What’s new in sales tax?

There’s always something changing in the world of tax, especially sales tax. Here’s a review of some of the recent 2023 sales tax changes and updates.

Well into the black: Black Friday 2023 e-commerce spending jumped 7.5% from a year earlier to a record $9.8 billion in the U.S., according to a Adobe Analytics report cited by news sources. Americans spent $12.4 billion on Cyber Monday, news reports added, saying overall spending increased 9.6% from a year ago, making it the biggest online shopping day ever.

Buy-now-pay-later offers were especially popular. During peak hours of both days, shoppers spent $15.7 million every minute.

Analysis of Google activity also showed that the most searched term in Black Friday was iPhone deals. Iowa topped the list for having the highest search levels for Black Friday in the U.S., followed by South Dakota, Kentucky, West Virginia and Kansas. New York ranked last.

Other popular terms included “tires” in New Hampshire, “couches” in Colorado, “furniture” in Missouri and “shoes” in Alabama.

Making it right, eventually: A woman in St. Johns County, Florida, received a $750 credit from Amazon after discovering that the marketplace facilitator had been overcharging her for sales tax for more than a decade, news reports said. The mix-up reportedly happened because she lives in an unincorporated county but her shipping city was listed as Jacksonville, which is in a different county with a higher tax rate.

States’ tax revenue declining: The Urban Institute has reported that states’ tax revenue is sliding broadly, falling in September for the 14th straight month on an inflation-adjusted basis and by 5.6% year over year. Cooling economic growth, tax cuts and weak stock-market performance are big contributors to the drop in revenue that was robust – particularly for sales tax – during the online-shopping boom of the pandemic.

Gains in sales tax revenue are becoming spottier in general – especially on the local level – but not statewide everywhere. New York state sales tax collections jumped 2.5% in October year-over-year. Overall, local collections in NYS also totaled nearly $1.8 billion, up $43.5 million compared to the same time in 2022.

State Sales Tax Updates in 2023

California has expanded its sales and use tax exemption for new, used or remanufactured trucks and new or remanufactured trailers or semitrailers delivered to a purchaser in state for use in interstate commerce to include used trailers or semitrailers. The sunset of this expanded exemption is also extended to Jan. 1, 2029.

In Georgia, effective this Jan. 1 sales of specified digital products, goods and codes sold to an end user in the state are subject to Georgia sales and use tax, provided that the end user receives or will receive the right of permanent use of such products, goods, or codes and the transaction isn’t conditioned on continued payment by the end user, among other conditions. “Specified digital products” means digital audio-visual works, digital audio works or digital books. “Other digital goods” means the following items transferred electronically to an end user: artwork, photographs, periodicals, newspapers, magazines, video or audio greeting cards or video games or electronic entertainment. “Digital code” means a key, activation or enabling code that conveys a right to obtain digital goods.

Michigan has added a definition of “food sold with eating utensils provided by the seller” for purposes of sales and use taxation of prepared food.

Also in the state, an oncology company wasn’t entitled to a Michigan use tax exemption for its purchases of materials. The company argued that its purchases were eligible for the industrial processing exemption because it used the materials in research or experimental activity for or on behalf of an industrial processor, but the company’s activity didn’t meet the requirements for research or experimental activity.

If you think your business may be impacted by the 2023 sales tax changes/updates, contact TaxConnex. TaxConnex provides services to become your outsourced sales tax department. Get in touch to learn more.