As 2015 comes to a close and we look ahead to 2016, you should be aware of several state and federal policy changes that could have a bearing on your business:
SALES TAX EXEMPTION CERTIFICATION
Beginning Jan. 1, the only valid proof of a sales, use or lodging tax exemption for statutorily tax-exempt organizations will be an annual certificate of exemption, known as Form STE-1. For a sample letter explaining this change to tax-exempt groups that do business with your store, go here.
Learn more at:
- Revenue Department Clarifies Tax Exempt Sales Notice
- Retailers May Want to Review Record-Keeping in Light of New Law for Tax-Exempt Groups
- Tax-Exempt Sales, Use and Lodging Certification Standardized as of Jan. 1, 2016
TAX REPORTING CHANGES FOR VAPOR PRODUCTS
As of Jan. 1, state sales taxes on consumable vapor products go to the General Fund. Sellers reporting retail sales of consumable vapor products on a monthly, quarterly or annual basis must separately report those sales in Column D — “Consumable Vapor Products 4%” — on all state sales tax returns (S&U:2100 and S&U:2105).
> Learn more at How to Remit Sales Taxes on Vapor Products under New Law
LAST-MINUTE FEDERAL TAX BREAK EXTENTIONS
Before Congress left for the year, it extended dozens of tax breaks. H.R. 2029 made permanent the 15-year depreciable life for retail, leasehold and restaurant improvements and new restaurant construction, as well as a bonus depreciation to apply to improvements made to stores and restaurants that are owned rather than leased for a five-year period. The 50 percent bonus depreciation becomes 30 percent bonus depreciation over the next five years. Businesses will be able to expense some of their business investment costs, with the rest being subject to the usual depreciation rules. The tax extender law also included an increase in the expensing limitation (Section 179) to $500,000 and a phase out at $2 million. Those amounts are indexed. The $250,000 cap on qualified real property is eliminated beginning in 2016.
OVERTIME RULE CHANGE COMING IN 2016
The U.S. Labor Department is expected to make a July 2016 release of its final rule to raise the overtime pay exemption threshold, according to the agency’s fall 2015 regulatory agenda. July is the government’s best estimate for when it will release the final regulations. Nearly 300,000 comments were received on the proposed rule. The rule tops the DOL’s list of regulatory priorities in the Obama administration’s final full year. Once the final rules are published, employers will have 60 days to comply.
Although the final text of the exemption rules and their implementation date is not yet known, prudent employers should begin preparing for these changes now.
> Learn more at Overtime Rule Change Could Become Effective in 2016
EFAIRNESS ISSUE TO RETURN IN 2016
Efairness legislation that would level the playing field for Main Street retailers and online-only sellers when it comes to sales tax collections did not make it through the last-minute legislative push in 2015. Hope remains that efairness legislation will move with the Permanent Internet Tax Freedom Act by October of 2016. PITFA, which bars state and local governments from taxing the monthly bills customers pay for Internet service, expires in October 2016. The delay of the Internet access tax ban sets up an opportunity to finally move forward with efairness legislation.