Sales Tax Burden Increases for U.S. Consumers and Businesses in Q3 2013

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We are not only seeing more tax law changes, but also more complexity for businesses to cope with as they interpret and apply these new laws to their business operations.

The burden for U.S. taxpayers increased in the third quarter with 129 state, county, city and transit sales tax increases—compared to 69 in the same period last year, according to a recent Thomson Reuters report. In addition, in Q3 2013 there were 208 U.S. tax code changes, compared to 146 for the same period in 2012.

New or increased tax rates have an obvious impact on consumers, but the impact these changes have on businesses is often overlooked. Any tax change—be it an increase, decrease, or a new tax all together—represents a significant operational burden for businesses that are chartered with collecting sales tax on behalf of government.

In addition to the surge in overall tax changes, unprecedented new tax laws such as the Marketplace Fairness Act, the Medical Excise Tax and the Massachusetts Computer Software Sales Tax have either been enacted or proposed in the past year. In other words, we are not only seeing more tax law changes, but also more complexity for businesses to cope with as they interpret and apply these new laws to their business operations.

Additional highlights from Thomson Reuters’ indirect tax report for Q3 2013:

  • The number of value-added tax rate increases globally declined from 20 to 3.
  • In the U.S., the average city, county and state tax rates increased as follows, compared to Q3 2012:
    • City rates increased from 1.68 percent to 1.75 percent
    • County rates went from 1.15 percent  to 1.245 percent
    • State rates went from 5.48 percent to 5.615 percent
  • Italy deferred its 1 percent VAT increase from July 1, 2013 to Oct. 1, 2013.

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A blog from Thomson Reuters, a source of intelligent information for businesses and professionals.

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Carla Yrjanson

Carla Yrjanson is the Vice President of Tax Research & Content for Indirect Tax within Thomson Reuters. She leads the Tax Research & Content Team which is responsible for delivering Sales/Use...

J. Harold McClure

Dr. James Harold McClure, senior manager of transfer pricing at Thomson Reuters, has over 18 years of transfer pricing and valuation experience and has authored a number of papers on the subject....
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