Way Down Yonder

[00:00:08] Speaker A: Welcome to Taxing Poetic. I'm Tim. [00:00:11] Speaker B: I'm Jenny. [00:00:12] Speaker A: And today we are going to be talking another one of our regional series, and it's going to be Way Down Yonder discussions on Kentucky, Tennessee, Alabama and Mississippi. [00:00:22] Speaker B: And I think we always want to preface these regional series by saying these region came from Wikipedia. We didn't make them up. Correct. [00:00:29] Speaker A: Completely agree, JB, right? [00:00:31] Speaker C: No, but if you go to Wikipedia and you type in regions of the United States, this is how they've broken down by nine different regions. [00:00:38] Speaker A: And yet again, just to reiterate, I think JB actually edited Wikipedia for these specific regions because he could just do it on the fly. [00:00:46] Speaker C: That is true. I could have just changed them to whatever I wanted. [00:00:49] Speaker B: So that is why we're discussing these states today. I just want to make that clear. So, yes. And of course, we have to open with a song oh, my gosh. Way down yonder on the chattahoochee. [00:01:01] Speaker A: Here it is. Who sings it? [00:01:03] Speaker B: Alan Jackson. [00:01:04] Speaker A: Oh, congratulations. I know, absolutely awesome. [00:01:06] Speaker B: I did know that. Too bad that wasn't in the quiz for later. [00:01:09] Speaker A: Hey, luckily, though, the Chattahoochee does touch one of those states. [00:01:13] Speaker B: It does, in fact. [00:01:14] Speaker A: Alabama. Bingo. I thought it also touched Tennessee, actually, I don't believe it goes up to Tennessee, does it? [00:01:21] Speaker C: It's called the chattahoochee. [00:01:22] Speaker A: It has to. [00:01:23] Speaker B: Yeah, I think it does. Yeah, because chad. Yeah. Come on, Tim. So, yes, I have a haiku here in honor of Way Down Yonder. So if you're ready, go for it. Okay. Way down yonder y'all. I shoot the Chattahoochee sales tax on my tube because guess what? Tube rentals are taxable in Tennessee. [00:01:48] Speaker A: Tube rentals are taxable in Tennessee. That's absolutely fantastic. Look at that. [00:01:51] Speaker B: Have you shot the hooch before? [00:01:53] Speaker A: I have shot the Hooch before, yeah. [00:01:54] Speaker B: Pretty fun. [00:01:55] Speaker A: Yeah, I've done it up in times. Yep. So, yeah. [00:01:59] Speaker B: So now we're on to now that our haiku is done and my singing is complete, I think we're moving on to Nerdy News, right, Tim? Yeah. [00:02:06] Speaker A: What do you got for Nerdy news? [00:02:07] Speaker B: Okay, well, our first date we have for Nerdy news is Kentucky. So, Tim, let's talk about the latest news from Kentucky. Is that a partial exemption for services that became taxable in 2023? [00:02:22] Speaker A: Which is quite shocking because a lot of states typically don't tax services. Right, we've talked about that. [00:02:27] Speaker B: We have. But the trend is moving towards taxing them. Correct. [00:02:31] Speaker A: Some form of services, certainly. [00:02:34] Speaker B: So let's talk about these exemptions. Well, first tell us, Tim, what is happening? What happened? [00:02:41] Speaker A: Well, basically, Kentucky had provided for a whole host of services that they were going to enumerate or basically state in their law that were going to ultimately be taxable. And those services became taxable effective January 1 of 2023. But then they were going to be offering a partial exemption when gross receipts from these services exceeded $6,000 in a calendar year, all services over $6,000 were ultimately going to be taxable. So anything less than 6000 wouldn't be taxable. Anything above $6,000 would technically be taxable. [00:03:13] Speaker B: Okay. And then we have a whole list of services here that are now taxable for over $6,000. [00:03:19] Speaker A: Do we want to read the entire list, or are we just going to selectively pick through them? [00:03:23] Speaker B: I feel like I can just read them quickly and then we can pick on a few of them. [00:03:26] Speaker A: Yeah, that sounds awesome. [00:03:27] Speaker B: Okay. All right, so lobbying, executive recruitment, facsimile transmission, JB. I think you even asked me what that was. [00:03:35] Speaker A: That's fax meal. [00:03:36] Speaker B: That's what I said. It's a fax. And he's like, what's? Faxsimile? I said, yeah, because duh. I know it's 1980. Mailing services, parking services, automobile club, AA, condo timeshare, exchange services, event planning and space rental. I mean, that's kind of a big deal. Event planning and space rental. [00:03:54] Speaker A: Absolutely. [00:03:55] Speaker B: Because any wedding is over, as we know, is over $6,000. [00:03:59] Speaker A: Bingo. [00:04:00] Speaker B: Yes. So let's see leisure, recreational, and athletic instruction, personal fitness training. I mean, I wouldn't know about that, but lab testing, interior decorating, moving design services, and our favorite lapidary services. [00:04:15] Speaker A: What is a lapidary service? [00:04:17] Speaker B: It is not a gentleman's club. It is actually cutting, polishing, and engraving precious stones. [00:04:25] Speaker A: Did you actually just bring gentlemen's club into this? [00:04:28] Speaker C: I'm glad we use the term gentleman's club. [00:04:30] Speaker A: I know it took a lot of. [00:04:32] Speaker C: Episodes for us to bring that up much earlier. [00:04:34] Speaker B: I mean, when you think about lapidary. [00:04:35] Speaker C: Services yeah, there's a couple that I just highlighted we have to talk about. [00:04:40] Speaker A: I'm having secondary embarrassment, just to let you know. [00:04:42] Speaker C: Well, engraving precious stones, the lucrative engraving precious stones market in kentucky, they were like, listen no more. These people cannot keep getting away with this. [00:04:52] Speaker A: We must tax the engraving of emeralds. [00:04:56] Speaker C: There's maybe eleven people in the state of kentucky who make more than $6,000. [00:04:59] Speaker B: Engraving stones, cutting and polishing, too. You're not getting your stones polished, people. [00:05:04] Speaker C: Well, if you are, that price is going to go up for you. We were talking about how they should hire lobbyists to go to the bat. [00:05:14] Speaker A: For them, but they can't, because now it's going to be taxable. [00:05:18] Speaker C: Well, the lobbyists are not very good in Kentucky, obviously. They couldn't even get themselves off this list. [00:05:22] Speaker B: They can't even lobby to not have lobbying not be taxable. [00:05:27] Speaker C: Also, the poor gym, the gym teachers, leisure, recreation, athletic instruction. The gym teacher making $21,000 a year teaching gizzardblade dodgeballs. Now I got to pay taxes. [00:05:35] Speaker A: And also, I mean, yoga instructors, right? [00:05:37] Speaker C: Yoga. [00:05:38] Speaker A: Jenny's not going to be able to get yoga in Louisville on personal training, please. [00:05:41] Speaker B: Terrible yoga. [00:05:42] Speaker C: And I just bring up interior interior decorating. So I went to film school and I dated some girls that were interior architect majors, and interior architecture and interior decorating are very different, and I just want to bring that up. Interior design is people use it now as oh, I put a throw pillow here, and I want the walls to be mauve instead of taupe. And it's like, that's not what it is. It's interior architecture. It's actually harder than exterior architecture. [00:06:12] Speaker B: There's a lot of math with it. [00:06:13] Speaker C: There's a lot of math. [00:06:14] Speaker A: Did you just use the words mauve and taupe? What is that? I took color theory again, 1980. Is that like beige? [00:06:22] Speaker C: It's in the beige family. [00:06:23] Speaker B: It's in the beige family. [00:06:26] Speaker A: For those of us who do not understand, my color palette basically extends to about, like, the primaries and secondaries. I learned that in third grade. Well, actually second grade. [00:06:35] Speaker C: But I did want to congratulate them on the fast emile transmission, because that is dozens of dollars that they will be making. [00:06:41] Speaker B: Yeah. Fax industry, you're going down for sure. Forget it. Yeah. Kentucky lobbyists get better because now your services are taxable. [00:06:49] Speaker A: All right, we picked on kentucky. We definitely got to apologize a lot to the lapidary folks there. [00:06:55] Speaker B: Well, the entire state. [00:06:56] Speaker A: Yes. Okay. Alabama. [00:06:58] Speaker B: Yeah, alabama. Sales tax, rate reduction on food. And tim, we have had this conversation before well, and JB about states that pass a tax, and they say it's going to end by a certain date, and that date comes, and they're like, oh, just kidding. We're just going to extend it for a little while to pay for x, y, or z. And one of our favorite examples we've brought up is here in georgia, the state road 400 toll tax that they said when it ended, it ended, and they tore down the toll plaza, and we were all shocked. And here's another example of a state. They said they were going to drop their grocery rates at a certain date once they reached a target with their education trust fund, and now they're dropping it. So it's going from 4% to 3%, september 1 of this year. [00:07:51] Speaker A: Yes. It's good to see states I mean, obviously, a lot of states are legally obligated to do this, right. You have legislatures and departments of revenue that are legally obligated because there are sunset laws within that they pass to actually have certain acts, certain bonds, certain other things that actually get put into place. And once those sunsets are hit, those sunset dates hit, guess what? It goes away. But there's a ton of work by lobbyists that will actually extend that for certain industries. We saw that here in georgia with the concrete truck exemption and how it was actually sunset, and then it was ultimately brought back into place right. To allow for a lot of money to be saved by concrete companies because their equipment, their trucks actually qualify as manufacturing equipment. But yes, it's great to see that when states excuse me, see and hit certain targets, they actually abide by their rules and help constituents by dropping these kinds of taxes. And we've also talked about grocery taxes extensively. Right. We've talked about those in the past. Now how it's a regressive tax. [00:08:49] Speaker B: Right. [00:08:49] Speaker A: We don't really like it. It's bad on constituents because as inflation comes up and this kind of leads into our next state. Right? [00:08:56] Speaker B: Yes. [00:08:57] Speaker A: We're going to talk about what Tennessee and their amendments of their code with regards to sales tax holidays. But the big thing is that seeing the elimination of grocery taxes is a pretty good thing. It helps all consumers and we just. [00:09:08] Speaker B: Love to see a state keep their promise. Correct. You made a promise, keep it. [00:09:12] Speaker A: There you go. [00:09:14] Speaker C: So it's the education trust fund that they hit? [00:09:17] Speaker B: That's what it looks like, yeah. [00:09:19] Speaker C: They have all the money they need for education in Alabama. [00:09:21] Speaker B: Well, this is just wondering, I mean, obviously they set a goal and made a promise and they wanted to reach a certain goal within this fund and they did. So now they're dropping the tax. But you're right, maybe that is a question I cannot answer. Yes. Maybe the lobbyists in Alabama can answer that question about education and whether they have all their funds. But keeping on so with Tennessee Nerdy news, effective January 1 of next year of 2024, they have amended their code to tax services performed outside the state when TPP or computer software is delivered within the state. Right, Tim? [00:10:03] Speaker A: Yes. [00:10:03] Speaker B: Okay. And this is something we're seeing more and more. Absolutely. States are especially I know we pick on Maryland a lot sometimes, but Maryland now has new software laws correct. And digital advertising. [00:10:15] Speaker A: And they've actually been changing them a lot. Right. So Maryland try tax and SaaS now. They're not going to be taxed and SaaS. It's very interesting in the way that these laws actually get passed and then certain people are like, hey, wait a minute, they come back to the table and they look at it. They get lobbied by certain businesses, certain industry groups, and they actually end up removing that tax. It's also kind of interesting to look at how some of these states are going to try to enact these laws because they could be violating interstate commerce. You're going to see people challenge these laws now that states we've gotten through wayfair they're being able to tax remote sellers and all this other stuff, they're going to get really aggressive about taxing items that go across certain cross state lines. Or like this in this case, hey, you provided or you're performing software services potentially in another state. But all that software or the delivery of TPP occurs within the state of Tennessee. Okay, well, there's kind of a line test there. I'm taxing something or taxing a service where the benefit's been received outside of Tennessee. But you're saying because the application or the software, the hardware is actually delivered within Tennessee, they're entitled to all that revenue? That doesn't make a lot of sense. [00:11:17] Speaker B: Right. [00:11:17] Speaker A: It's kind of goofy. [00:11:18] Speaker B: Yeah. So we'll see what happens. [00:11:20] Speaker A: We'll see what happens. [00:11:21] Speaker C: A good change. [00:11:23] Speaker A: Interesting change. [00:11:23] Speaker B: Interesting change. Not really. I mean, if Tennessee can make it stick, it's good for know, more revenue. But yeah, it's just an example that we're seeing throughout the country with certain. [00:11:36] Speaker A: I mean, the biggest thing that you look at when you read that law as a tax professional, when you read the headline and you read how it reads, tennessee amends their code to tax services performed outside the state. When the product is ultimately then delivered inside the know, there's going to be certain states are going to have major problems with that, like Louisiana neighbors, Alabama and Georgia. When you're actually performing a service on a piece of tangible property within the state, if this is taxable service within that state, you should be taxing it. Well, Tennessee is now saying, hey, guess what, we're going to tax it as well. Okay, well, which state do I owe the tax to? Do I get reciprocity? Am. So is it dual taxation? Is it double taxation? Right. So then you're going to see a lot of people argue, hey, you can't do that. It's a violation of the dormant commerce clause. You can't turn around and tax something that occurs outside the jurisdictions of the state. You're violating interstate commerce. This is a big problem. [00:12:28] Speaker B: Yeah, I mean it's kind of random. The services they're taxing are TPP or computer software and then also laundering or dry cleaning of TPP. Okay. [00:12:41] Speaker A: Apparently you truly upset somebody in Tennessee because you carted all your laundry across state lines and then brought it back again. [00:12:48] Speaker B: Lobbyists in Tennessee for dry cleaning do better installing and that could be like. [00:12:53] Speaker A: If you think about it and sorry to interrupt you, Jen. No, that could be like a CentOS or an airmark or some of these. [00:12:59] Speaker B: Other companies oh, that's true. [00:13:01] Speaker A: May be doing uniform cleaning services, dry cleaning services for cities in like Memphis or Tunica, which is right there near Tennessee when they actually could be moving things across back and forth across state lines because your proximity to a jurisdiction or proximity to the border is that close that you can do that. And Tennessee is like, no, we want our money. So pretty interesting. [00:13:22] Speaker B: It is interesting. So, yeah, hopefully we'll have some more legislative updates and nerdy news for you on that. [00:13:27] Speaker A: It's probably going to be a court case. [00:13:29] Speaker B: Yeah, probably. And then our last Nerdy news state is Mississippi. But actually we didn't find too much new about Mississippi that's going on right now, so I know. Tim, you want to tax poetic about Mississippi. [00:13:41] Speaker A: Yeah, Mississippi for contractors, obviously. This is like one of my favorite discussions to have when we get into contractors because we talk about things in the southeast and how contractors and taxes on contractors. So if you're doing certain types of contracting services in Mississippi, specifically if your contract is in excess of $10,000, you're actually subject to this thing that's called the three and a half percent contractor's tax, and you actually have to apply for what they call a material purchase certificate. And what that ultimately ends up doing is it allows you to buy all your materials exempt from tax, but you ultimately have to pay three and a half percent contractor's tax on the gross receipts derived from the actual project itself. Right. But there's some very specific rules that you have to go through with Mississippi on these contracts. It trips people up all the time. If you are a contractor and you're trying to do work in the state of Mississippi, better call somebody. [00:14:36] Speaker B: What were they trying to alleviate, you think, with that? [00:14:40] Speaker A: In all honesty, what it is, is it's alleviating basically contractors that will cruise into a state and do a bunch of work and bail out on a job and ultimately never pay any use tax. They could bring their materials in from outside the state. They could bring people in and actually perform the services and then ultimately leave the state, and they would never be subject to the tax and Mississippi wouldn't get its cut. And so by doing this, it's forcing contractors to I mean, number one, when you go through an inspection and you go to get permitted and do a bunch of other things, since this tax is typically imposed on the prime contractor since it's imposed on the prime. If they're trying to pull permits and they can't show a valid MPC, they're not going to get permitted. And so it is a known component of doing large scale jobs, jobs that are, like I said, in excess of $10,000 in Mississippi, that you have to get this MPC and you have to go through it, and Mississippi expects to get their cut. It's very interesting. It also alleviates people skirting income tax requirements and everything else within the state, too. So it's a law that's been around for a while. Just a lot of people don't understand the ins and outs of it. And I answer questions about it all the time. People are always calling me like, what is this contractor's tax garbage? They came out and did a crane inspection on one of my jobs, and now they're not going to give me a permit and I'm stuck doing well. How much is your crane job? It's like 180 grand. Yeah, dude, you got a problem. You got to turn around and do this. If you're not working underneath a prime or if you're working directly for the customer, congratulations. You're considered a prime and you're subject to it. [00:16:14] Speaker B: Got it. Okay, so not necessarily new legislative updates, but just an ongoing issue you see in Mississippi. [00:16:19] Speaker A: 100%. Yeah. Great state. Everybody likes Mississippi. [00:16:22] Speaker B: Oh, yeah. [00:16:23] Speaker A: It's all so fun to spell. [00:16:24] Speaker B: Absolutely. There's a song that goes with it. M-I-S-S-I-S-S-I-P-P-I. [00:16:29] Speaker A: There you go. [00:16:29] Speaker B: Yeah, so there you go. It's easy to spell now. All right, well, we're going to take a quick break, and we'll be back in a minute. [00:16:35] Speaker A: Perfect. [00:16:39] Speaker B: Welcome back to Taxing Poetic. [00:16:41] Speaker A: And, you know, before we get into our next segment, I've got to give you guys a quick update. Like, I literally received our first communication from Taxi MC Taxface regarding an issue on one of our episodes. He's actually calling us out and got something wrong. Yeah, apparently we misspoke in our Wayfair episode. [00:17:01] Speaker B: No way, right? [00:17:03] Speaker A: Like, we don't know enough about Wayfair. Right already. [00:17:05] Speaker B: I don't believe it. Well, what did Mr. Or Mrs. McTax face say? [00:17:11] Speaker A: Yeah, basically said that we stated that 45 states had a sales tax imposed on remote sellers, and it was like, no, that's actually incorrect. It's 46. Why would they say 46, Jenny? [00:17:27] Speaker B: If I had to guess, they were incorrect in thinking that Alaska has a statewide sales tax. [00:17:33] Speaker A: There you go. Alaska does have a remote seller commission, but we don't really consider it to be a statewide tax. Why is that? [00:17:38] Speaker B: Because they only have local tax. [00:17:40] Speaker A: So if you really wanted to call it correct, you'd have to take the 70 some OD jurisdictions in Alaska and add them all to the rest of the states. But guess what we're not doing. [00:17:50] Speaker B: Yeah, don't don't step to us. Taxi Mctack space. [00:17:53] Speaker A: I mean, seriously, you're going to bow up? [00:17:55] Speaker B: Yes. [00:17:55] Speaker C: Like, no, they were wrong. [00:17:57] Speaker A: I mean, in our interpretations, and this is the best part about sales tax. Right. We always say depends on the state. We always say dots know. It depends congratulations. It depends on your interpretation of it. Frankly, we don't think that it's. [00:18:10] Speaker B: Yeah. [00:18:11] Speaker A: So you do have to register in Alaska. You do have a remote know commission in Alaska that you have to report to, but it's for all the little cities, like, you know, North Pole. North Pole. [00:18:23] Speaker B: Yeah. [00:18:23] Speaker A: There you go. [00:18:24] Speaker C: Good for Taxing with taxpayers knowing so much about Wasilla. [00:18:28] Speaker B: Whatever. In your face, taxing with taxpayers, where. [00:18:30] Speaker A: Apparently you can see, you know, somebody's back porch in Wasilla, Alaska. [00:18:35] Speaker B: You always got to go there, don't you? Oh, Lord. All right, so that anyway, anywho, so. [00:18:41] Speaker A: We got to hop into a quiz. Pop quiz hotshot. [00:18:45] Speaker C: Yes, we have a pop quiz hotshot. [00:18:47] Speaker A: Do we ever get a score update? Like, do we get an overall score? [00:18:50] Speaker C: Since people don't need to listen in order, it's difficult to say what the score? [00:18:54] Speaker A: Really? [00:18:54] Speaker C: The only time the score is really going to come into play is the last episode of the season. [00:18:59] Speaker A: We, as the participants, have to fly by the seat of our pants. [00:19:02] Speaker B: Yeah. It's just going to be a surprise to both of us. [00:19:04] Speaker A: Well, it's ultimate competition every week, then. [00:19:06] Speaker C: Yeah, ultimate competition every week. [00:19:07] Speaker A: Absolutely. [00:19:07] Speaker B: So JB's keeping track, and he'll let us know at the end of the season. [00:19:10] Speaker A: I know I'm winning already. [00:19:11] Speaker B: That up. That's fine. [00:19:12] Speaker A: Yeah. [00:19:13] Speaker C: Okay, so this first question is for Jenny, which of the way down yonder states is not a oh, shut up, Tim. [00:19:22] Speaker B: I got this one. It's kentucky is a commonwealth, right? Dang it. [00:19:25] Speaker C: Kentucky commonwealth. That is good job. That is correct. [00:19:28] Speaker B: Yay yay, me. [00:19:29] Speaker A: That's my favorite, like, bar trivia question. Love it. [00:19:33] Speaker C: There's a lot of commonwealth. There are actually most states aren't states. [00:19:37] Speaker A: Actually, most states. [00:19:38] Speaker B: Most states aren't states. That was deep. [00:19:41] Speaker C: Yeah. [00:19:42] Speaker B: Wow. [00:19:43] Speaker A: Okay. Rhode island has, like, a really weird name too. Isn't it, like, Rhode Island and the something very long. Yeah, something very long in the collection of island territories. Garbage like that. Yeah, it's pretty interesting. [00:19:55] Speaker B: Garbage. Okay, you just offended. [00:19:58] Speaker A: Oh, boy. I just said garbage. [00:20:01] Speaker C: Okay, sorry. Here's. Tim, which of these does not have a local sales tax? [00:20:07] Speaker A: Which of the states? That would be Mississippi. [00:20:11] Speaker C: It's actually Kentucky. [00:20:13] Speaker A: Wait, what? [00:20:14] Speaker B: It's a statewide 6% sales tax rate. You need to start filing more return to stay on top of things here. [00:20:21] Speaker C: Does that have something to do with the commonwealth, or is that just it's. [00:20:24] Speaker B: Just the state, I think, just chooses to have several. Like Massachusetts and others. They just have a statewide sales tax. Yeah, it's just 6%. Interesting. [00:20:31] Speaker A: Okay. [00:20:32] Speaker B: Yeah. [00:20:32] Speaker C: Okay. [00:20:33] Speaker B: I'm having second hand embarrassment for you right now. [00:20:35] Speaker A: I'm embarrassed for myself. I know another state that only does but yeah, no. Anyways, I screwed up. [00:20:40] Speaker C: All right, Jenny, which of these does not have state income tax? [00:20:44] Speaker B: Tennessee. [00:20:46] Speaker C: Tennessee is correct. [00:20:47] Speaker A: Why is she getting all the softballs? [00:20:49] Speaker B: Dude, I got yours. You got yours wrong. These aren't yeah, I'm on fire. [00:20:52] Speaker C: Not for me. I didn't know that. Okay, tim, which of these states is considered home rule? [00:20:59] Speaker A: Alabama. [00:21:00] Speaker C: Yeah, so I don't know what that is. What's home rule? [00:21:02] Speaker A: Home rule is where local jurisdictions can actually collect and administer their own taxes, so you actually have to submit the return to the local jurisdiction as opposed to submitting it into and collecting the state. So, like, in Georgia? Georgia is a state administered jurisdiction, so we have very complex layers of taxation. You have Esplast, T, SPLOST, and that's special purpose local option sales taxes. Right. For education, for transportation. You also have county city for the city of Atlanta. And state rates. Well, you pay all that into the state, and you have to break it all down on the st three on the state return, but then the state administers those taxes out to all the jurisdictions in a periodic basis, whereas in Alabama, a lot of those jurisdictions self administer them. Now the state's actually doing a lot more through the one spot, right? [00:21:53] Speaker B: Avenue. [00:21:54] Speaker A: Yep, yep. So we can actually administer a lot of these local jurisdictions through singular portals, but they still technically are receiving their direct cut from your submission. That's what a home rule jury. [00:22:05] Speaker C: What's the benefit? [00:22:06] Speaker A: The benefit is the jurisdictions don't have to rely on the state on doing things right. That's why Georgia, there was a lot of questions when Georgia first administered taxes as to whether the state was actually giving out the correct funds. Right. So this way, the states, just like in Colorado, you can either trust the state to do it for you through their systems, or the jurisdictions say, hey, it's not that we don't trust the state, but we just want to administer it ourselves. And it's easier for us to just collect the tax and take it immediately. [00:22:32] Speaker B: And Louisiana, they're another home rule state. [00:22:34] Speaker A: Bingo. And we also technically have a number of different home rules, too. When you're submitting local food and beverage taxes right. To these local jurisdictions, and same thing with hospitality taxes. Sometimes you have to submit a return. So just saying that a state is particularly homerule. There's other jurisdictions that are out there that are homerulishing. [00:22:53] Speaker B: And Alaska Taxi. MC Tax Base. [00:22:55] Speaker A: Bingo. And Rhode Island's official name, by the way, is Rhode Island and the Providence Plantations. [00:23:02] Speaker B: What? I honestly never knew that. [00:23:04] Speaker C: Too soon. [00:23:05] Speaker B: Yeah, too soon. [00:23:07] Speaker C: All right. Too soon. This one is going to be this is going to be on me because the next question is what is home rule? And I just wanted to know legitimately and had Tim explain it. But that was Jenny. [00:23:23] Speaker A: That was Jenny's question. That is fantastic. [00:23:25] Speaker B: I would have gotten that correct, though. [00:23:27] Speaker C: Yeah. So do you want me to just give yes. I'm going to come up with another question. All right. For Jenny. Only two cities in Mississippi have local taxes. [00:23:38] Speaker B: What are, um oh, my gosh. [00:23:42] Speaker A: Oh, this is why Mississippi has local, right? [00:23:46] Speaker B: What? [00:23:46] Speaker A: Why? All you need to cut that out. Did I just hear that incorrectly? What did he say? [00:23:50] Speaker B: He said there's two locals in Mississippi. [00:23:53] Speaker A: That's what I said. This is why Mississippi has local taxes. Yeah. [00:23:56] Speaker C: Because only two cities because I said. [00:23:57] Speaker A: That Mississippi had a state based rate, and I can't think of the two jurisdictions. What is it? Jackson and something else. [00:24:03] Speaker B: Oh, yeah. Jackson. [00:24:04] Speaker A: And I'm not going to give you the other one. [00:24:06] Speaker C: I was going to say you're helping her a lot. [00:24:07] Speaker B: I know. I don't know, though. What is it, Jackson? [00:24:11] Speaker A: Tupelo. [00:24:12] Speaker B: Tupelo. Really? [00:24:12] Speaker A: Did you know that the birthplace of the front door? [00:24:19] Speaker B: I know. So, yeah. All right, give me a zero for that one. [00:24:23] Speaker C: Okay. [00:24:23] Speaker B: Darn it. [00:24:24] Speaker C: Jenny singing Jailhouse Rock what is the applicable form called to be tax exempt in the state of Alabama? [00:24:33] Speaker A: Whoa. Well, what kind of exemption? [00:24:36] Speaker C: So let's go with a wholesaler exemption. [00:24:39] Speaker A: It's a resale certificate. Right. Alabama resale certificate. [00:24:44] Speaker C: It's called an St. [00:24:47] Speaker A: You're asking for the form name? What do you think I am, chat GPT? Tim? No. I am chat GPT, not chat GP. Tim. There are certain forms that I can regurgitate. The SPD three x 40 niner is not one of four niner niner in there talking on a walkie talkie. [00:25:08] Speaker B: Walkie talkie? [00:25:09] Speaker C: Well, sorry. You got that wrong. [00:25:11] Speaker B: Yes. [00:25:12] Speaker C: It's on me a little bit for breaking up. Donna, I'll add you to a list of people to apologize to for not reading your quiz before. [00:25:21] Speaker B: Donna, thank you for your help, my precious. [00:25:24] Speaker A: All right, Jenny in her freaking Golem voice over there. Okay, so let's get to our history lesson. [00:25:32] Speaker B: Yes. [00:25:32] Speaker A: What are we going to be talking about today there? Oh, great educated one? [00:25:35] Speaker B: Our history lesson for today is about sales tax holidays, and we were inspired by Tennessee recently passing a sales tax holiday on the retail sale of food and food ingredients, aka groceries, and it's going to be a three month holiday from August 1, 2023 through October 31 of 2023. [00:25:57] Speaker A: Did you say three months? [00:25:59] Speaker B: It is a three month sales tax holiday. [00:26:01] Speaker A: That doesn't sound like a holiday to me. That sounds like an awesome vacation. That's like a sabbatical. That's what we're going to call it now, a tax sabbatical. [00:26:08] Speaker B: Tax sabbatical. [00:26:09] Speaker C: Tax sabbatical. [00:26:11] Speaker B: I'm on board for that 100%. When are they going to have one in Hawaii? [00:26:15] Speaker A: You still need to get there and fight some audits. I'm telling you, like, I need some in person conferences with the Department of Revenue. [00:26:22] Speaker B: Anyways, so basically, let's talk about what's a sales tax holiday. It's kind of intuitive, but some states have these already and have had them for years, where sometimes when you're going back to school or they're trying to stimulate the economy, they're going to offer a consumer not to pay sales tax on certain items, correct? [00:26:44] Speaker A: Bingo. Yes. Most typically, it's back to school holidays. Right. We see a lot of back to Tennessee as typically a three day back to school holiday. It's been that way for years, and they always do it in the end of July. And it'll apply to anything that is related to clothing items, back to school shopping items. It can be on personal computers and tablets that are less than $1,500. It'll apply to all those things. [00:27:11] Speaker B: Yes. So, yeah, we were just going to tax poetic about some pros and cons and what we like don't like about sales tax holidays. Again, obviously as consumers, we really enjoy them because we're paying less for certain items that we would hopefully normally buy. [00:27:27] Speaker A: Right. [00:27:28] Speaker B: But if you're on the other end of sales tax compliance or a retailer or whatever, it's really tough to update your systems for this, right, Tim? [00:27:39] Speaker A: Yes. Especially when we're talking item specific exemptions. A lot of people haven't set up their POS systems to have these specific exemptions for certain types of items, so it tends to send people scrambling. Right. So you have a legislative body that decides, hey, we're going to do a sales tax holiday this year. Okay, well, what's it going to be on? Well, it's going to be on this group of specific items. And if you're like a Kohl's or if you're Target or Walmart or whoever, you have to make sure that. Those groups. First off, the items have been categorized into groups number one. And then you have to set up those groups as being categorically exempt when your system sees that for those specific dates. That is very complex in a systems environment, especially to be able to get it done in a three to four month period, right? Because a lot of times we're not going to hear about these sales tax holidays until legislative session is over, which is usually what, March, April, timeframe of a year. And so then they'll pass and approve these sales tax holidays. And guess what? Now think about Tennessee, even though everybody already understands Tennessee's, but if it was something new. So if Georgia decides to do this, we only have three or four months to implement that in a system. That's an awful lot to ask an It team or a group of tax professionals to do that's. Sometimes where we come in, we can help you out, do that. There's other professionals that are out there can do that. But you have to get with somebody who understands tax technology as well as the legislative components of the tax. And also the compliance piece, right? Because the compliance piece is going to be difficult to figure out how you're going to get the information out of the system and make sure that it's. [00:29:15] Speaker B: All working technology wise. It's probably an advantage that it's three months, because when it's only like three days, it's horrible. That's really tough. [00:29:22] Speaker A: You're doing all this work for literally three days of exemptions, and especially when you're a hybrid retailer, it's very difficult, right? It'd be nice if all we did was sell pens and notebooks, but unfortunately, the majority of these retailers sell a heck of a lot more than that, right? [00:29:39] Speaker C: That's why three months, maybe that's why. [00:29:41] Speaker B: And I think, like we were saying earlier, I think these sales tax holidays have great intentions for this one's, for groceries. And it's basically, from what our research told us, was to help alleviate low income households with inflation costs and really trying to give people a break from the higher prices. [00:30:05] Speaker A: I'm going to offer the dissenting opinion on that. See, to me, this is what I find so interesting about government and the passing and management of government policy. So we've had this inflation issue for now for a number of months, right? It's been a problem and we know that it's been impacting our economy drastically over the last 16 to 18 months. But now Tennessee decides to pass this holiday and they pass it and they specifically talk about it. They're like, oh yeah, we wanted to alleviate the pressure on increases in food prices. And they cited eggs as a specific example. Well, you had egg prices that for a while during the summer were over $5 a dozen. Well, egg prices have already come back down and now they're like, hey, guess what, we're just going to go ahead and do the sales tax holiday. Well, you're a day late and a dollar short. Right. And that's what's very difficult. And I feel for them, I truly do. When you're trying to do policy and you're trying to do the right thing for consumers, but you're a little bit on the lagging component. [00:31:06] Speaker B: Well, I think every little bit helps. Dissenting opinion to your dissenting opinion is august 1 is usually the beginning of the school year. [00:31:13] Speaker A: Yes. [00:31:14] Speaker B: A lot of these family students who don't have food insecurity during the summer months, this might help these families as the kids go back to school. [00:31:22] Speaker A: And I love that. I mean, I think the sales tax holidays for back to school stuff is absolutely amazing. And I think historically, with Tennessee doing that, a lot of other states have followed suit. I think it's a really good thing. What I truly found interesting was the Tennessee Works Act, that basically this three month grocery thing kind of fell under. I was like, that's kind of interesting. It's an interesting way to try to stimulate the economy when you're on the back end of the wave. But that's just my opinion. [00:31:47] Speaker B: Right? No, that's okay. We all know what they say about opinions. [00:31:50] Speaker A: Bingo. [00:31:52] Speaker C: You and me. [00:31:54] Speaker A: Wait a minute. No. [00:32:00] Speaker B: Okay, so let's get back to our history lesson. So as we were researching this, I thought it was so interesting. I thought, when was the first sales tax holiday? I don't know. So the first sales tax holiday was in Michigan in 1980, and it was on automobiles, which, surprise, surprise, are mostly produced back then in Michigan and Detroit. And they were offering sales tax holidays on automobiles purchase to help stimulate the economy for automobiles. Correct? [00:32:31] Speaker A: That's exactly right. Think about it. What were we coming out of in 1980? [00:32:36] Speaker B: A recession. Correct. [00:32:37] Speaker A: Right. Big time recession and super high gas prices and super long gas lines and things of that nature. And that had a massive impact on what industry? Automobile. [00:32:47] Speaker B: Automobile. And it helped them boost some sagging sales. So, yeah, that was the first time something like that was offered. And it worked. But however, the idea did not catch on until New York, in 1997 decided to offer a sales tax holiday on clothing items less than $500 because they were noticing that folks were traveling into nearby New Jersey to purchase clothes, say, for back to school or for the winter or whatever, because clothing is tax exempt in New Jersey. [00:33:18] Speaker A: There you go. [00:33:19] Speaker B: So they decided to go ahead and offer that holiday then, I think, Tim, didn't they make that exemption permanent? [00:33:25] Speaker A: There's definitely clothing exemptions all throughout the Northeast. It's quite interesting that a lot of the states that are just all bordering each other right there, when you look at Pennsylvania, New Jersey, New York, Connecticut, they all have some form of exemption on clothing, basically to follow suit with each other's loss. And they're some of the only jurisdictions in the US. That actually exempt clothing purchases that are less they have a floor, right? Yeah, I guess it's a floor. It's basically anything less than 125, or in some cases, it's 100 or 150. Boom. Then you'll turn around and you don't pay any tax, but any items that are over that you ultimately pay the sales tax on. [00:34:03] Speaker B: Because I think in the Northeast, you probably have to wear more clothes than you do in Florida. [00:34:07] Speaker A: That's exactly so. [00:34:08] Speaker B: That's probably why they all need to have some sort of so then there. [00:34:14] Speaker A: Must be some sort of exemption in Florida on jean shorts, though. University of Florida. Is that right? [00:34:19] Speaker B: I can't believe you went there. [00:34:20] Speaker A: I had to. I'm a dog fan. Come on. Go gators boo. The swamp. The biggest thing is just understanding when those holidays fall, doing the systematic implementation of it. Once you do it once and you kind of get it under your belt, then the biggest thing is understanding people. If a state has never had a holiday before, organizing and categorizing those items and making sure that they're in the appropriate buckets that can fall into that. So your system can pick it up appropriately. But we can help you do that. Or another tax professional. [00:34:51] Speaker C: No, just us. Just us. [00:34:53] Speaker A: Shameless plug. [00:34:53] Speaker B: For shameless plug. [00:34:54] Speaker C: All right. Okay. We have some people to apologize to before it's actually a long list. The Alan Jackson fans, just in case. Who knows the Chattahoochee River, which is actually not in Tennessee. [00:35:05] Speaker A: See? Thank you. I knew it. [00:35:07] Speaker C: Okay. [00:35:07] Speaker A: Thank you so much. Starts in Georgia and flows to the Gulf of Mexico. [00:35:11] Speaker C: I'm sure people started writing emails immediately as soon as we're yeah, yeah, definitely. It's in Tennessee. [00:35:15] Speaker B: I was a B student in geography. [00:35:17] Speaker C: Kentucky lobbyists. Rock shiners and engravers of Kentucky. [00:35:22] Speaker B: I do not apologize to Kentucky lobbyists. [00:35:24] Speaker C: I made some insinuations about the education in Alabama. Sorry. [00:35:27] Speaker A: I think someone needs to apologize for comparing lapidary services to a strip club. [00:35:33] Speaker C: Lapidary. People who know what the word lapidary means. John McCain. Republicans as you made fun of their queen. [00:35:42] Speaker A: Oh, my gosh. [00:35:43] Speaker C: Rhode island. Alaska. Donna, this is from me for not reading all the tax questions before asking them and then asking one of those questions just offhand Tennessee legislators who are just trying to help the Florida and their jean shorts and UGA people who are bringing the mullet back. Long list. [00:36:06] Speaker A: I'm part of that UGA fandom. It's just if I could grow a mullet, I could, unfortunately. [00:36:11] Speaker C: So, yeah, you have to say sorry. [00:36:13] Speaker A: I apologize. [00:36:14] Speaker B: I apologize to everyone but Kentucky lobbyists. Sorry. [00:36:18] Speaker C: It's never all of them. We can never just apologize all them. [00:36:20] Speaker A: I mean, literally, Jenny has drinking hater aid by the gallon. She has had her hater aid fail. [00:36:26] Speaker B: I mean, you guys can apologize, but thank you for listening to us today on Taxing Poetic. A reminder you don't have to listen to these episodes in order and you can find us on Stitcher, Spotify, Apple, Google and you can watch and listen on YouTube. [00:36:40] Speaker A: Yes, please like and subscribe. We absolutely love hearing from you all, even if you are taxi MC Taxface and probably have given us a one star rating. Please rate us and continue with the questions. We love interactions with the audience, so thank you very much. Have a great day.