New Tax Laws Passed in California, North Carolina, and Vermont
Several new tax laws have been passed in California, North Carolina, and Vermont, bringing significant changes for digital businesses and remote sellers. These legislative updates aim to address the evolving digital economy and ensure proper tax compliance.
California Senate Approves Digital Tax Bills
On June 27, 2024, the California Senate approved SB 1327, imposing a 7.5% tax on gross receipts from data extraction transactions. This tax applies to online platforms with annual gross receipts of $2.5 billion or more when they sell user information or advertising.
AB 886 was amended and passed by the Senate Judiciary Committee on June 26, 2024, then sent to the Appropriations Committee. The bill requires covered platforms—those with net annual sales or market capitalization over $550 billion, or more than one billion monthly active users—to either compensate digital journalism providers annually or participate in arbitration to determine payments based on advertising revenue. The definition of "covered platform" now excludes companies earning less than 50% of their annual revenue from online platforms, advertising, and search services.
North Carolina Removes Remote Seller Transaction Threshold
North Carolina enacted Session Law 2024-28 on July 1, 2024, eliminating the 200-transaction threshold for remote sellers and marketplace facilitators.
Effective immediately, retailers must collect sales and use tax if their gross sales from remote transactions sourced to North Carolina exceed $100,000 in the previous or current calendar year, including marketplace sales. Marketplace facilitators must also collect tax if their gross sales from all marketplace sellers' transactions sourced to the state exceed $100,000 in the previous or current calendar year.
Vermont Now Taxing SaaS Sales
On June 17, 2024, Vermont enacted HB 887, which imposes sales and use tax on prewritten software accessed remotely, also known as software-as-a-service (SaaS). Effective July 1, 2024, the definition of tangible personal property is revised to include prewritten computer software, regardless of how it is paid for, delivered, or accessed. This new bill repeals the 2015 legislation that stated charges for remotely accessing prewritten software were not considered charges for tangible personal property under 32 V.S.A. Section 9701(7).
