There have been a few developments since we last looked at cryptocurrency in April, 2017 (Are Bitcoin Users Cheating on Taxes? (Or Are They Just Confounded by the Rules?)). The IRS has increased tax compliance enforcement but unfortunately, guidance from the Internal Revenue Service has not kept up with the advances in the cryptocurrency world continuing tax reporting challenges.
In 2014 the IRS released their position regarding the taxation of cryptocurrency transactions in Notice 2014-21 (https://www.irs.gov/pub/irs-drop/n-14-21.pdf). The IRS notified taxpayers that: (more…)
By Erika Diebert, CPA, Tax Manager
ASL Tax Group
The U.S. Supreme court recently made a landmark decision in South Dakota v. Wayfair. The case has changed the rules on the taxability of internet sales. The court decided for South Dakota and allowed the state’s ability to tax internet sales of consumers who lack physical presence in South Dakota. Since 1992, the Supreme Court decision in Quill Corp v. North Dakota has been the standard on when states can impose sales tax on retailers. The Quill decision required some minimum physical presence of property or employees before states could impose sales tax. As technology has advanced and consumers have turned to the internet for retail activities, the Quill standard has imposed a barrier on the individual states’ ability to tax sales activities occurring within their borders. Many states have reacted by imposing new standards in an effort to circumvent the Quill decision. Some of these standards include cookie nexus or click through nexus that put simply, create the minimum presence needed to impose sales tax through defining the presence of technology as physical presence of property. Up until now the Supreme Court has declined to hear a case involving the state’s new imposition of these nexus standards that do not follow the Quill decision, until now.
The South Dakota v. Wayfair case challenged the application of sales tax to internet sales of retailers that did not meet the physical presence standard of Quill. The court decision has now opened up the door for states to impose sales tax on sales previously off limits. Although this will definitely make things more complicated for retailers, it was not a no holds barred decision for the states. The Supreme Court justices explained that this imposition of sales tax was not a burden to interstate commerce because of the simplicity of South Dakota’s law. The law does not apply retroactively, includes a safe harbor for minimal business transactions, imposes a simplified tax structure, and allows taxpayers to use a free software to calculate and remit. The court specified in its decision that a more complex sales tax structure would be seen as a burden to interstate commerce and would not be upheld by the courts decision. The justices also urged action by congress to make legislative changes to simplify the administration and application of sales tax. At the moment there are proposals but nothing has gotten traction in congress.
What’s Next? – We will be keeping tabs on any future legislative changes but we anticipate many more states will update and impose sales tax laws based on the findings in the Wayfair case. If you have specific questions on how this may impact your business, please feel free to reach out to our team here at ASL.
Likely, you saw plenty of headlines as the final May 25, 2018 deadline approached. Just more alphabet soup? You may have ignored the article content as soon as you discovered that this was the name of European Union (EU) legislation.
What is it?
General Data Protection Regulation – protects data and privacy for EU residents (individuals), who are referred to as “data subjects”. Provisions cover collection, protection and retention of personal data. (more…)
The European Union (EU) proposed a tax on digital services in the draft package for “Fair and Effective Taxation of the Digital Economy”, which it released on March 21, 2018.
According to the European Commission, top digital companies pay an average tax rate of only 9.5% in EU, which is less than the 23.3% paid by traditional companies. The aim of the proposal is to tax the business in the member state in which value is created, even though the business has little or no physical presence in that state. (more…)
The Tax Cuts and Jobs Act (the Act), enacted on December 22, 2017, creates some interesting consequences when applying US GAAP principles for income tax accounting related to deferred taxes. FASB guidance requires that deferred income tax assets and liabilities be remeasured as a result of changes in tax laws or tax rates. As commonly known by now, the Act reduced the maximum tax rate for corporations to 21% from 35%. (more…)
As everyone knows by now, the U.S. tax system was widely altered on December 22, 2017 by enactment of the Tax Cuts and Jobs Act (the Act). The date of enactment is highlighted here because that is the date that triggers financial statement implications. Oh…so close to year-end for most companies. This timing situation is complicated because: (more…)
In the last couple of years, I have witnessed several of my private company clients reorganize their operations, through either a merger, an acquisition or a significant management member buyout. While such situations provide a great stage for all to display their accounting chops, they also present us an opportunity to consult with our clients and help them avoid an accounting faux pas or burdensome and unnecessary disclosures caused by an inadvertent accounting election. So, in no specific order, I thought I would summarize some of the unique accounting issues I’ve encountered in such situations and how to navigate them: (more…)
By Wei Wei, Tax Senior
As you have been made aware from our series of webinars, e-mail updates and blog posts, President Trump signed the Tax Cuts and Jobs Act just in time for the new year and the Act includes new rules for the taxation of “qualified equity grants”. Internal Revenue Code Section 83(i) allows “eligible employees” to elect to defer taxation on the exercise of certain stock options or the settlement of restricted stock units for up to 5 years. Employees must make the election no later than 30 days after the employee’s rights in “qualified stock” are transferrable or vested. The election only defers income tax, the stock-based compensation received by the employee is still subject to employee and employer payroll taxes when vested. (more…)
Historically a taxpayer selling tangible property was not required to collect a state’s sales tax unless the taxpayer had “nexus” within the state. Nexus is generally defined as a “connection to the state”. My prior blog discussed the changing concept of nexus: Do You Meet the Newest Invisible Tax Filing Requirement?. The landmark 1992 Supreme Court case of Quill v. North Dakota established a physical presence standard. For a state to impose an obligation for a taxpayer to collect sales tax, the taxpayer must have a physical presence within the state. In recent years to generate new sources of tax revenue states have sought to expand the concept of nexus far beyond the physical presence test. These new standards look at economic nexus. (more…)