State Sales Tax News April 2021
State Sales Tax Update April 2021
Illinois: Kane County Imposes County Cannabis Retailer’s Occupation Tax - Apr. 14, 2021
Effective May 1, 2021, Kane County imposes a 2.5% county cannabis retailers’ occupation tax on the gross receipts from retail sales of adult use cannabis. The tax is in addition to the state cannabis retailers’ occupation tax (6.25%) and any locally-imposed retailers’ occupation tax that also applies to retail sales of adult use cannabis. However, the tax it is not imposed on cannabis purchased under the Compassionate Use of Medical Cannabis Program Act.
New Mexico: Sales and Use Tax: Governor Signs Adult-Use Marijuana Legalization Bill - Apr. 14, 2021
On April 12, 2021, New Mexico Gov. Michelle Lujan Grisham signed into law H.B. 2 which provides for the legalization of adult-use marijuana. Commercial sales will begin no later than April 1, 2022 and the issuance of licenses to conduct commercial cannabis activity will begin no later than January 1, 2022. The rate of the cannabis excise tax will begin at 12 percent and will be applied to the price paid for a cannabis product. Gross receipts tax will also apply. Medical marijuana sold under New Mexico law is currently subject to gross receipts tax, however proposals would eliminate taxes on medical marijuana.
New York: Taxability of Dairy Cow Hoof Trimming Equipment, Tools, and Supplies Discussed - Apr. 14, 2021
A dairy cow hoof trimmer’s purchases of the following are not subject to New York sales tax because they fall under the farming exemption in Tax Law §1115(a)(6)(A):
hoof trimming truck;
supplies and tools used to maintain the truck;
supplies and tools used to maintain the truck tilt table and chute;
supplies and equipment to keep the truck sanitized;
cow treatment tools and supplies;
tablet to run reports for dairy farmers; and
However, supplies to maintain the garage where the truck is stored and clean protective clothing are subject to sales tax because they fall outside of the production cycle.
New York: Taxability of Site Fee for Special Events Discussed
A special event venue’s site fee charged for using its space is subject to New York state sales and use tax when the venue is rented along with catering service. The site fee under such circumstances is taxable because it constitutes a charge in conjunction with the sale of food and drink. When the venue is rented without catering, the site fee is not subject to tax. In addition, the venue’s reimbursement payment to a caterer for the costs related to food and beverage preparation are taxable receipts from the sale of food and drink, but the profit paid to the venue by the caterer is not subject to tax.
New York: Fee Paid for IT Support Service Delivered Out-of-State Not Taxable - Apr. 14, 2021
A fee a taxpayer pays for information technology (IT) support services is not subject to New York sales and use tax because the only taxable component of the IT support service is delivered to the taxpayer outside of New York.
IT Support Services
The taxpayer provides investment advice to its customers. As part of its service, the taxpayer conveys significant data to its customers mostly by means of its website, although some information is also conveyed by emails and via telephone calls. To prepare its investment advice and to house its website, the taxpayer uses IT assets, including servers, all of which are located outside New York. To maintain those IT assets, the taxpayer hired a New York-based company (Company X), to provide it with "managed IT services."
The service Company X sells to the taxpayer has four components. The services of supporting the taxpayer’s hardware and software (i.e., items 1 and 2) fall short of being services to maintain, service or repair tangible personal property, or even to supervise such a service, and are thus not subject to tax. Similarly, Company X’s back-up service (item 3) also does not appear to be taxable. Because the service of providing backup and storage of data is not a taxable one, management of that service also would not be taxable. Thus, those components, if analyzed on a standalone basis, would not be taxable. In contrast, the service described in item 4, which the taxpayer refers to as the service of managing the security of the taxpayer’s IT assets and data, standing alone, would constitute a protective service. However, because the computer assets and data being protected are located outside New York, this component of the taxpayer’s service also is not taxable. Generally, taxability of an integrated service, such as the managed IT services being provided by Company X, is determined based on the service’s primary function. However, it is not necessary to determine the primary function of Company X’s managed IT services here because the only taxable component of the managed IT Services is being delivered to the taxpayer outside of New York. Under that circumstance, whether or not Company X’s managed IT services as a whole would constitute a taxable imposition, the fee the taxpayer pays for those services is not subject to sales and use tax.