The Bloomberg BNA SALT Blog is a forum for practitioners and Bloomberg BNA editors to share ideas, raise issues, and network with colleagues about state and local tax topics. The ideas presented here are those of individuals and Bloomberg BNA bears no responsibility for the appropriateness or accuracy of the communications between group members.
Friday, May 25, 2012
In an effort to maintain eroding tax bases, many state tax departments have set their sights on taxing new types of transactions such as social media discounts, Bloomberg BNA’s Steven Roll and Deborah Swann explain in a Weekly State Tax Report article.
The tax treatment of these transactions depends largely on how the state defines “sales price,” according to Arthur R. Rosen, partner with McDermott Will & Emory LLP in New York.
All states, including the 21 states that fully adopt the Streamlined Sales Tax Agreement, exclude “cash discounts” and “seller's coupons” from the definition of sales price, but complexities arise with respect to “manufacturer's coupons,” especially when this paradigm is applied to social media coupons and other types of emerging discount transactions, Roll and Swann explain.
The Streamlined Sales Tax Governing Board is struggling to determine how to tax social media coupons. An advisory body of the Streamlined Sales Tax Governing Board Inc. failed to reach consensus on a potential interpretive rule governing uniform sales tax treatment of online “deal-of-the-day’’ vouchers, Bloomberg BNA’s Michael Bologna reports [read full text of story here].
The governing board's State and Local Advisory Council took up two different proposals that would clarify tax treatment of vouchers sold and marketed by firms such as Groupon and Living Social for the 24 states participating in the Streamlined Sales and Use Tax Agreement (SSUTA).
One option, touted by Tennessee and supported by internet deal-of-the-day organizations, would treat the difference between the face value of the voucher and the amount the consumer paid for the voucher as an “in-store discount,’’ and not subject to taxation.
A second strategy, introduced by Nebraska, would have established a “toggle approach’’ that would permit states to choose one of three tax treatment options. One of the options mirrored the Tennessee approach, but another would permit states to apply sales taxes to the full face value of each voucher.
But neither proposal won sufficient support to suggest a direction to the SSUTA governing board.
For a closer look at these and other issues facing deal-of-the-day programs, register here for an upcoming Bloomberg BNA webinar on taxation of Groupon and other emerging business models.
In other developments…
California’s Budget Crisis: Part XII.
Excise tax rates on wine, from Nick Kasprak of the Tax Foundation.
Is Eduardo Saverin any different from rich New York snowbirds, by Scott A. Hodge of the Tax Foundation.
Summary of tax provisions in New York State's fiscal year 2012-13, issued by the New York State Department of Taxation and Finance.
For New York’s gay couples, tying the knot tangles estates.
Amazon poised to get a cut of California sales taxes.
Compiled by Priya D. Nair Follow us on Twitter at: @SALTax Join BNA's State Tax Group on LinkedIn
to post a comment.
Incentives Watch: State Tax Credits Enacted That Cover Gamut of Taxpayer Interests
Sales Tax Slice: A Preview of Service Providers’ Nexus-Creating Activities from Bloomberg BNA’s Annual 50-State Survey
Weekly Round-Up: Are States Pushing the Limits of Trust Taxation?
Weekly Round-Up: How Non-Profits Can Avoid an Expensive Sales and Use Tax Surprise
Extras on Excise: Do Declining Severance Tax Revenues Await States at Finish Line in Race to the Bottom?