Wipfli’s sales and local tax (SALT) team highlights the most recent hot topics in tax, including updates to Colorado’s retail delivery fees, a Texas initiative on unclaimed business property and the status of digital advertising tax requirements in Maryland.
Updates to the Colorado retail delivery fee
Exactly one year from when the initial implementation of the Colorado retail delivery fee (RDF) began, the state is instituting significant changes to the RDF, effective July 1, 2023. The most important one is that the fee will no longer apply to “qualified small, new businesses” that had less than $500,000 in sales during the previous year.
The state has also made changes to the administration and invoicing requirements for a business that will need to continue to pay the RDF:
- The RDF fee is increasing by 1 cent to 28 cents.
- It is no longer a requirement to add the RDF to the price of the retail delivery, separately itemize the RDF or even collect RDF from customers.
- For the purposes of proper reporting, the RDF should now be remitted on the date (or within the reporting period) that the retail delivery took place, regardless of whether RDF was collected and/or paid after the fact.
For taxpayers who have been reporting and remitting the fee but now fall under the exemption, the state will not provide refunds for any RDF collected and remitted before the effective date of the new bill.
Texas unclaimed property initiative
The Texas Comptroller of Public Accounts started sending notifications to businesses operating in Texas reminding them of its unclaimed property code (74.101 and 74.301) and requiring companies to respond. In short, the deadline to file the unclaimed property report in Texas is July 3, 2023, and the most common types of abandoned property companies should look for are uncashed checks, payroll/wages, customer credits and financial assets/accounts.
Texas does require companies to file a negative ($0) report even if there is nothing to be escheated. The notice response requires companies to indicate how they plan to be compliant this reporting year, provide contact information, sign and date it.
Companies have only two options: either remit and pay their reportable property or file a negative report by the deadline.
If a response is not received, the notices state the office will be contacting you to confirm your status. If you have a business in Texas, this is a good reason to get your reporting process started before Texas adds you to their audit list.
Maryland digital advertising tax update
Now that the Maryland Supreme Court vacated the lower circuit court’s ruling over lack of jurisdiction and administrative remedies, what’s in store for companies that use digital advertising and how does this affect other states’ decisions?
For starters, companies that advertise digitally in Maryland must continue to file the quarterly digital advertising tax return (DAGR Form 600D), which is based on total estimated gross revenue and then calculated using an apportionment factor.
Other states with current or proposed bills similar to Maryland’s digital advertising tax (including Massachusetts, New York and Texas), halted legislation pending the outcome of this case and may decide not to move forward.
Companies that participate in digital advertising should take proactive measures in understanding their tax obligations in the states they advertise in.
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