executives) consists of three local small businesses all sharing space and resources.  This group has been working together for over eight years in some capacity and they are all very involved in many community programs such as local chambers of commerce, business networking groups, and Rotary International.

Food Drive 2016

Michael Ericksen, President of WAC Solution Partners- Midwest, in conjunction with his Rotary group, originally put together the School District 54 Food Pantry which has expanded into two locations. The need for helping the local community in this capacity was formed when it was noticed that many students were coming to school hungry.

The 200 N. Executives held this local food drive last year and donated a large car-trunk filled with canned goods and non perishables.  We look forward to donating at least three car-trunks full this year.

The food can be dropped off at the office anytime during business hours 8:30-5 during the drive dates of November 1st through December 18th.

1501 E. Woodfield Road Suite 200N

Schaumburg, IL 60173

For more information on the food pantry check out the School District 54 food pantry site here.

For any questions regarding this food drive please contact Kari-Ann Ryan at 847.605.1590.

Thank you for your support.

The dish on taxing deliveries

Repost from Avalara

What can’t be delivered today? For the right price, consumers can have a car delivered across the country, a sofa delivered from granny’s attic, and a gourmet meal delivered from a starred restaurant. Some businesses provide their own delivery services, some deliver via common carrier, and some partner with a third party to deliver their goods. No matter what the scenario, it’s essential to get sales and use tax right.

Unfortunately, tax laws and policies on delivery charges vary from state to state, and sometimes from transaction to transaction.

 ‘Fast’ food

Modern take-out and delivery services are said to have begun at a Chinese restaurant in 1920s Los Angeles. They began to flourish in the late 1950s, when they were welcomed by the crowd that embraced cake mixes and TV dinners. And today, food is one of the hottest areas in delivery.

After years of “avoiding delivery at all cost,” the online and mobile food ordering pioneer GrubHub is now focusing its efforts on providing delivery services. It’s not alone. Young San Francisco-based DoorDash is hot on its heels, connecting products and people with delivery in “less than 45 minutes” and striving to continually reduce costs. UberEATS boasts that, with its Instant Delivery service, “the average order takes 35 minutes from start to finish.” Food delivery start-ups are popping up like mushrooms in a Seattle yard, some staying local, some looking to dominate the national market. Even Amazon has entered the fray (perhaps in anticipation of food delivery by drone).

To those awaiting their food, delivery may seem simple: meals ordered with a call or a click magically appear after (hopefully not too much) time has passed. But behind the scenes, businesses work hard to process sales. Getting any part of an order wrong can lead to disgruntled customers and the dreaded unfavorable online reviews. If the error involves sales tax, a business can face penalties and fines or even find itself in court, as has the large pizza franchise that’s been dealing with class action suits in two states for allegedly improperly applying tax to delivery charges.

Taxability rules vary from state to state, and some can seem quite quirky. In Iowa, for example, delivering food that’s ready to eat is considered to be catering, and catering services are taxable. The Iowa Department of Revenue specifies that “this includes hot, delivered pizza.” However, “A person who makes pies and cakes and delivers them is not considered a caterer, and those sales are not taxable.” Try and make sense of that one.

 An inseparable link

Delivery charges don’t just pertain to food. They can be slapped on anything a business sends to a consumer, from a slim book of poetry to a multi-million dollar yacht.

Recently, the Illinois Department of Revenue amended its shipping and handling regulation in response to the Illinois Supreme Court decision in Kean v. Wal-Mart Stores, Inc. (a class action suit regarding the taxability of charges for delivering a trampoline). The updated regulation makes clear that, as of April 1, 2016, shipping fees are subject to sales and use tax when there is an inseparable link between the sale and the shipping incurred by the customer.

In the amended regulation, an inseparable link exists when either of the following is true:

  • Transportation and delivery charges are not separately stated on the invoice or contract
  • Shipping fees are separately stated, but the seller doesn’t offer the customer an option to pick up goods or obtain free shipping

Shipping fees are exempt from Illinois sales and use tax if there is no inseparable link, as when the customer is offered the option to pick up the purchase, or a free shipping option is available and offered.

The Illinois regulation also clarifies the department’s stance on mixed transactions, sales that include both taxable and nontaxable sales, or sales that are taxed at different rates (for example, the lower rates that Illinois applies to sales of food, drugs and medical appliances). So long as the invoice separately states delivery charges for each item, tax may be calculated for each separately listed item. However, if the invoice contains a lump sum delivery fee, “the lump sum delivery charge will not be taxable if the selling price of the items for which delivery is nontaxable is greater than the selling price of the items for which delivery is taxable,” and vice versa.

In Michigan, however, taxability often hinges on when the transfer of ownership occurred, and whether or not a seller is “simultaneously engaged in a nontaxable delivery service.” According to the Michigan Department of Treasury, “Delivery charges on merchandise delivered by a seller who is not engaged in a separate delivery service business as defined above are taxable if the charges are incurred prior to the transfer of ownership. Delivery charges are not taxable if incurred after the transfer of ownership.”

 Separately stated

Whether or not delivery charges are separately stated also comes into play in determining taxability in Missouri. The Missouri Department of Revenue recently announced that a Missouri Supreme Court decision has affected the taxability of delivery charges, noting, “If your business is not currently collecting and remitting tax on delivery charges, this decision may require you to begin doing so.”

The court opinion makes a distinction between sales price and sales transaction: “Taxability does not depend on whether the parties intended the charge for the service to be part of the sales price; taxability depends on whether the parties intended the provision of the service to be part of the sales transaction.” It’s a subtle but important distinction. Viewed another way:

  • Shipping and handling charges that are not intended to be part of the sale of tangible personal property (TPP) are not subject to tax even if they are separately stated
  • Shipping and handling charges that are intended to be part of the sale of TPP are subject to tax even if they are separately stated

Since taxability hinges on intention, which is intangible, the court listed a number of factors to be used to determine whether or not a delivery service is intended to be part of the sale. These include: when title passes from the seller to the buyer; who controls the cost and means of delivery; and whether the seller derives financial benefit from the delivery.

But what’s true in Missouri is not true everywhere. In Connecticut, for example, shipping and delivery charges connected to the sale of taxable tangible personal property or services are taxable “even if the charges are separately stated” and “regardless of whether the shipping or delivery is provided by the seller or by a third party.”

 Sorting it all out

Delivery charges are increasingly part of our new reality — a world in which there are more online shops, more food delivery, and more reasons to stay at home and click “Deliver” than ever before. Companies that don’t provide some sort of delivery option may find themselves quickly outpaced by competitors that do. But offering delivery services involves more than obtaining a truck or a building relationships with common carriers; it means getting sales and use tax right. Using third parties for delivery can also affect whether or not you need to collect sales tax on the charges. Download Sales Tax Implications of Drop Shipping to learn more.

Avalara AvaTax sales tax automation helps businesses to determine whether or not their delivery charges are taxable and, when they are, to calculate the correct rate for each transaction. It enables businesses to get sales tax right while focusing on getting their products to their customers.

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Written by Avalara, Tax Software Partner of the WAC Solution Partners

What’s new with SaaS

Repost from Avalara

It’s been said that by 2020, most aspects of our lives will be connected. We’re talking about the internet of things (IoT), of connecting coffee makers, lamps, ovens, refrigerators, wearable devices, you name it. Back in 2014, Forbes observed that “anything that can be connected, will be connected,” and that’s swiftly becoming reality.

Numerous businesses have already made the shift from on-premises to the three major cloud-based solutions: software-as-a-service (SaaS), Platform-as-a-service (PaaS) and Infrastructure-as-a-service (IaaS).

The more the world moves towards interconnectivity, and the more businesses seek ways to streamline their workforce, the more businesses will move their business processes to the cloud. During the next five years, more than $1 trillion in IT spending is expected to be “directly or indirectly affected by the shift to the cloud.” According to Gartner, an information technology research company, “Cloud-first strategies are the foundation for staying relevant in a fast-paced world.” The shift to SaaS is expected to grow by 37% through 2020.

State and local tax authorities have noticed this shift to the cloud, and many are eager reap revenue from it. Yet since it’s a relatively new industry, states are struggling with how — or if — to apply tax to it. In 2013, most states were “still silent” on how to tax the sale and use of IaaS, PaaS, and SaaS and provided “minimal guidance … on the nexus and sourcing issues surrounding any cloud services” (Tax Adviser). However, that’s changing as more and more states pass laws and issue rulings about cloud computing services. As a result, sales and use tax compliance around cloud computing is becoming more complicated.

Businesses are struggling to decipher how different states are taxing cloud-based services. Once determined, they struggle to ensure that they’re compliant with these policies and that they remain compliant in the face of change. Just how fertile this ground is for change is underscored by how frequently tax authorities need to address and update their policies.

Recent changes
Massachusetts enacted a tax on computer software and services in 2013 but quickly repealed it. Then Department of Revenue Director Amy Pitter has acknowledged that “the complexities and confusion surrounding the law were a burden”— even during its brief tenure (GovTech). It was also extremely unpopular among businesses.

Michigan attempted to tax remotely accessed software in 2014, but the court intervened. In the fall of 2015, Michigan again delved into the taxability of cloud computing. And early this year, the Department of Taxation created two distinct categories of cloud computing for tax purposes: products that don’t include a code that enables the vendor’s system to operate, and products that include electronically delivered prewritten computer software. Taxability is also affected by the primary object of a transaction.

Even cities are joining the fray. Chicago recently extended its personal property lease transaction tax to cloud computing services. After some delay, the tax took effect on January 1, 2016 and applies retroactively, with a lookback period of four years for businesses that have not complied with it. To help ease confusion (and there is plenty of that) the Chicago Department of Finance issued Tax Ruling #12 to explain how to apply the lease tax to newer technologies such as SaaS, PaaS, and IaaS.

Crazy-making Colorado
Then there’s Colorado. The state of Colorado exempts software-as-a-service. However, Colorado is a home rule state, meaning that counties and cities with a population of 2,000 or greater have the power to levy and collect taxes as they see fit. Approximately 70 Colorado municipalities have adopted home rule, and some of these tax SaaS at the local level (tax is remitted to the local tax authority).

That’s the case in Denver. Denver sales and use tax applies to all software, custom and pre-written, whether it is downloaded, delivered electronically, or accessed via the cloud. See Denver’s Tax Guide Topic No. 18, Data Processing, for additional information.

The situation is a bit more complicated in the City of Boulder, which dances around the edges but doesn’t specifically address the taxability of cloud computing services. For example, the city explains that retail sales of computer software are taxable unless “the cost of modification of the software is greater than 25% of the price of the unmodified software.” And it states that a license fee paid by a manufacturing company to a software manufacturer for the right to use its software is taxable. Software updates may or may not be taxable. When doing business in Boulder and in doubt, businesses are advised to contact the city.

In Fort Collins, sales and use tax “is imposed on the purchase price or charge for access, use, or receipt of information” even when the information is received electronically. However, “interactive systems on which the user updates as well as accesses the data” are not considered to be taxable information services. As with Boulder, the taxability of cloud computing services is not directly addressed.

Learn more about how states treat taxability of software and digital goods and services.

Tax Compliance in the Cloud
More companies are turning to SaaS solutions to manage business processes, saving time, resources and money. Risk mitigation is also improved by moving sales and use tax compliance to the cloud. With tax rates and rules constantly changing, on premise and manual processes are inefficient and prone to error. A SaaS solution like Avalara automates this process for faster, easier, accurate treatment of sales and use taxes on taxable and exempt transactions. Avalara has the added benefit of being a simple add-on to nearly any accounting system, ERP, ecommerce or point of sale system.

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Written by Avalara, Tax Software Partner of the WAC Solution Partners

I am Insanely Busy During Sage Summit (2016)

Sage Summit was awesome this year.

Although, as the marketing director, I am insanely busy, I was still able to attend all the keynotes and a good amount of general sessions.

The majority of my sessions I chose gave me insight to implement right away. This is the whole goal of Summit, to share ideas, inspire and educate.  I feel I was the benefactor of all three.

My favorite quote of all the keynotes was from Robert Herjavek of Shark Tank.  ” When the pain from your current situation becomes unbearable, you’ll change” This spoke to me on many levels.  I find the most successful clients we have are always willing to change and improve on what they have.  There was so much inspiration shared.

I look forward to the next bigger and better Sage Summit in 2017 as it grown in attendance and quality each year!

Kari-Ann Ryan, Marketing & Sales

WAC Solution Partners- Midwest.

This was my first Sage Summit (2016)

This was my first Sage Summit…

Sage Summit 2016 in Chicago was amazing. The McCormick Place is such a grand venue and the perfect place for holding the event. Sage Summit had so much to offer to partners, customers, and sponsors alike.

The sessions on the different Sage products were so helpful in introducing and explaining the different products; how they, upon their release, will improve the functionality and efficiency of our customers worldwide. This includes updates for Sage 300 and Sage 300c, Sage Live, Sage One and Sage X3, to name a few. I really appreciated that the Sage speakers were open to all feedback, from partners and customers alike, in order to make sure Sage is addressing how they can make the products as user friendly as possible. The Sage team has proven how they are working hard to tackle any obstacles from all possible angles. Other sessions focused on how one can improve their business based on different strategies and skillsets.

The keynote speakers had some incredible advice to share and it was truly inspiring to hear what they had to say. A quote from Daymond John, the founder and CEO of FUBU, that really struck me was, “If you do everything, you’re never going to grow. A great team allows you to grow.” This is very inspirational and the statement holds so much truth because at Sage we are a team working together to benefit each other and our customers. All the keynote speakers were so insightful and had so much wonderful advice and experience to share. It was also great to see all the participating sponsors; to meet them and talk to them one-on-one about how they too can benefit our partners and customers.

It was truly incredible to see and meet people from all over the world coming together for this amazing event and I look forward to what is to come for next year.

Stephanie Piller, Administrative Executive

WAC Solution Partners- Midwest

Sage Summit 2016… A Great Opportunity

Sage Summit is a great opportunity for partners and customers to meet with the people who are creating our software.  The conference is designed for small businesses even if they are not using Sage Software products.   This year the conference was in Chicago for the first time.

The keynote speakers are awesome!   One that we had this year was Sir Richard Branson.  He told the story of how he started his airline thanks to American Airlines canceling one of his flights.  We also heard from Daymond John and Robert Herjavec from the TV show Shark Tank who shared their stories about how they began their businesses.  I liked Robert’s statement that he never invests in companies that need money.  He invests in successful companies that need money to grow faster.  He also stated that good entrepreneurs always find a way to solve their problems.  If a company isn’t working well, giving them more money will not solve their problems.

The feedback we receive from our clients is that they really learn a lot when they attend and cannot wait to attend next year.   We feel the same.

Michael Ericksen, President, CPA, Sage 300 Certified

WAC Solution Partners- Midwest

Managing Partner at Sage Summit 2016

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Sage Summit 2016

As the years go by, Sage Summit is becoming more customer and sales oriented and less technical and reseller oriented.  We have gone from two separate events, to two events next to each other, to a customer event with a token nod to resellers on the first day.  Even that first day is primarily sales oriented.

Not much we can do with the content, but we can adapt to it and leverage it for what it is.  It may not the place to send all of your technical resources to learn, but it is the place to bring your prospects and customers to learn.  If you don’t have a plan going into it with your customers and prospects you are missing an opportunity. As a Partner our primary goal is to act as a guide, to recommend what sessions to attend, and what vendors to see.  Even if we don’t sell anything to our customers and prospects, we at least want them to experience the depth of the product that they are using or looking at, experience the ecosystem that they may need in the future, and assure them that there is a roadmap to the future.

In some cases where the prospect is very engaged, meeting with Sage employees and product managers can reassure their interest.  We had one prospect looking to migrate to a new Sage platform that met with multiple Sage employees and was given multiple personalized demos.

Overall WAC Solution Partners has adapted well to making our customer’s experience great.  We are always striving to do more and keep them engaged, informed, and coming back year after year!

So while it’s unfortunate that the focus is no longer on the reseller, as they say, when you have lemons, you need to learn to make lemonade.

 

Robert Distler, Managing Partner, Consultant

WAc Solution Partners- New England

An Unusual Sage Summit for Me This Year

This was an unusual Summit for me this year in Chicago.  As a Sage City VIP, I was asked to do 4 presentations.  What this ultimately meant was, I didn’t get to as many sessions as I normally attend.  I have to say that my presentations were very well attended, even when I had to compete with lunch and the end of the day when poeple were heading to the Killers concert.  They sessions I gave seemed to be very well received as well.  Although very different for me…. all in all, a great experience in Chicago.

On a non Sage Summit note…. the highlight of my trip was attending a Cubs game at Wrigley Field – a major bucket list item now achieved! It was actually against the Chicago White Sox and the Cubbies won!!!!

Mary Clark, Consultant

WAC Solution Partners- Carolinas