New Sales Tax Bill Proposed By Rep. Senesenbrenner
Rep. Sensenbrenner recently proposed H.R. 5893 “No Regulation Without Representation Act of 2016.” This bill would provide more objective physical presence threshold for states’ right to subject taxpayers for sales tax collection responsibilities.
If H.R. 5893 passes, states would be limited in what they can consider nexus. A seller under the new bill would be someone who has physical presence in a state. Nexus is triggered only if a taxpayer is physically located or have personal property or employee in the state. This means Amazon FBA sellers are no longer on the hook to collect and remit sales tax in states where the seller’s only connection with a state is inventory in an Amazon fulfillment warehouse.
Still long way to – need to be passed by House, Senate, and the President. We expect that states would fight hard to dismiss this new bill, but we will continually monitor the passage of this new bill.
Nevada Commerce Tax Return
Nevada enacted the state’s first business activity tax – the “Commerce Tax” in 2015. Opponents of this new tax regime tried very hard to repeal it but the efforts were unsuccessful. The Commerce Tax is a gross receipts tax that is imposed on gross revenue sourced to Nevada.
Effective July 1, 2015, all taxpayers (including C corp, S corp, LLC, Parternship, Trust, and Individuals) engaged in business in Nevada are required to file Form TXR-030.01 by August 15, 2016 for the initial report cover year from July 1, 2015 through June 30, 2016. A 30-day extension can be requested if additional time is required. This gross receipt tax is imposed on Nevada source gross revenue in excess of $4 million, but the return filing requirement is nevertheless required for taxpayers with Nevada source gross revenue lesser than $4 million.
Tax Form: http://tax.nv.gov/uploadedFiles/taxnvgov/Content/Commerce/COM_Tax_Return.pdf
FASB Decision to change Income Tax Accounting for Intra-entity Assets Transfers
FASB decided to require an entity to recognize income tax impact of an intra-entity asset transfer, other than an intra-entity asset transfer of inventory.
An intercompany sale or purchase of assets between entities in different taxing jurisdictions is a taxable event for the seller and a new tax basis for the buyer. Under current guidance under ASC 810 and 740, intra-entity balances, transactions, and profit or loss on assets remaining within the consolidation group be eliminated and the related tax impacts (i.e., tax payable on gain by the seller and deferred tax asset related to tax basis adjustment to buyer) are not recognized for US GAAP based financial statement purposes.
However, this non-recognition treatment will be eliminated from US GAAP, except for intra-entity asset transfer of inventory. This amendment is expected to be effective annual reporting periods beginning after December 15, 2017 for public entities and December 15, 2018 for all other entities. Early adoption is permissible.
Please see the attached FASB meeting minute below.
Intra-Entity Asset Transfers.pdf
Annual Report Requirements for Multinational Companies
Added to the already overwhelming various international information disclosure requirements, the IRS issued final regulations requiring large US multinational companies to file annual report disclosing certain information on a country-by-country basis related to their income and tax payments. The regulations are issued in connection with the BEPS implementation by the US government.
Generally, the filing requirement apply to US taxpayers that are the ultimate parent entities of multinational enterprise group with prior year annual revenue in excess of $850 million. The regulations are effective tax years beginning on or after July 1, 2016.
Click below link to see a copy of 1.6838-4 for your reference.
Final reg Country-by-country report.pdf