Hot SALT news roundup: First quarter 2024
Wipfli’s state and local tax (SALT) team highlights the most recent hot topics in tax, including tips for sales tax registration and new updates to digital advertising tax.
Sales tax registration: Tips and tricks
Even though the requirement to register for sales taxes may sound simple, there are many complicating factors to consider.
Here are some best practices you can apply to help you register successfully:
- Gather the necessary personal information: States routinely ask for personal information — such as Social Security Numbers — about a company’s directors, officers and other “responsible persons” who may become personally liable for any uncollected sales tax.
- Assess your prior period nexus risks: When disclosing the date on which your company started doing business in the state, your company should carefully evaluate whether it may have had nexus in the state before that date. Otherwise, registering could eliminate your eligibility for programs that help bring companies into compliance while reducing penalties.
- Consider other taxes: Before registering for sales tax, companies should consider other tax types that they may owe, such as income, franchise or gross receipts taxes.
Digital advertising tax update
New Mexico has joined several states in enacting a tax associated with digital advertising.
Digital advertising has become the leading form of marketing for companies to promote their brand, broaden their reach and gain new customers. Digital advertising consists of several forms of online advertising, such as social media ads, email marketing and search engine advertising.
The taxation of digital advertising is different in each state. For instance, Maryland passed a digital advertising gross revenue tax on businesses with global annual gross revenues of at least $100 million, of which at least $1 million is derived from digital advertising in Maryland. In New Mexico, the tax is derived from gross receipts of digital advertising when ads can be accessed or viewed within New Mexico.
Companies that market themselves online should review their marketing activities and be proactive in understanding their tax obligations in the states they advertise in.
Want to stay up to date on SALT issues?
Wipfli’s SALT team can help you better understand your state and local tax exposure and compliance issues. Reach out to learn more about how we can support your organization.
Sign up to receive our quarterly newsletter in your inbox or continue reading on:
