The Power of Data: Vertex’s Approach to Keeping Pace with Tax Changes Part 2

In this episode of the SALTovation podcast, we continue our conversation with Mike Bernard, VP of Tax Content and Chief Tax Officer at Vertex, a global provider of indirect tax software solutions. We examine the threefold increase in fee impositions within three years, underpinning the expectation of continued expansion in this domain. We also explore the burgeoning landscape of state and local taxation, where green fees, neighborhood assessments, and intricate policies intertwine with local economies and legislative nuances. Mike also shares insights on the future of sales and use taxes, the impact of commercial real estate devaluation, and the potential taxation of services. 

Topics discussed in this episode:

• There's been a significant increase in environment-related fees, which is reflective of a broader trend towards eco-conscious taxation.
• Fees are emerging as a preferred alternative to sales tax increases due to the ease of implementation and their transaction-based nature.
• Diverse new fees create operational and compliance challenges for businesses, requiring sophisticated tax software and calculated strategies.
• The sales and use tax is positioned to become more prominent in funding state budgets, especially considering economic downturn resistance and recovery.
• Professional services taxation complexity may continue to be addressed indirectly through audit practices, while explicit taxation of services remains a point of debate.

Quotables

• “Fees can be passed with relative ease. They're easy to audit because it's on normally a per-transaction basis. And so I think if you think about how local communities or local districts want to continue to raise revenue without raising the sales tax rate, these are going to be a significant portion of that. And I will tell you this, a lot of our customers are very aware of this and they want to make sure that at least we stay apprised of making sure that in our monthly data update, we get those fee positions updated with that as well, so that they're charging proper fees as well.” -Mike Bernard [01:43]

• “The devaluation of commercial real estate in the urban cores puts pressure on budgets. So you're seeing this massive kind of revaluation because people are either hybrid work or they're not having to go in five days a week. And so now these commercial buildings are being revalued. And so property tax revenues are starting to be greatly impacted.” -Mike Bernard [13:37]

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