As a result of ambiguous and antiquated state tax codes, taxpayers and their advisers struggle to determine and comply with their state and local tax obligations. Too often, they also find themselves immersed in prolonged, expensive, and unnecessarily burdensome disputes with state taxing authorities.
From the states’ perspective, unclear and outmoded tax laws create different challenges. As state tax bases rapidly erode, state revenue departments are faced with increasing demands to fill state coffers, along with pressure from various stakeholders to adopt policy positions regarding who or what should be taxed to address budget shortfalls. When legislative fixes are sought, politicians often balk, hesitating over comprehensive tax reform and modernization efforts that inevitably would create new sets of winners and losers. Absent legislative reforms, state tax authorities are then forced to apply existing taxes to new realities through audits, administrative guidance, and litigation.
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Reprinted with permission.