Pivot Strategic Consulting 2023 – Q1 Newsletter

Pennsylvania Updates

Pennsylvania Lists NFTs as a Taxable Transaction

Pennsylvania recently updated their Retailer Information Guide on sales and use tax (REV-717) and provided that non-fungible tokens (NFTs) are now specifically listed as taxable transactions. NFTs are unique digital assets such as art, music or videos.  The issue being discussed by taxpayers, practitioners and Pennsylvania’s Department of Revenue is whether to treat NFTs as tangible personal property, intangible personal property or a combination of the two.  Pennsylvania’s Department of Revenue is working on guidance to provide further clarity on this matter. Other states are also in the process of determining their tax treatment of NFTs. Washington State already indicated their treatment of NFTs for sales and use tax purposes as being a taxable transaction.

Other State & Local Tax Updates


States Get Graded on Sales Tax

The Council of State Taxation issued their 2022 grades for best and worst state sales tax systems. As you will see, Alabama, Colorado, Louisiana, Mississippi and South Carolina received failing grades. Since Louisiana and Colorado have long been in the spotlight due to the administrative burden placed on taxpayers from the locality perspective, this is not surprising.  Pennsylvania, Maryland, New York and West Virginia were among states that received a C grade.  Virginia, New Jersey and Ohio were among those states that received a B grade.

California Follows Guidance from MultiState Tax Commission 

California was quick to follow the guidance provided by the MultiState Tax Commission. Their guidance updated examples of activities that are and are not protected under Public Law 86-272. Specifically, relating to interactions with taxpayers and customers on the taxpayer’s website.  A lawsuit was filed in California with regards to California Technical Advice Memo 2022-01 and  efforts to declare this document invalid.

Colorado Retail Delivery Fee

Colorado has new issues with their sales and use tax compliance. One issue is the retail delivery fee being applied by Colorado that was effective July 1, 2022.  All deliveries of retail to a location within Colorado of taxable property would have this fee applied and would be reported with the sales and use tax returns filed with the state.  Colorado provides additional information on this fee as well as the appropriate rate. Hope remains that this administrative burden will be addressed in 2023.

Missouri’s Economic Nexus Threshold

Missouri’s economic nexus threshold is effective January 1, 2023. Taxpayers should ensure that they understand and comply with nexus factors for various taxes in all states including both physical presence nexus as well as economic nexus standards.