Wednesday, August 31, 2011

Wal-Mart and - Strange Bedfellows??

Rusty Little

Wal-Mart and probably don't see eye-to-eye on many things because they are in fierce competition in the retail marketplace (nor do any of the other big box retailers and the other large online sellers). 

But arguably, they are in the same boat with regard to many sales tax collection issues.  Beginning yesterday, there have been a lot of stories in the main stream media regarding Wal-Mart not collecting sales tax on certain online sales.  This article from the LA Times attempts to sum up the recent revelations regarding Wal-Mart's "failure to collect California sales tax" on sales by CSN Stores (based in Boston) that are made through Wal-Mart's website.

Sure, there is some degree of comic irony in the fact that Wal-Mart is one of the leaders in the fight to force to collect sales tax on its online sales.  Furthermore, it doesn't help the public's perception that CSN Stores has posted on its website (in broad daylight, no less) that "one of the best things about buying through CSN Stores is that we do not have to charge sales tax . . ."

However, the thing that the media frenzy on this subject will not indicate is whether Wal-Mart is legally required to collect sales tax on these particular sales.  It all depends on the facts (and many times, the facts seem to be unimportant in the mainstream media).

Wal-Mart is a great company, and they collect sales tax when they are legally required to do so. is also a great company, and they collect sales tax when they are legally required to do so.  There is nothing wrong with that.  Just because these companies dominate in their respective markets doesn't give the states carte blanche to force them to collect sales tax because it is easy for them to do so, or because the states think they are missing out on potential tax revenues.

Wal-Mart and could become strange bedfellows in an environment where states are attempting to cross legal boundaries just because they need budgetary relief from what the U.S. Constitution has limited them from doing.

Tuesday, August 30, 2011

Social Media for Tax Professionals: Is It Time for Firms to Kick the Tires?

When online social media first began to take hold as part of modern culture for business as well as personal users, many tax and accounting firms were reluctant to participate. However, the rapid growth of the most popular sites in the last few years is causing some firms to reconsider their usefulness as business applications. In this article, Rusty Little of Dow Lohnes Price explores how tax firms might consider using online networking sites as part of their business strategy.

Please view entire article here.

Reproduced with permission from Tax Management Weekly State Tax Report, 2011 TM-WSTR 3, 08/26/2011. Copyright 2011 by The Bureau of National Affairs, Inc. (800-372-1033)

Friday, August 26, 2011

State Tax Alerts - This Week's Stories Worth a Second Look

Rusty Little

A few state tax developments, blog posts, news articles, and observations from the past week:
  • Surprise, Surprise, Surprise . . . state tax auditors are looking at your company website - Avoid surprises!
  • Indiana Tax Court Issues Interesting Opinion on Sourcing of “Dock Sales” - from Tax Executives Institute's Daniel De Jong
  • Ohio's consumer use tax amnesty program begins Oct 1, 2011 - click here for the details
  • New York is the 48th state to do this:  Cuomo Signs Mobility Law for New York CPAs - from Accounting Today 
  • IRS to roll-out fingerprinting process for preparer registration program - From CPA Letter Daily 
  • Momentum grows to swap income tax for sales tax in states - from the Kansas City Star 
  • States Pursue Sales Tax Revenue Vanishing Into Computing Cloud - from Bloomberg
  • Bloomberg to acquire BNA for $990 million - from Washington Post
  • H&R Block to sell RSM McGladrey back to McGladrey & Pullen - from Boston Business Journal

Reminder - Dow Lohnes Price launched its new website design this week at  Check it out when you have a minute.

Wednesday, August 24, 2011

Surprise! Surprise! Surprise! - The State Auditor Looked at Your Website???

While this entry is more of a random musing than a highly technical analysis, it addresses a common issue faced by many taxpayers.

Many times taxpayers have a "Gomer Pyle moment" when a state tax auditor refers to a company's website to corroborate something they have been told or to support their position.  This happens most frequently with potential nexus questions and when an auditor is trying to determine exactly what activities a company may be performing in the state.  Any state tax auditor worth his or her "salt" (pun intended), is going to review a company's website to gather intelligence.  This is going to happen both in the world of on-site audits and also in the world of desk audits/nexus questionnaires.

When you answer nexus questionnaires and/or reply to IDRs, be sure to check your answers against what the company is telling the world on its website.  Company websites often tend to "over sell" because they are a marketing vehicle by design.  But if the company website says something like "we will install or service our widgets for you no matter where you live" or "our sales representatives are also available to train your employees," then you might have some explaining to do.

The mining of company websites by state tax auditors for information is nothing new and is not just limited to questions of nexus either.  Information pertaining to sourcing of sales, intercompany transactions, arm's length relationships, and many other issues can be gleaned from a simple review of a company website.

Any tax professional worth his salt should be very familiar with what a company is telling the world on their website long before a state auditor or nexus questionnaire ever arrives.  Company websites are a rich source of information for states looking for low hanging fruit (potential audits) and also for auditors who are currently working on company income tax, sales tax, and/or abandoned property audits.

It is prudent to try to avoid those Gomer Pyle moments . . .

Tuesday, August 23, 2011

The New Jersey Supreme Court Determined That “You Can’t Throw Out The Baby With The Bath Water”

Jimmy Helms; Marshal Kline
In Whirlpool, a unanimous decision by the New Jersey Supreme Court ("Court"), it was determined that a state's throw-out rule could simultaneously operate constitutionally and unconstitutionally.  This article looks at some of the constitutional standards addressed by the Court and provides some thoughts as to when they may apply in the current state tax environment.

View the full newsletter here.

Monday, August 22, 2011

Dow Lohnes Price launches new website

Please visit our new website for previous SALT To Taste newsletters, updated tax specialist profiles, plus an interactive display featuring client success stories and areas of experience.

Friday, August 19, 2011

State Tax Alerts - This Week's Stories Worth a Second Look

Rusty Little
In case you missed it, the following is a summary of a few key state tax developments, news articles, and observations during the past week:

  • Amnesty Alert: MEDIA COMPANIES Voluntary Disclosure Initiative in New Jersey Details here
  • The New Jersey Supreme Court Determined That "You Can't Throw Out The Baby With The Bath Water" More here
  • Tax Patents: What's Good for the Goose May Not Be Good for the Gander - More here
  • The Tax Foundation notes that the Texas margin tax experiment is failing due to collection shortfalls, perceived unfairness for taxing unprofitable and small businesses, and confusing Rules. More here
The past few weekends, many states have had their annual back-to-school sales tax holidays.  Since these sales tax holidays are top of mind right now, they are a popular subject in the mainstream media.  But wait, here are a couple of articles that conclude sales tax holidays may not be such a great idea:

Tuesday, August 16, 2011

An Introduction to the Basics of Unclaimed Property Audio Teleconference
Thursday, September 8, 2011
2:00 p.m. - 3:00 p.m. EST

Unclaimed property reporting is perpetually under intense scrutiny in many states. Dow Lohnes Price speakers Kellie A. Lanford, CPA and Marshal T. Kline, CPA will provide a “basic overview” of important terminology, priority rules, due diligence requirements and other unclaimed property considerations. Participants will learn the requirements for identifying and reporting unclaimed property so they can maintain compliance or take the necessary steps to become compliant.

Course Details:

     CPE Credit: 1.0 CPE credit (based on a 50 minute credit hour)
     Location: Virtual via teleconference
     Delivery Method: Group-Live
     Field of Study: Specialized Skills and Applications
     Program Level: Basic
     Prerequisites: None
     Advance Preparation: None

The cost of the teleconference is $45 for the first attendee and $25 for each additional attendee on the same connection. Please use the following link to register for the course. Registration Form

Information regarding course speakers can be accessed below:

Kellie A. Lanford - Biography
Marshal T. Kline - Biography

Dow Lohnes Price Tax Consulting Group LLC is registered with the National Association of State Boards of Accountancy (NASBA), as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN 37219-2417. Web site:

Monday, August 15, 2011

Amnesty Alert: MEDIA COMPANIES Voluntary Disclosure Initiative in NEW JERSEY

New Jersey’s Division of Taxation recently announced a voluntary disclosure initiative directed to media and media content companies beginning on August 15, 2011 and ending on November 15, 2011.

Several of the program details include:

  • A look back period will be limited to four years. This includes the current period and the previous three years.
  • All late filing penalties will be waived. A five percent amnesty penalty will be assessed for amnesty eligible periods; i.e., returns due on or after January 1, 2002 and prior to February 1, 2009.
  • The amount of receipts earned by licensing intangible property cannot exceed ten percent of total gross receipts.
  • Discretionary apportionment relief from “throwout” allocation may be granted on a case-by-case review.
  • Within 90 days of execution of its VDA, the taxpayer should file its New Jersey Corporation Business Tax Returns for the disclosure period and remit the taxes due.
  • Interest will be paid within 30 days of assessment.
For instructions and all of the specific principles of the program, please click here.

If you have any questions or require assistance regarding this voluntary disclosure offering, please feel free to contact Geoff Christian at 864-241-2009, or Marshal Kline at 864-241-2005,

Friday, August 12, 2011

Tax Patents: What's Good for the Goose May Not Be Good for the Gander

Kellie A. Lanford
In May, Chainbridge Software, Inc. (“Chainbridge”), a company based in Fairfax, Virginia, was granted a patent for a computer based method and system for use in determining tax avoidance by taxpayers. More specifically, this method and system is used to detect tax avoidance resulting from unreasonable pricing arrangements between related parties across state lines (“transfer pricing”). According to information provided in the patent: