CFOs rank state tax environments in recent study

Sovos
November 4, 2014

A recent report by CFO, the 2014 CFO State Tax Survey, examined how 78 tax directors responded to state tax compliance changes implemented in 2013. These directors were asked to rank states based on various tax-related issues.

The report noted certain states are increasing their tax collection efforts for out-of-state corporations.

“One way of doing so is by asserting economic nexus – a threshold of business activity that makes an out-of-state company subject to income tax (as opposed to sales and use tax) even without a physical presence in the state,” the report said.

When asked which states were most aggressive in this regard, respondents ranked California as the top state. California was followed by New York, New Jersey, Michigan and Massachusetts. In regard to the states that are least aggressive in asserting economic nexus, South Dakota, Nevada, Virginia and Wyoming, which tied for third, and Kansas and Maine were the top 5.

Tax directors aren’t fond of California
California held a position in the top five spots for all other negative dimensions of the survey. For overall tax environment, it tied with New York for least fair and predictable. When it came to asserting sales and use tax nexus, California was ranked most aggressive, and held No. 1 for likelihood of enacting corporate tax rate reform and aggressiveness in pursuing clawbacks of business tax incentives granted to individual companies.

The only ranking where California wasn’t seen as the most unfavorable was in regard to whether respondents thought the state’s fiscal condition would have adverse effects on their companies in the next year. The Golden State followed behind Illinois at No. 2 for this question.

Companies must understand their state tax reporting obligations
The IRS has made significant efforts to close the tax gap, which refers to the disparity between actual tax revenues that are collected and what the agency should be collecting. At the state level, many reforms and actions have been put in place to accomplish the goal of improving tax collection efforts.

In fiscal year 2011, Idaho beefed up its efforts by adding 48 temporary auditors and collectors. This move led to $26.3 million in collected taxes, far exceeding the original $11.5 million estimate. As states increase their enforcement, companies need to be aware of reporting responsibilities to avoid penalties.

For more information about state tax reporting, check out our education section.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Sovos

Sovos is a global provider of tax, compliance and trust solutions and services that enable businesses to navigate an increasingly regulated world with true confidence. Purpose-built for always-on compliance capabilities, our scalable IT-driven solutions meet the demands of an evolving and complex global regulatory landscape. Sovos’ cloud-based software platform provides an unparalleled level of integration with business applications and government compliance processes. More than 100,000 customers in 100+ countries – including half the Fortune 500 – trust Sovos for their compliance needs. Sovos annually processes more than three billion transactions across 19,000 global tax jurisdictions. Bolstered by a robust partner program more than 400 strong, Sovos brings to bear an unrivaled global network for companies across industries and geographies. Founded in 1979, Sovos has operations across the Americas and Europe, and is owned by Hg and TA Associates.
Share this post

North America Tax Information Reporting
March 22, 2024
Market Conduct Annual Statement Reminders and More

On the second Wednesday of each month, Sovos experts host a 30-minute webinar, Water Cooler Wednesday, to share the latest updates on statutory filings. In March, Sarah Stubbs shared information about the many filings due after March 1, from Market Conduct Annual Statements to health supplements for P&C and life insurers writing A&H businesses and […]

North America ShipCompliant
March 21, 2024
How Producers Can Build a DtC Shipping Market

Direct-to-consumer (DtC) shipping has become one of the leading sales models for businesses of all sizes and in all markets. The idea of connecting directly with consumers is notably attractive, as it helps brands develop a personal relationship and avoid costly distribution chains. Yet, for all its popularity, DtC is often a hard concept to […]

North America ShipCompliant
March 20, 2024
Key Findings from the 2024 DtC Beer Shipping Report

This March, Sovos ShipCompliant released the fourth annual Direct-to-Consumer Beer Shipping Report in partnership with the Brewers Association. The DtC beer shipping report features exclusive insights on the regulatory state of the direct-to-consumer (DtC) channel, Brewers Association’s perspective and key data from a consumer preferences survey. Let’s take a deeper dive into some of the […]

March 20, 2024
As the World Gets Smaller, Think Bigger About Global Tax Compliance

For the past few weeks back, my colleagues and I have been talking a lot about the importance of a global strategy when it comes to addressing today’s modern tax environments. On the heels of Sovos introducing the Sovos Compliance Cloud, many in our company’s leadership team have blogged about related topics and the critical […]

North America ShipCompliant
March 12, 2024
Florida HR 583 Set to Uncork Larger Format Wine Bottles

This bill was signed into law on March 28, 2024 and takes effect July 1, 2024. Florida wine lovers could soon enjoy a bigger selection of bottles based on a recent bill passed by the state’s legislature (HR 583) that would remove the existing cap on wine bottle sizes. What is Florida’s HR 583 bill? […]