PPB March 2019

• Simplified administration of exemptions • Simplified tax returns • Simplification of tax payments • State level of administration of sales and use of tax collections • Protection of consumer privacy Responsible Responsibilities When it comes to liability, failing to collect or misappropriating sales and use taxes can put everyone—owners, officers, directors, shareholders and employees—at risk. If deemed as “responsible parties,” each of these individuals may be held personally liable for the failure of the promotional products business to properly collect and remit sales and use taxes. A responsible party can include not only the individual whose duties involve managing and paying taxes, but may also include any other person who has the authority or ability to control business payments and decisions. What’s worse, this liability extends beyond the business to each individual’s personal assets, which could be claimed to satisfy the business’s sales tax liability. Using Use Taxes As every supplier and distributor is or should be aware, long-standing laws already compel buyers whomake tax-free purchases to self-remit the taxes due. The self-remit rules are often referred to as “consumer’s use tax.” However, although the consumer use tax rules focus on the purchaser’s duty to self-remit use taxes, in some states, a seller may be obligated to collect “seller’s use taxes” on behalf of purchasers. As with sales taxes, seller’s use taxes are charged to the purchaser on the sales invoice and are required to be collected by sellers in some states. Each state has its own complexities, which can cause occasional confusion for sellers. Although the rate of compliance to self-remit is relatively low, as more and more sellers are required to collect sales—or seller’s use taxes—economic nexus rules may make so that no compliance is a moot issue and poses less of a challenge for many business purchasers. As economic nexus rules take hold, sellers of all types will be required to collect sales or seller’s use taxes on sales made all over the country. One result will be a reduced consumer’s use tax compliance burden for some buyers. The Customer’s Perspective Whether promotional items are subject to sales tax depends on where the sale is made. The rules, as mentioned, vary from state to state but consider a situation where a company buys items to give to customers. An example are t-shirts with the company’s name imprinted on them given to the company’s regular customers. Customers get a t-shirt regardless of whether a purchase is made or not. In most cases, the manufacturer or supplier should be charging sales tax (or the company paying a use tax) on the t-shirts. Conversely, a small entertainment venue that SSUTA States Sellers registering through the Streamlined Sales Tax Registration System (SSTRS) are automatically registered in each of the full member states. These 23 states are full members in the Streamlined Sales And Use Tax Agreement: Arkansas Georgia Indiana Iowa Kansas Kentucky Michigan Minnesota Nebraska Nevada New Jersey North Carolina North Dakota Ohio Oklahoma Rhode Island South Dakota Utah Vermont Washington West Virginia Wisconsin Wyoming Tennessee is an associate member state meaning that it has achieved substantial compliance with the terms of the agreement, but not necessarily with each provision as required by the SSUTA. Source: Streamlined Sales Tax Governing Board Inc. | MARCH 2019 | 95 THINK