Tax

Subscribe to Tax

Supply chain disruptions and accompanying inflation for raw materials have challenged many businesses. A recent case involving paint retailer Sherwin-Williams shows how not to deal with these challenges. In a putative class action, plaintiffs accused Sherwin-Williams of surreptitiously adding a hidden “Supply Chain Charge” to every sales transaction. On October 24, the U.S. District Court for the Northern District of New York said the claims may proceed.

The plaintiffs allege they suffered economic injury as a result of a “deceptive bait-and-switch scheme” perpetrated by Sherwin-Williams. They asserted claims of deceptive acts or practices under New York General Business Law § 349, breach of contract, and unjust enrichment. On Sherwin-Williams’ motion to dismiss, the Northern District of New York tossed the unjust enrichment claim, but held that the Section 349 claim and breach of contract claim were plausibly alleged.Continue Reading Supply Chain Surcharges? Plaintiffs Say You Better Not Conceal Them

On February 12, 2021, the Maryland General Assembly voted to override Governor Larry Hogan’s veto of House Bill 732, which carried over from the close of last year’s legislative session and enacts the nation’s first gross receipts tax on digital advertising targeted at Maryland consumers. The tax takes effect on March 14, 2021 and applies to all taxable years beginning after December 31, 2020. Legal challenges to the tax have already begun in the Maryland courts.

Overview of Digital Advertising Tax

House Bill 732 passed both the Maryland House and Senate with more than three-fifths support in March 2020, as the legislature rushed to consider legislation before adjourning for 2020 due to COVID-19 concerns. Governor Hogan vetoed the bill, leaving it in limbo until the legislature reconvened in 2021. The legislature’s override of the governor’s veto leaves companies with little time to determine their compliance obligations.Continue Reading Maryland Passes First-of-Its-Kind Digital Advertising Tax

Venable clients that engage in selling goods and/or services over the internet should evaluate whether the recent Supreme Court decision in South Dakota v. Wayfair will now require them to begin collecting sales and use taxes in states where they have not previously done so. In the Wayfair Case the Court held that a state can require a remote vendor to collect its sales/use tax based merely on “economic nexus” with the state. The prior law standard requiring a remote vendor to have physical presence in a state has been overturned. Under the South Dakota law at issue in Wayfair, an internet retailer is required to collect South Dakota sales tax if it has more than $100,000 of sales into the state or more than 200 sales transactions in the state over the course of a year.

Our chart below lists the states that currently have authorized an economic nexus standard similar to that approved in Wayfair and lists the threshold requirements for each state. This list can be expected to grow as states without economic nexus laws for sales tax purposes rush to alter their existing standards to take advantage of Wayfair’s liberalization of the sales tax nexus rules.Continue Reading Internet Vendors Need to Pay Attention to these States After U.S. Supreme Court Alters Sales Tax Collection Standard