SALTovation: Making Sense of State and Local Tax SALTovation

In this episode of the SALTovation podcast, Judy Vorndran focuses on the current challenges facing the accounting profession, particularly the shrinking pipeline of accountants. Judy highlights how the SALT field offers a dynamic and intellectually stimulating career path. She also discusses the various career trajectories within the field, from litigation to compliance to technology implementation, each presenting unique challenges and opportunities.
*The number of taxing jurisdictions in the U.S. is hard to capture at any one point since it is a moving target. As of June 2024, by some counts, there were over 13,000 taxing jurisdictions combined from 45 states and the District of Columbia, which have a general sales tax, and 38 states with local sales taxes.*


Key Takeaways:Multifaceted Nature of SALT: The interplay between legal analysis and compliance makes the SALT profession both challenging and rewarding.Diverse Career Paths: Opportunities within SALT extend beyond traditional roles, encompassing litigation, technology, and international tax issues, among others.Intellectual Engagement: The logical and strategic aspects of tax law require creativity and decisiveness, making it an engaging field for problem solvers.Educational Gaps: There's an ongoing need for more focused SALT education in accounting and law programs, despite its pervasive impact on everyday life.Practical Impact: Knowledge in SALT is crucial given its daily impact, from sales tax to property tax, underlining the importance of skilled professionals in the field.


Quotables
"As a CPA, you read the laws and you learn to apply them. That makes you a big part of America.” -Judy Vorndran [06:51]"Every single day we are all impacted by state and local taxes, our property taxes on our housing, our sales taxes on our food, our mobile telephone, our WiFi, and our electricity bill. There is tax all over the place in America and we just don't even see the bite-sized pieces it takes out of our pie.” -Judy Vorndran [09:30]


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In this episode of the SALTovation podcast, Diane Yetter, President and Founder of YETTER Tax and the Sales Tax Institute shares insights on streamlining tax administration, the impacts of COVID-19 on tax enforcement, and the critical importance of choosing the right tax automation solutions. Diane also addresses the complications arising from differing taxability rules within Colorado, Louisiana, and Arizona, highlighting the need for conformity and how the current tax automation tools often fall short. 
SALTovation listeners can get 10% off Sales Tax Institute training with discount code: SALTovation10
Key Takeaways:Streamlining Tax Administration: The necessity for states, particularly those with home rule jurisdictions like Colorado, to simplify and unify taxability rules and compliance processes.Impact of COVID-19 on Tax Enforcement: Post-pandemic changes in audit practices and enforcement highlight the need for businesses to stay vigilant and prepared.Tax Automation Pitfalls: Common mistakes businesses make when implementing tax automation solutions without adequate consultation, and the importance of ensuring that tax software meets the specific needs of a company.Transaction Due Diligence: Insights into the due diligence process, especially in M\&A activities, emphasizing the risks of unknown liabilities and the benefits of voluntary disclosure agreements.Global Tax Compliance: Financial and administrative burdens faced by businesses selling internationally, with specific focus on VAT compliance in the EU and other regions.
Quotables
“A lot of these newer, smaller platforms don't realize the complexities and are setting up their taxability rules based solely on what the state rule is.” -Diane Yetter [01:40]"Ignorance is never an excuse. If you are in business, you have an obligation to know all of the laws that apply to your business.” -Diane Yetter [24:15]
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In this episode of the SALTovation podcast, Judy Vorndran discusses the vital role data plays in sales tax compliance, especially in an era where businesses often operate beyond traditional storefronts. She elaborates on why software often fails to completely address tax needs, and takes an in-depth look at the complexities introduced by home rule jurisdictions and how they influence the overall tax compliance profile of a business.
*The number of taxing jurisdictions in the U.S. is hard to capture at any one point since it is a moving target. As of June 2024, by some counts, there were over 13,000 taxing jurisdictions combined from 45 states and the District of Columbia, which have a general sales tax, and 38 states with local sales taxes.*
Topics discussed in this episode:
Data Integration: Properly integrating billing, inventory, and customer data is crucial for accurate sales tax compliance.Software Limitations: Many software solutions offer a minimum viable product that may not cater to specific business needs, highlighting the importance of manual oversight.Nexus and Tax Mapping: Understanding what constitutes nexus and accurately mapping taxability are key to avoiding compliance pitfalls.Home Rule Complexities: Jurisdictions with home rule can significantly complicate the tax compliance process, requiring businesses to stay informed about various state and local regulations.Automation Cycle: The cycle encompasses data gathering, system integration, and continuous updates to reflect changing tax laws and business operations.

Quotables

"You need to understand all the things in the cycle, the entire machinery in your business process. We have had to morph our world of automation to understand that process." -Judy Vorndran [13:25]

“The issue with home rules is that we don't have one system of record. We have several home rule states where there are separate filings for the cities than there are from the state. We have a subsystem” -Judy Vorndran [21:33]


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In this episode of the SALTovation podcast, Diane Yetter, President and Founder of YETTER Tax and the Sales Tax Institute returns to share valuable insights into sales tax education, significant legislative updates, and advances in the industry. Diane discusses the challenges businesses face with Nexus, audit complexities, and the importance of choosing the right sales tax software. She also shares her experience testifying before the U.S Senate Finance Committee, emphasizing the need for standardized e-commerce thresholds and reduced compliance burdens for businesses. 
SALTovation listeners can get 10% off Sales Tax Institute training with discount code: SALTovation10
Topics discussed in this episode:
Sales Tax Nexus: Nexus remains a critical topic, with ongoing debates about physical and economic standards across different states.Audit Preparedness: Post-COVID, states are reactivating audits. Proper documentation and exemption certificate management are more vital than ever.Software Solutions: Companies must carefully select sales tax software that fits their specific needs, considering evolving sales channels and technological changes.US Senate Testimony: Diane Yetter highlighted the importance of reducing compliance burdens and achieving consistent economic Nexus thresholds.Continuous Education: The Sales Tax Institute offers numerous resources, including webinars, on-demand classes, and community forums that help professionals stay updated on tax laws and best practices.

Quotables
“We really need to reduce the burdens on business. Physical nexus standards and inconsistent application of them across the states is an issue. We need to have some sort of consistency so that businesses know exactly what is going to create nexus.” -Diane Yetter [06:32]

“There are many more products on the market today, so being able to share about that and also sharing: How do you go about selecting the right one for your business? There are so many out there, it's so easy to get confused about which one should I actually use. Which one meets your needs?” -Diane Yetter[18:06]


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In this episode of the SALTovation podcast, we continue our conversation with Nancy Prosser, General Counsel at the Multistate Tax Commission, on the purpose and work of the MTC in promoting uniformity and assisting taxpayers with compliance in state and local tax matters. She explains how the MTC develops model statutes and regulations, and the challenges they face in getting states to adopt them. Nancy also shares insights into the selection process for uniformity projects and highlights the current projects focused on the taxation of digital products and partnerships. 
Listen this week as Nancy addresses the complexities of adopting and adapting MTC recommendations and the role of stakeholder input in the process.
Topics discussed in this episode:
The MTC's purpose is to facilitate the appropriate determination of tax liability, promote uniform tax systems, assist taxpayer compliance, and avoid duplicate taxation.States are sovereign entities and thus decide independently whether to adopt MTC's model statutes and recommendations.Uniformity projects at the MTC can be initiated by both member states and public stakeholders, showcasing a collaborative effort toward state tax policy refinement.The MTC actively studies tax policy and aims to offer resources and models to better handle emerging and complex tax issues, like the taxation of digital products and partnerships.
Quotables
“It is an ongoing effort. I don't know that there's ever going to be a perfect way for the MTC to spread the word, but we appreciate opportunities again like this podcast and the technology that we have today to reach out and talk to people and do the best we can to explain who we are and what we do. We are hoping to develop good models that show people how to do it well and do it right.” -Nancy Prosser [10:03]
“The essence to me of those projects are studying these areas to see, okay, what's going on in the economy on this front, what are the states doing or not doing and how, you know, collectively with, again, that stakeholder input, can we perhaps make recommendations that will help everybody do it more easily.” -Nancy Prosser [19:05]


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In this episode of the SALTovation podcast, we speak with Nancy Prosser, General Counsel at the Multistate Tax Commission. Nancy shares her experiences navigating through the complexities of introducing major legislative tax changes and discusses the intricacies of rule-making and policy development. She also talks about the importance of collaboration and transparency within the tax community, be it through engaging with different states' revenue departments or fostering constructive dialogues within the MTC.
Listen this week as we take a look at the evolution of tax legislation and policy from the trenches of legal administration to the broader scope of multi-state coordination. 
 
Topics discussed in this episode:
Nancy Prosser's unconventional journey into state and local tax The implementation of Texas' franchise tax reform: heavy emphasis on rule development, training, and taxpayer education to ensure a smooth transitionThe Multistate Tax Commission plays a pivotal role in addressing interstate tax policy issues and fostering a collaborative approach amongst state tax administrations.The symbiotic relationship between tax professionals across sectors and the mutual growth derived from sharing expertise.


Quotables
“We brought the multistate tax commission in to do training to help taxpayers and practitioners understand how the comptroller's office was going to administer this very major shift.” -Nancy Prosser [08:38]

“As I advanced through the agency and had more of a kind of global perspective on the agency itself in our work, it dawned on me more and more that decisions that were made in terms of tax policy did not just affect Texas, obviously, but did impact the world because so many people were doing business in Texas.” -Nancy Prosser [20:43]


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