Rethinking the State Taxation of Services After COVID-19

As policymakers reconsider indirect taxation overhauls prompted by the COVID-19 pandemic, tax leaders will have an influential advocacy mandate.

In this Tax Notes State article, Vertex Chief Tax Officer Michael Bernard and Principal Economist and Tax Policy Advisor George Salis discuss possible indirect taxation overhauls prompted by the COVID-19 pandemic.

Global crises tend to accelerate trends. For example, COVID-19 may have fast-tracked many organizations’ transitions to remote-work models and will also hasten and compel three preexisting, but tentative, tax trends:

  1. an overhaul of indirect taxation at the state and local levels;
  2. public finance and reform regarding the acceleration of payments and tax revenue collection; and
  3. the reacquisition and expansion of corporate tax leaders’ new core skill set.

Once federal, state, and local governments tally the economic fallout from the coronavirus pandemic, they will consider a wider range of sales and use tax increases, tax base expansions, exemption eliminations, and the creation of new types of tax.

In this article, Michael and George address the following questions and more:

  • Will states revisit efforts to tax traditional services?

  • What should tax leaders expect when states foresee revenue shortfalls? 

  • What is the current state of U.S. digital services tax?

  • How can tax leaders influence tax policy?

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Our Global Tax Resources Related to COVID-19

In light of the current coronavirus (COVID-19) healthcare crisis impacting businesses, we have compiled a list of resources that provide information at the international, U.S. federal, and state levels.

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