Jurisdiction, Nexus and the Internet: Advanced issues in determining nexus for sales and use tax purposes after Wayfair. What are the limits, if any, for economic presence nexus? Questions of retroactivity, de minimis nexus and foreign commerce implications. State and local responses to Wayfair thus far. Impact of traditional business practices such as drop shipments, advertising, delivery in company-owned trucks, use of independent contractors, unpaid representatives, maintenance of inventory, occasional visits by employees or representatives. Establishing “temporary nexus” and other safe harbors. Potential effect of having employees work from home during Covid. Responding to nexus inquiries; using voluntary disclosure agreements and amnesty programs to best advantage.
Manufacturing Exemptions: Determining whether a manufacturing exemption is available in a particular state and how far it extends — to manufacturing, processing, fabricating, packaging, R&D, testing, pollution control; to machinery, materials, chemicals, electricity, natural gas, computers, transportation equipment; to the production of intangibles; to retail or service industries. Must the final product be sold? Proving substantial transformation. Manufacturing incentives.
The Streamlined Sales Tax Project: Detailed update and discussion on the current status of, and issues surrounding, the SSTP. Why the Streamlined Sales Tax Project has been, and will continue to be, important. Substantive state tax changes already made. Which states are participating and at what level? Prospects for the future and the potential effect of the Wayfair decision.
Ethical and Procedural
Issues: Sufficiency of evidence and ethical issues on audit—maintaining exemption certificates and other records, including those kept electronically, defining good faith, using statistical sampling. The effect of Sarbanes-Oxley on recordkeeping for sales and use taxes; how to put internal controls in place to ensure that the sales and use tax department is run with ethics and integrity.
Computer Software and Other Mixed Transactions: Sales and use tax treatment of computer software under the latest theories used by the states. Determining what is critical to its taxability: delivery method, content, licensing, technology transfer, or another distinguishing characteristic? Tax consequences of other mixed transactions involving both exempt and taxable elements, including use of the true object test to determine whether a particular transaction is entirely taxable or not taxable at all. Structuring the transaction to produce the best result.
Cloud Computing, Information Services, Internet Services and Related Sourcing Issues: Identifying the type of service involved in a particular transaction—SaaS, ASP, information, communication, automated data processing, Internet, personal or individual, canned versus custom, or some other variation- and then determining whether that service is subject to sales or use tax. Sourcing issues for services, especially for those offered electronically or through “cloud computing,” including how to deal with multiple or roaming users of the same service and more than one jurisdiction claiming the right to tax the same service transaction. Practical approaches to sourcing service transactions to minimize the possibility of double taxation.
Accounting for Undisclosed Sales and Use Tax Liabilities: Discussion of obligations under FASB Statement No. 5 (FAS 5 or ASC 450) to book appropriate reserves for undisclosed sales and use tax liabilities. Impact of recent SEC orders related to failure to maintain appropriate internal controls and adequately reflect sales tax liabilities for both public and private companies. Identification of typical tax risk drivers which contribute to undisclosed liabilities. The impact of undisclosed liabilities on mergers and acquisitions. Strategies for identifying, quantifying and mitigating tax exposure, thus reducing undisclosed sales and use tax liabilities.
Practical application of the concepts presented.