Today, US Senators John Thune (R-SD) and Ron Wyden (D-OR) filed the Digital Goods and Services Tax Fairness Act of 2018 (S.3581) for reintroduction in the United States Senate. A companion version is expected to be reintroduced tomorrow in the House of Representatives by Representatives Lamar Smith (R-TX) and Steve Cohen (D-TN). This bill, if enacted, would establish a national framework for how states apply their sales and use tax systems to sales and uses of digital goods and digital services.  The bill would resolve current uncertainty regarding which state has the right to tax certain sales and whether a state has the right to tax the sale of a digital good or digital service. The bill also would establish uniform, destination-based, sourcing rules for sales of such products and services.

Sales of digital goods and services are highly mobile transactions. A customer could have a billing address in one state and download a digital good from the seller’s server in another state while the customer is traveling in a third state. Whether such a transaction has sufficient attributes in any one of the three states to give rise to the right to tax the transaction by any one of them is open to question. Assuming one of the states has the right to tax the sale, there is a question as to which state that might be. The bill would clearly specify that one of the states has the right to tax the sale and clearly delineate which state has such taxing rights. 
Continue Reading

Top Hits You May Have Missed

Illinois Department of Revenue Issues Post-Wayfair Guidance Implementing October 1 Economic Nexus Law

Reform Pending for Illinois Captive Insurance Framework

More States Respond to Federal Tax Reform

Speaking Engagements in October:

October 1, 2018: Steve Kranz spoke at the Institute for Professionals in Taxation (IPT) 2018 Sales & Use

McDermott hosted the first Tax in the City® meeting of 2018 in its Chicago office on March 15, 2018. Tax in the City® is a discussion and networking group for women in tax aimed at fostering collaboration and mentorship, and facilitating in-person connections and roundtable events around the country.

The Chicago program was one of

McDermott hosted its last Tax in the City® women’s tax roundtable of the year in its Chicago office on December 14, 2017.

The Chicago Year-In-Review event featured a CLE/CPE presentation, “Key Provisions of International Tax Reform,” by Britt Haxton, Kristen Hazel and Sandra McGill, followed by a roundtable discussion on interest expense limitations, changes to net operating loss provisions, pass through tax rates and effects of tax reform on benefits.

Additionally, Catherine Battin, Mary Kay Martire and Jane May discussed the SALT perspective on the international tax reform provisions.  A summary of key Illinois income tax changes is below, and a thorough explanation of the new SALT implications in the tax reform bills can be found here.


Continue Reading

While there are differences between the House and Senate tax reform bills that remain to be worked out between the two chambers, both bills are positioned to broaden the tax base and reduce the tax rate. This article highlights the possible impact on state income tax liabilities stemming from the base broadening provisions.

Continue Reading.