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State & Local Tax Update - 2/24/12

Posted 2:50 PM by

Idaho Updates Guidance Regarding Sales Tax on Interstate Vehicles – Effective 7/1/12, HB 361 provides that, in the context of the tax exemption for motor vehicles and trailers substantially used in interstate commerce and registered under the International Registration Plan (IRP), “substantially used in interstate commerce” means that the vehicle or trailer is operated in a fleet that logs at least 10% of its fleet miles outside of Idaho in the four fiscal quarters beginning July 1 and ending June 30 of each year (previously, in an annual registration period) under the IRP. If such motor vehicle or trailer is not substantially used in interstate commerce during the four fiscal year quarters beginning July 1 and ending June 30 of each year (previously, during an annual registration period), it is deemed to be used in Idaho and it is subject to the Idaho use tax.

Illinois Issues Ruling on Independent Contractor and Nexus - The Illinois Department of Revenue determined that a taxpayer's contracting sales of services in Illinois on a regular basis would “likely” subject the taxpayer to Illinois income taxation. The taxpayer operates a 24/7 call center for national retailers with multi-site locations. The business consists of coordinating contracted labor on an as-needed basis for its national customers, some of them located in Illinois. The “contracted” work is done by independent contractors as the taxpayer does not have payroll, inventory, personal property or a physical presence in Illinois. However, Ill. Admin. Code 86 § 100.9720(c)(6) provides that the use of independent contractors may only afford a nonresident immunity from taxation for “limited activities.” The IL DOR indicated that the fact that the taxpayer's business is entirely set up around using independent contractors on a regular basis may jeopardize the protections otherwise afforded. See IT 12-0001-GIL for details.

 

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