Over the past few months, we have discussed many facets of sales tax. To wrap up this series of articles on sales tax, we thought it would be helpful to give our readers information on whom to contact in each state to stay informed about what is happening with sales tax in the states.
Beginning with the Wayfair decision we have seen how the past few years have added requirements for remote sellers to collect and remit sales tax in several states. With Nexus, we saw that there are several ways that a business can establish nexus, and thus become liable for collection and remittance of sales tax. We have delved into the complexities of sales tax at both the state and local level, an issue that affects any business that sells in more than a single jurisdiction. And we have seen how the pandemic of 2020 affected state budgets and ushered in a wave, some might say a tsunami, of new and updated sales tax laws.
Here is a handy list for you to keep with rate and contact information for each state about sales tax issues.
The Alabama Department of Revenue notes that sales and use tax rates vary across cities and counties, in addition to the state sales tax rate. Click here for more information on sales tax for Alabama.
Alaska does not charge a state sales tax at this time. However, local jurisdictions have wide discretion as to the rate that they can apply. In some areas, it is as high as 7.5%. The Alaska Department of Revenue has more information on local taxing authorities.
Arizona applies a 5.6% sales tax to sales made within or into the state. Business owners can refer to the Arizona Department of Revenue for guidance. A handy little how-to guide for tax payments can be found here.
Arkansas imposes a sales tax that is 6.5% of the gross receipts from the sales of tangible personal property and selected services. An explanation of how taxes are determined, collected, and remitted can be found here.
California charges a statewide rate of 7.25%, and most local jurisdictions have added from 0.1% to 1.0% additional tax. More information can be found on the California Department of Tax and Fee Administration website. Additional information on rates charges by local jurisdictions can be found here.
The Colorado Department of Revenue imposes a statewide sales tax rate of 2.9%. More information can be found here. Local jurisdictions are permitted to impose additional sales tax. Rates for various districts, as well as exemptions from sales tax, can be found here.
The state of Connecticut is an odd man out state. They impose a 6.35% sales tax statewide. Local jurisdictions are not permitted to collect additional sales tax. The Connecticut State Department of Revenue Services has more information on the collection and remittance of sales tax on their website.
Delaware does not impose a state or local sales tax but does impose a gross receipts tax on the seller of goods or provider of services in the state. More information on determining your tax liability in Delaware can be found here.
The Georgia Department of Revenue imposes a 4.0% sales tax on the retail sale, lease, or rental of most goods. Local jurisdictions are permitted to add up to 4.0% to the state tax. More information on sales tax in Georgia can be found here.
Hawaii has one of the lowest sales tax rates. The state collects 4.0% and allows local municipalities to add just 0.5% more. Additional information can be found on this Hawaii state website.
Depending on what is being sold, Idaho imposes either a sales tax or a use tax. These are both set at 6.0%. The Idaho State Tax Commission sets policy for sales tax in the state.
Illinois is considered to be one of the highest tax states. Illinois Revenue sets the statewide rate at 1% for food, drugs, and medical appliances and a 6.25% rate on items required to be titled and registered AND on general merchandise. Additional tax permitted by local jurisdictions can increase the total to as much as 11.0%
The sales of goods and tangible personal property is taxed at 7.0% in Indiana. Businesses that do so are required to register with the Indiana Department of Revenue. More information on taxes and registration can be found on their website.
The Iowa Department of Revenue imposes a statewide sales and use tax of 6.0%. Local jurisdictions are also permitted to impose additional sales tax.
Kansas imposes a 6.5% sales tax on various products and services. Local jurisdictions are allowed to charge an additional sales tax. More information can be found on the Kansas Department of Revenue site.
The Kentucky sales and use tax imposed by their Department of Revenue is set at 6.0% of gross receipts or purchase price. Local jurisdictions are not permitted to add to this rate.
Louisiana is another state where sales tax can be high. While the Department of Revenue imposes a general sales and use tax of 4.25%, local jurisdictions can also pile on up to a total of 11.25%. So across the state, the rate can vary greatly.
Maine Revenue Services imposes a 5.5% sales tax and does not allow for additional tax at the local level.
The Comptroller of Maryland imposes a 6.0% tax on tangible goods and a 9.0% tax on alcoholic beverages. Additional information on Maryland taxation can be found here.
Massachusetts imposes a 6.25% sales tax. More information can be found on their sales and use tax website.
Michigan Treasury imposes a 6.0% sales tax. More information can be found on their website.
Sales tax on most retail goods and some services in Minnesota is set at 6.875%. Additionally, local jurisdictions can add to this rate. The Minnesota Department of Revenue website has more information on collection and remittance.
Part 2 - States Mississippi through Wyoming
Sales taxes at the state and local level change frequently. Given the complexity of collecting and remitting sales tax, it is recommended that both retail and service businesses subject to state sales tax employ a Certified Service Provider to verify that state and local sales taxes, where applicable, are collected and remitted properly.
As always, for tax compliance done right… it is important to know the facts. And remember, you can be proud to pay taxes in these great states but could be just as proud for half the amount.