Key Takeaways
- IL Amnesty for Out-of-State Retailers
- New Data Center Tax Changes
- MS Requirements for Third-Party Booking Entities to Collect and Remit Sales Tax
- AI and State Taxation
Welcome to this edition of our roundup of state tax developments. Consider the Eide Bailly State & Local Tax team for your state tax planning, compliance, and incentive needs. Beginning this week, the State Tax News and Views will move to a biweekly schedule.
Shock and Audit: Artificial Intelligence Meets State Taxation - David W. Bertoni, Tax Notes ($):
The [New York Department of Taxation and Finance] has not been alone among New York agencies in adopting AI for a variety of governmental functions. These agencies, however, may now face a reckoning because of New York’s LOADinG Act (shorthand for the Legislative Oversight of Automated Decision-Making in Government Act), which was signed into law by the governor on December 21, 2024.23 The LOADinG Act imposes a review and disclosure regime in connection with the adoption and continuing use of AI technologies in support of governmental functions — requirements consistent with voluntary federal guidance on the adoption of AI by industry.
NYC Under Fire For Shortage of Judges - Danielle Muoio Dunn, Bloomberg Tax ($):
The issue was highlighted in a complaint filed in the US District Court for the Southern District of New York last week [ . . .].
State-By-State Roundup
Colorado
Colo. Allows Sales Tax Searches Using Taxpayer ID Numbers - Michael Nunes, Law360 ($):
Illinois
Illinois Offers Sweeping Tax Amnesty to Out-of-State Retailers - Michael J. Bologna, Bloomberg Tax ($):
. . .
The Illinois tax bill, approved by the Legislature May 31, creates a six-week general tax amnesty, waiving penalties and interest for most tax and fee programs going back to June 30, 2019. This general amnesty will be available between Oct. 1, 2025 and Nov. 15, 2025
. . .
[T]he bill also creates a program tailored to remote sellers, which will be available between Aug. 1, 2026 and Oct. 31, 2026.
Iowa
Iowa to Revoke Tax Breaks Due to Businesses' Mass Layoffs- Jacqueline McCool, Law360 ($):
Iowa Expands Property, Sales Tax Breaks for Data Centers - Zak Kostro, Law360 ($):
. . .
The bill also allows an eligible business that leases a data center to qualify for a sales and use tax exemption or refund related to purchases of backup power generation fuel, electricity, computers and equipment . . .
. . .
The provisions affecting the property tax and sales and use tax exemptions for data centers took effect immediately . . .
Louisiana
La. Lawmakers OK Increased Tax Threshold for Nonresidents - Paul Williams, Law360 ($):
. . .
The bill would also make several changes to the state's tax rules for S corporations, including by automatically recognizing them as pass-through entities, according to a fiscal note on the legislation.
Minnesota
Minn. Lawmakers OK Tax Package, Data Center Change - Sanjay Talwani, Law360 ($):
Under H.F. 16, a data center would continue to qualify for the sales and use tax exemption for hardware and software for 35 years from the time of the facility's certification by the state or until July 2042, whichever is later. Under current law the exemption is applicable for 20 years or until July 2042, whichever is earlier.
Mississippi
Mississippi Issues Notice On Requirement of Third-Party Booking Entities To Collect and Remit Sales Tax - Nicholas Molinari, Eide Bailly LLP:
The Mississippi Legislature passed Senate Bill 2805, which clarifies the definition of the term "hotel" to include entities facilitating, arranging or brokering transient guest transactions, including third-party entities.
Third-party booking companies that meet the definition of "hotel" are required to collect Mississippi sales tax on the gross income of any hotel booking. A third-party booking company that registers and collects Mississippi sales taxes will relieve a property owner or hotel manager of the requirement to collect state and local sales taxes.
Tax Bites: Tips, Tricks and Opportunities in SALT
Colton Timberlake, Manager, Eide Bailly:
Have you ever sold a product or service to a customer who claims they are exempt from sales tax because they are a manufacturer, wholesaler, nonprofit, or another type of "exempt" entity? Proof of exemption is your best defense in a sales tax audit!
Collecting exemption certificates is an essential step for businesses to ensure that they are compliant with state sales and use tax laws. A properly completed exemption certificate serves as official documentation that a purchaser is exempt from paying sales tax on certain purchases. Without properly collected and maintained exemption certificates, businesses risk being held liable for uncollected taxes during an audit, which can lead to significant tax liabilities.
If you have questions about when, where, or what type of exemption certificates to collect, the SALT team can help develop a strategy to ensure that you remain compliant.
