The new tax package proposed by House and Senate Democrats this week includes SB 5814 and the identical HB 2083. The bills would subject more services to the sales tax and more products to the other tobacco products tax. They would also require businesses to make a one-time prepayment of sales tax collections. (Fiscal notes are not yet available.)

First, some personal, business, or professional services are already subject to state retail sales tax and retailing business and occupation (B&O) tax (e.g., car parking services). The bills would make the following services subject to the sales tax and the retailing B&O tax, effective Oct. 1, 2025:

• Information technology technical consulting services
• Information technology training services and technical support
• Custom website development services
• Investigation, security services, security monitoring services, and armored car services
• Temporary staffing services
• Advertising services (except printing, publishing, radio, and television)
• Custom software and customization of prewritten computer software
• Data processing services
• Live presentations where participants are connected via the internet
• Digital services primarily involving “the application of human effort by the seller, and the human effort originated after the customer requested the service”

Second, the bills would increase the types of products subject to the tobacco products tax. The definition of “moist snuff” (subject to a tax of at least $2.56 a unit, depending on the size of the product) would be expanded to refer not only to tobacco, but also to “a similar product containing nicotine.” Similarly, the definition of “tobacco products” (subject to a tax of 95% of the sale price) would be expanded to include not only items containing tobacco, but also to products containing “nicotine, whether derived from tobacco or created synthetically.” These changes would take effect Jan. 1, 2026.

Third, the bills would require businesses with at least $3 million in taxable retail sales in calendar year 2026 to make a one-time prepayment of retail sales tax collections to the state. Normally, businesses must remit the sales taxes they collect to the state in the month after the taxable activity occurs. Under current law, retail sales taxes collected in June 2027 must be remitted to the state on July 26, 2027.

The bills would instead require businesses to remit June 2027 sales taxes to the state on June 25, 2027. Because the actual amount of sales taxes collected in June 2027 will not be known before the end of the month, the bills would require businesses to remit an amount equal to 80% of the sales taxes they collected in June 2026. Then, they would pay the remaining amount of June 2027 taxes on July 26, 2027.

June 2027 is the last month of fiscal year 2027 and the last month of the 2025–27 biennium. Consequently, this proposal would shift state sales tax revenues from FY 2028 (2027–29) to FY 2027 (2025–27). This would not be a permanent change to the filing schedule, so revenues for 2027–29 would be lower than otherwise expected.

Shifting the timing of revenues or spending is a common budget gimmick. But it’s unclear why the bills would shift money into FY 2027. As I’ve written, FY 2026 seems to be the most difficult year to balance (the House- and Senate-passed budgets include other shifts to reduce spending and increase resources in FY 2026).

(I wrote about the proposed business and occupation tax changes in the new tax package here.)