CPA Practice Advisor - 19

FEATURE

As States Look to Bounce Back, Tax
Leaders Need to Engage with Lawmakers
By Michael J. Bernard, J.D.

THE CORONAVIRUS PANDEMIC decimated budgets across the
country in the first half of 2020. As of this writing, 25 states
passed emergency budget legislation to address COVID-19, totaling more than $1 billion. Some of that money was earmarked
for other programs and some was pulled from reserve funds,
but much of it will need to be recovered to bring state budgets
back into the black.
Simply put, emergency spending
combined with less tax revenue due
to shelter-in-place orders means that
states are going to be looking to rebalance budgets-likely by enacting new
tax-related laws and rule changes
in the face of revenue shortfalls and
budget deficits.
The problem with all of this? At
least fifty jurisdictions are looking at
different ways to claw back revenues
and will define various timelines and
means for how this will be accomplished. That begs the question of how
tax managers can prepare in a world
of uncertainty, especially at a time
when companies are trying to address
unprecedented challenges.
Industries that did well during
the pandemic-such as grocery stores,
delivery services and e-retailers-are
likely to face more significant tax
impacts as states will not want to
burden businesses hit hardest by the
crisis. Service industries like hotels,
sports and other entertainment saw
spending decrease by 90% compared to
pre-COVID estimates, according to the
Center on Budget and Policy Priorities.
Those businesses might not be able to
withstand a tax hike.
Especially in times of crisis, states
are more inclined to pass legislation
that provides a temporary fix. Such
regulations, however, could end up

becoming detrimental to businesses
if left in place long enough. Therefore,
finance leaders and tax executives need
to engage with state tax policymakers,
which can help shape thoughtful new
laws. As the cost of rushed and poorly
crafted tax regulations can prevent a
swifter recovery, it is necessary for the
business community to have a seat at
the table among policymakers and a
stronger voice in the way tax policy is
crafted.
By engaging at the state level,
companies may be able to limit any
additional taxes by type or jurisdiction.
That will be important as businesses
already face a multitude of varying
tax rules that cannot be
managed manually. Adding
more would intensify the
already considerable tax
compliance burden.
Transact ion
tax
changes are on pace to
reach the second highest
total in the past 11 years.
150 city sales tax rate
adjustments have occurred
to date this year-with all
but 10 being rate hikes-and
those numbers aren't likely to
slow down.
It would be deleterious for tax
officers to not take into account unfinished business regarding marketplace

facilitators. Many legislatures were
poised to enact new post-Wayfair
marketplace facilitator laws or make
already passed laws more uniform.
Lawmakers will likely want to pick
the conversation back up, as it could
lead to another stream of sorely needed
revenue.
Despite this dizzying array of new
rules coming at tax managers, there
are ways to manage the process.
Accurate, up-to-date tax data and
automated processes can greatly
reduce the indirect tax management
complexity and keep companies from
running afoul of tax laws they might
not have known even existed.
The next few months-and
beyond-will not be easy for businesses navigating unchartered waters.
Corporate tax leaders need to work
with lawmakers to help them better understand potential short- and
long-term implications of regulatory
shifts. ■
Michael J. Bernard is Chief Tax Officer, Vertex,
Inc.

AUGUST 2020 ■

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19


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CPA Practice Advisor

Table of Contents for the Digital Edition of CPA Practice Advisor

From the Editor: NASBA: Is it Time for a COVID-19 CPE Break?
Who Really Won the SCOTUS Ruling on Trump's Taxes?
From the Trenches: Do You Have a Clear Vision for Tax Document Automation?
Innovation Awards Announced
Multi-State Taxation: As States Look to Bounce Back, Tax Leaders Need to Engage with Lawmakers
2020 Product Review: Tax Document Automation
The Leadership Advisor: Communication Methods in Our New Work Environment
2020 Product Review: Fixed Asset Management
Health-Related Benefits Under the CARES Act
2020 Accountants Product & Service Guide
State Income Tax Complexity
What is a Series LLC and Why Your Clients Should Care
Apps We Love: At-Home Education Apps
The Millennial Advisor: Office Space: You're Not Home Alone
The ProAdvisor Spotlight: Streamlined Invoicing and Tasks Among New Features in QuickBooks Online Advanced
Marketing Your Firm: SEO Keyword Tips to Boost Your Firm's Google Ranking
Year in the Life of a Payroll Accountant: A Primer on IRS Continuous Wage Garnishments
The Labor Law Advisor: Age and Other Post-Pandemic Discrimination Claims
How to Modernize Your Firm
CARES Act Causing Business Valuation Concerns
How to Conduct a Business Insight Review
AICPA News
Bridging the Gap: Creating a Data Culture
CPA Practice Advisor - 1
CPA Practice Advisor - 2
CPA Practice Advisor - 3
CPA Practice Advisor - From the Editor: NASBA: Is it Time for a COVID-19 CPE Break?
CPA Practice Advisor - Who Really Won the SCOTUS Ruling on Trump's Taxes?
CPA Practice Advisor - From the Trenches: Do You Have a Clear Vision for Tax Document Automation?
CPA Practice Advisor - 7
CPA Practice Advisor - Innovation Awards Announced
CPA Practice Advisor - 9
CPA Practice Advisor - 10
CPA Practice Advisor - 11
CPA Practice Advisor - 12
CPA Practice Advisor - 13
CPA Practice Advisor - 14
CPA Practice Advisor - 15
CPA Practice Advisor - 16
CPA Practice Advisor - 17
CPA Practice Advisor - 18
CPA Practice Advisor - Multi-State Taxation: As States Look to Bounce Back, Tax Leaders Need to Engage with Lawmakers
CPA Practice Advisor - 2020 Product Review: Tax Document Automation
CPA Practice Advisor - 21
CPA Practice Advisor - 22
CPA Practice Advisor - The Leadership Advisor: Communication Methods in Our New Work Environment
CPA Practice Advisor - 2020 Product Review: Fixed Asset Management
CPA Practice Advisor - 25
CPA Practice Advisor - 26
CPA Practice Advisor - Health-Related Benefits Under the CARES Act
CPA Practice Advisor - 2020 Accountants Product & Service Guide
CPA Practice Advisor - 29
CPA Practice Advisor - State Income Tax Complexity
CPA Practice Advisor - What is a Series LLC and Why Your Clients Should Care
CPA Practice Advisor - Apps We Love: At-Home Education Apps
CPA Practice Advisor - The Millennial Advisor: Office Space: You're Not Home Alone
CPA Practice Advisor - The ProAdvisor Spotlight: Streamlined Invoicing and Tasks Among New Features in QuickBooks Online Advanced
CPA Practice Advisor - Marketing Your Firm: SEO Keyword Tips to Boost Your Firm's Google Ranking
CPA Practice Advisor - Year in the Life of a Payroll Accountant: A Primer on IRS Continuous Wage Garnishments
CPA Practice Advisor - 37
CPA Practice Advisor - The Labor Law Advisor: Age and Other Post-Pandemic Discrimination Claims
CPA Practice Advisor - How to Modernize Your Firm
CPA Practice Advisor - 40
CPA Practice Advisor - 41
CPA Practice Advisor - CARES Act Causing Business Valuation Concerns
CPA Practice Advisor - 43
CPA Practice Advisor - How to Conduct a Business Insight Review
CPA Practice Advisor - 45
CPA Practice Advisor - AICPA News
CPA Practice Advisor - Bridging the Gap: Creating a Data Culture
CPA Practice Advisor - 48
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