Posted: September 20th, 2022

Fact Pattern #1 The legislature in the State of Red enacted a new law re­quiring out-of-state sellers to collect and remit sales tax on the retail sales of goods and ser­vices in the State. Sellers are required to collect and remit the tax to the State,

TaxResearchMemoFormat1 TaxMemoA-21 x
 

Fact Pattern #1

The legislature in the State of Red enacted a new law re­quiring out-of-state sellers to collect and remit sales tax on the retail sales of goods and ser­vices in the State. Sellers are required to collect and remit the tax to the State, but if they do not then in-state consumers are responsible for paying a use tax at the same rate. The Act covers only sellers that, on an annual basis, deliver more than $150,000 of goods or services into the State or engage in 200 or more separate transac­tions for the delivery of goods or services into the State.  Your client is a B-etsy online retailer with no employees or offices in the State of Red and, therefore, has not collected any sales tax under the new Act.  Your client has received a notice from the State of Red requiring your client to register for a license to collect and remit the sales tax. A refusal to do so will result in your client being prohibited from online sales of any goods or services in the State. Your client wants to know if the business must comply with the sales tax requirements of the State of Red.  Also, what implications might this have in other states where your client does business online?

Prepare a tax memorandum for use in advising your client. State the issue(s) to be resolved and make sure to identify the specific authorities (code, statutes, case law etc.) that address your client’s tax issues.  Make sure to weigh authorities both for and against your client’s position.

The memo should be 2 pages, double spaced, one-inch margins, 12pt.

Hint: search engine words “online seller” “sales tax” “court decision”

Tax Research Memo

Sample Format

Your Firm

Your Town and State

Date

Relevant Facts

Specific Issues

Conclusions

Support

Actions to Be Taken

________ Discuss with client. Date discussed ________

________ Prepare a memo or letter to the client

________ Explore other fact situations

________ Other action. Describe: ___________________________

_______________________________________________________

Preparer ________
Reviewer ________
Partner ________

Research Memo A:

Hint: Both fact patterns are based on a recently decided tax case

Fact Pattern #1

The legislature in the State of Red enacted a new law requiring out-of-state sellers to collect and remit sales tax on the retail sales of goods and services in the State. Sellers are required to collect and remit the tax to the State, but if they do not then in-state consumers are responsible for paying a use tax at the same rate. The Act covers only sellers that, on an annual basis, deliver more than $150,000 of goods or services into the State or engage in 200 or more separate transactions for the delivery of goods or services into the State. Your client is a B-etsy online retailer with no employees or offices in the State of Red and, therefore, has not collected any sales tax under the new Act. Your client has received a notice from the State of Red requiring your client to register for a license to collect and remit the sales tax. A refusal to do so will result in your client being prohibited from online sales of any goods or services in the State. Your client wants to know if the business must comply with the sales tax requirements of the State of Red. Also, what implications might this have in other states where your client does business online?

Prepare a tax memorandum for use in advising your client. State the issue(s) to be resolved and make sure to identify the specific authorities (code, statutes, case law etc.) that address your client’s tax issues. Make sure to weigh authorities both for and against your client’s position.

The memo should be 2 pages, double spaced, one-inch margins, 12pt.

Hint: search engine words “online seller” “sales tax” “court decision”

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