It looks to be another exciting week for legislation. While we watch the pending legislation in other states it is important to remember that New York affiliates are still impacted by the legislation enacted last year in NY. As hard as we have tried to get the word out about how to continue to work with NY Affiliates many are still uneducated that it is possible to rebut the presumption of nexus. It is also important to realize that many states have a definition on their books that already includes “solicitors” as creating a nexus; the law is simply not yet enforced. Now on to the updates on some of the states with new legislation actively pending.
Hawaii continues to work on adding an Internet tax. Their latest, SB1678, is legislation to amend their Streamlined Sales Tax and it includes an Internet tax, It is important to note that Hawaii has an excise tax, a tax on business transactions, and not a sales and use tax.
Summary of purpose of this legislation Sb1678 which is scheduled for a vote on Tues May 5.
The purpose of this measure is to improve the State’s ability to capture taxes owed by out-of-state businesses by specifying the business activities that would constitute a sufficient connection with Hawaii to enable the State to impose a general excise tax on these activities.
Specifically, this measure clarifies the definition of “engaging” in business under the general excise tax law by:
(1) Including the sale of tangible personal property by a person soliciting business, through an independent contractor, with a resident in Hawaii who is paid to refer potential customers to the person;
(2) Exempting sales so solicited if the cumulative gross receipts for a twelve-month period are less than $10,000; and
(3) Allowing a rebuttal of the presumption of engaging in business through such solicitation if the independent contractor did not engage in any solicitation in Hawaii on behalf of the person that would satisfy the nexus requirement of the United States Constitution.
Minnesota is also down to the wire. The House and the Senate each passed their version of the Omnibus Tax bill and are now have a joint committee meeting to try and iron out the differences. The original House version of HF2323 passed 68-65. They sent the bill to the Senate who amendedit by replacing text with their own version (which had been Sf2074). The House disagreed with the change so joint committee was appointed with five members from Senate and five from the House. They held a couple sessions last week and will meet again today. HF2323
Tennessee is another state which has had legislation pending in both the House and the Senate. HB1947 and SB1741 are quite similar and hearings on both have been rescheduled again for this week. HB1947 and SB1741
Connecticut SB 806 has been placed on the foot of Senate calendar and I’ll keep watching for any change. It had received favorable support from Senate and House. Sb806
North Carolina also has dual bills pending, S487 and H558 and they are still in committee. S487 and H558
The hearing on California AB178 has been postponed by request of the author but I will continue to monitor action and alternative legislation. California AB178
While we watch the above legislation remember other states can also begin work on legislation; it is important to watch every state. Take time to familiarize yourself with the website of your state legislature and the current definition of nexus for your state.