{"id":15002,"date":"2025-05-21T23:04:14","date_gmt":"2025-05-21T23:04:14","guid":{"rendered":"https:\/\/taxops.com\/?p=15002"},"modified":"2025-09-09T16:03:53","modified_gmt":"2025-09-09T16:03:53","slug":"from-sales-to-income-tax-states-are-watching","status":"publish","type":"post","link":"https:\/\/taxops.com\/from-sales-to-income-tax-states-are-watching\/","title":{"rendered":"From Sales to Income Tax: States Are Watching"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;4.17.4&#8243; _module_preset=&#8221;default&#8221; background_color=&#8221;#003254&#8243; custom_padding=&#8221;7px||5px|||&#8221; global_colors_info=&#8221;{}&#8221;][et_pb_row column_structure=&#8221;3_5,2_5&#8243; make_equal=&#8221;on&#8221; custom_padding_last_edited=&#8221;on|desktop&#8221; padding_top_bottom_link_1=&#8221;false&#8221; padding_top_bottom_link_2=&#8221;false&#8221; padding_left_right_link_1=&#8221;true&#8221; padding_left_right_link_2=&#8221;true&#8221; 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divider_weight=&#8221;5px&#8221; _builder_version=&#8221;4.16&#8243; max_width=&#8221;120px&#8221; locked=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;][\/et_pb_divider][et_pb_text _builder_version=&#8221;4.27.4&#8243; _module_preset=&#8221;default&#8221; ul_text_color=&#8221;#003254&#8243; ul_font_size=&#8221;16px&#8221; custom_padding=&#8221;||0px|||&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<p>More than a dozen states have repealed the 200 transaction threshold for economic nexus, aiming to ease the burden on small sellers. Our guest Diane Yetter, President and Founder of Yetter Tax and the Sales Tax Institute, breaks down what these changes mean for businesses, particularly those navigating multi-state sales. Diane explains why small sellers can no longer rely solely on transaction counts to determine nexus and why a broader understanding of tax obligations is now essential.\u00a0<\/p>\n<p>We unpack the benefits of these reforms, the challenges that persist, and what steps businesses should take to stay compliant in an ever-evolving regulatory environment.<\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=&#8221;4.16&#8243; custom_width_px__hover=&#8221;1080px&#8221; custom_width_px__hover_enabled=&#8221;1080px&#8221; custom_width_percent__hover=&#8221;80%&#8221; custom_width_percent__hover_enabled=&#8221;80%&#8221; global_colors_info=&#8221;{}&#8221; use_custom_width__hover=&#8221;off&#8221; use_custom_width__hover_enabled=&#8221;off&#8221; width_unit__hover=&#8221;on&#8221; width_unit__hover_enabled=&#8221;on&#8221; gutter_width__hover=&#8221;3&#8243; gutter_width__hover_enabled=&#8221;3&#8243; parallax_1__hover=&#8221;off&#8221; parallax_1__hover_enabled=&#8221;off&#8221; 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header_2_font_size_last_edited=&#8221;on|phone&#8221; locked=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<h2>Transcript<\/h2>\n<p>[\/et_pb_text][et_pb_divider color=&#8221;#A0CD46&#8243; divider_weight=&#8221;5px&#8221; _builder_version=&#8221;4.16&#8243; max_width=&#8221;120px&#8221; locked=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;][\/et_pb_divider][et_pb_text _builder_version=&#8221;4.27.4&#8243; text_text_color=&#8221;#000000&#8243; text_font_size=&#8221;15px&#8221; text_line_height=&#8221;2em&#8221; link_font=&#8221;||||||||&#8221; link_text_color=&#8221;#fe4943&#8243; background_layout=&#8221;dark&#8221; max_width=&#8221;800px&#8221; global_colors_info=&#8221;{}&#8221;]<\/p>\n<div class=\"row mt-lg-5 mb-3 row-eq-height border-bottom no-gutters episode\">\n<div class=\"col-lg-9\">\n<article class=\"pb-4 pl-lg-5\">\n<section>\n<div class=\"episode-transcripts\">\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:00:35\">00:00:35<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Welcome to SALTovation.<\/p>\n<p>&nbsp;<\/p>\n<p>The SALTovation show is a podcast series featuring the leading voices in salt where we talk about the issues and strategies to help you make sense of state and local tax.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:00:46\">00:00:46<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Welcome back to the SALTovation Podcast. Today we&#8217;re joined once again by one of our favorite recurring guests, Diane Yetter from the Sales Tax Institute.<\/p>\n<p>&nbsp;<\/p>\n<p>Diane brings her deep insight and policy level perspective to the table as we unpack a major trend affecting sales sales tax nexus, the rollback of the 200 transaction threshold in several states. We dig into what&#8217;s happening, why it matters, and how businesses, especially small sellers, need to think beyond just economic nexus.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:01:19\">00:01:19<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>All right, everyone, welcome back to the SALTovation Podcast. We have our favorite recurring guest, Ms. Diane Yetter with the Sales Tax Institute with us today.<\/p>\n<p>&nbsp;<\/p>\n<p>So thank you, Diane, for joining us again on the Saltivation Podcast.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:01:34\">00:01:34<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>I&#8217;m thrilled to be here, both of you. I&#8217;m excited.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:01:38\">00:01:38<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>So let&#8217;s start with a big trend that kind of both of our groups had identified in our issues to watch lists and that is revolving around the states that have repealed their transaction thresholds for determining nexus, kind of under the Wayfarer standard that started with $100,000 and 200 transactions and there are about or at least 14 so far who in various stages of kind of Wayfair have eliminated that transaction threshold. And we&#8217;ve seen a lot of states kind of continue on with this trend. Why do you think this is occurring?<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:02:20\">00:02:20<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Well, I think this definitely goes to the undue burden on small sellers in particularly in particular, I should say.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>at I really brought out in my:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"2022 \">2022<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>And the streamlined sales tax governing board, after my 22 testimony made a recommendation to all of the streamlined states that they eliminate the 200 transaction count. They saw that as a valid point that I made in my testimony and that it was a big risk to some potential federal legislation that might happen.<\/p>\n<p>&nbsp;<\/p>\n<p>I truthfully don&#8217;t think anything&#8217;s going to happen, but I think it&#8217;s great that the states listened and recognized that. And so in 23, we had South Dakota eliminate theirs, we had Louisiana eliminate theirs, and then North Carolina.<\/p>\n<p>&nbsp;<\/p>\n<p>We also just this year Utah just passed theirs. That will be effective July 1st. New Jersey has a bill pending. So I just saw the latest update the legislature asked for a fiscal note.<\/p>\n<p>&nbsp;<\/p>\n<p>The executive branch came back and said, we can&#8217;t quantify it. So it was kind of an interesting discussion of then legislative research wrote something up that was interesting.<\/p>\n<p>&nbsp;<\/p>\n<p>And then there had been a rumor that Illinois was going to eliminate it. I had talked to the. The director last fall. He was not aware that any of this sort of stuff was happening.<\/p>\n<p>&nbsp;<\/p>\n<p>And then I saw him a month later at another conference and he announced that this was something he was going to take up. It just got added last week as an amendment to Senate Bill 752. So we will track that. That would make it.<\/p>\n<p>&nbsp;<\/p>\n<p>That would eliminate it as of January 1st of next year. So I think these are all great things. I think this is eliminating a burden for the smallest of the sellers.<\/p>\n<p>&nbsp;<\/p>\n<p>And I think it&#8217;s a really smart move of all the states to be doing this.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:04:56\">00:04:56<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>So would you say this is a kind of taxpayer win?<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:04:59\">00:04:59<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>It is definitely a taxpayer win.<\/p>\n<p>&nbsp;<\/p>\n<p>You know, the thing that you have to watch out for, you know, particularly those really small sellers, many of them sell on Amazon and they have their inventory in Amazon states. Now, some of the states have said that Amazon inventory will not create physical presence. Illinois is one of those states.<\/p>\n<p>&nbsp;<\/p>\n<p>And so what you have to watch out for is remembering, and we run into this every time we talk to a new client is they think the only economic or the only nexus they have to worry about is economic nexus, not realize that a remote employee in a state or a inventory in a state or traveling in and doing service in a state that all of that can create that physical presence that actually makes it much more challenging. And so these eliminations of the transaction counts only work if you are truly a remote seller.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:05:57\">00:05:57<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>So Illinois, I guess, directive on the physical presence piece and the inventory not creating, you know, that duty then is did they put that out in a regulation or how did they announce that.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:06:13\">00:06:13<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>It is not statutory? I&#8217;m trying to remember if it actually went in a reg or if it&#8217;s just in. I think it&#8217;s just in their remote seller bulletins that they came out.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>And in:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"2020 \">2020<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:06:33\">00:06:33<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>I think that&#8217;s interesting for our listeners too, because, you know, we get those questions a lot, even on the income tax side. Right. And so I think, you know, there it just is a little bit of a cautionary tale, right, that maybe it might not create sales tax nexus. Right.<\/p>\n<p>&nbsp;<\/p>\n<p>But there still could be the income tax nexus that could be triggered just depending upon this, the state and what maybe they&#8217;ve addressed in their.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:06:57\">00:06:57<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Exactly.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:06:58\">00:06:58<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>You know, in their, in their publications or whatever the case may be.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:07:02\">00:07:02<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Right.<\/p>\n<p>&nbsp;<\/p>\n<p>And I think, you know, the New Jersey bill, actually, because if, if you follow it from the income tax perspective, New Jersey has taken the position that the economic nexus threshold of 100,000 or 200 transactions is not only for sales tax, but also for the corporate income tax. And so this proposed bill eliminates it from both sales tax and income tax.<\/p>\n<p>&nbsp;<\/p>\n<p>So at least New Jersey is recognizing that it has to make that change, you know, to both of those, you know, but separate from that, you know, the states that are pursuing nexus, you know, we have seen, as I&#8217;m sure you guys have, Michigan has started getting very active on sending notices to companies that may be registered for sales tax and not registered for income tax or that they maybe didn&#8217;t register early enough. And so those started coming late last year.<\/p>\n<p>&nbsp;<\/p>\n<p>And another round just went out because we&#8217;ve got a new round of people calling us and saying, I just got this notice from Michigan. What do I need to do?<\/p>\n<p>&nbsp;<\/p>\n<p>And we&#8217;ve gone back to Michigan with a couple of clients that have really de minimis inventory in an Amazon warehouse, and they&#8217;re saying, we don&#8217;t care that it&#8217;s an average of $100 of inventory in the state. That&#8217;s physical presence, and you&#8217;re subject to income tax. So we&#8217;re starting to see that raise its head a little bit more.<\/p>\n<p>&nbsp;<\/p>\n<p>And I think you&#8217;re exactly right, Stacy, that sellers that are only looking at this from the sales tax perspective really need to look at it from the income tax perspective, too.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:08:47\">00:08:47<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Well, and what about if, you know, illinois repeals their 200 transaction tests, but effective one 1, 20, 26, what if you&#8217;ve had 200? Like, if you&#8217;re doing kind of a nexus study now, you have more than 200 transactions now, but then you won&#8217;t.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:09:05\">00:09:05<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>That&#8217;s your own.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:09:06\">00:09:06<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>You know, you don&#8217;t exceed the dollar value. What about kind of this purgatory period of history versus what the rule is now? It&#8217;s like, do you just kind of let it be? Because under the guise of.<\/p>\n<p>&nbsp;<\/p>\n<p>And this is not tax advice for any listeners who may be applying. Right. Like, just kind of food for thought on. Okay, well, is it kind of the intent of the state to just kind of.<\/p>\n<p>&nbsp;<\/p>\n<p>It&#8217;s not material because we&#8217;re willing to get rid of it. It&#8217;s like the rules are what they were for this kind of window of time, and they&#8217;re not now. So, like, how do you play that game.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:09:38\">00:09:38<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Yeah. I think it&#8217;s a question that has to be looked at on a case by case basis and even a state by state basis.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>first repealed theirs back in:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"2019\">2019<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>And Washington said we&#8217;re not going to pursue for those six months. But where we&#8217;re talking, you know, seven years, I can&#8217;t imagine that Illinois is going to walk away from that.<\/p>\n<p>&nbsp;<\/p>\n<p>I think if it&#8217;s, you know, just recently that you crossed, they might walk away from it.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>But if it&#8217;s going back to:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"2018 \">2018<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>You know, because all of these states that we&#8217;re talking about, Illinois, it&#8217;s a rolling, you know, 12 month look back. But you know, Utah, New Jersey, those are current or priority year.<\/p>\n<p>&nbsp;<\/p>\n<p>And South Dakota, when they repealed theirs, said you had to, it was repealed as of July 1 of 23.<\/p>\n<p>&nbsp;<\/p>\n<p>But because of the current or prior year, if you in January through June of 23 exceeded the 200 transaction counts, you had to stay registered through the end of 24 is how South Dakota interpreted that.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:11:28\">00:11:28<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Oh, interesting. Yeah.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:11:30\">00:11:30<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>You know, now North Carolina, they said if you were even if you were above the 200 transaction count, but you were below the 100,000 in January through June of 24 because theirs came out July 1 of 24, you could deregister as of July 1 of 24. Indiana also repealed theirs last year and they repealed theirs retroactive.<\/p>\n<p>&nbsp;<\/p>\n<p>I think the bill passed in like March or April and they repealed it back to January of 20. And so they said if you were below it in 24 or in 23, you could drop as soon as the bill was passed.<\/p>\n<p>&nbsp;<\/p>\n<p>So it&#8217;ll be interesting to see how Illinois kind of interprets that. That isn&#8217;t in the proposed bill.<\/p>\n<p>&nbsp;<\/p>\n<p>It is a question in the streamlined disclosed practices that we got added into Disclose practice number eight that asks the streamlined states when can you deregister if you if the state has dropped. So we&#8217;ll have to see how Utah and subsequently New Jersey, if it passes, how they answer that question.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:12:38\">00:12:38<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Yeah, it&#8217;s good to, it&#8217;s good to know. And, or as a reminder for the listeners. Right.<\/p>\n<p>&nbsp;<\/p>\n<p>That, I mean, let alone all the, like, enforcement dates versus, you know, enactment dates just from the, you know, from when Wayfair was passed.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:12:54\">00:12:54<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Right.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:12:54\">00:12:54<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>And then we&#8217;re, we&#8217;re struggling with some of that, with some of these, you know, repeals of the, of the transaction count and, or if, you know, some of these states have even changed their thresholds. Right. So it&#8217;s, it&#8217;s, these are constant struggles. Right. To know. Okay, do you do it like when you mentioned South Dakota. Right. That&#8217;s trailing nexus.<\/p>\n<p>&nbsp;<\/p>\n<p>Right. They, they, they kept with that trailing nexus, but maybe like you said, some of those states didn&#8217;t. Right.<\/p>\n<p>&nbsp;<\/p>\n<p>So it really is hard for taxpayers to keep track of and continues to be.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:13:29\">00:13:29<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Right.<\/p>\n<p>&nbsp;<\/p>\n<p>And the other kind of slightly related trend, you know, streamlined within their disclosed practice that we worked on to get all these questions answered. One of the things that came out of it is some of the select questions. The streamlined governing board agreed to define a best practice.<\/p>\n<p>&nbsp;<\/p>\n<p>So this is the best practice for the state. And removing the 200 transaction count, that was a best practice that got adopted.<\/p>\n<p>&nbsp;<\/p>\n<p>And then more recently, we got passed an adoption that the grace period after when you cross the threshold that you don&#8217;t have to Register until the 1st of the month following 30 days after you cross the threshold. South Dakota was a next transaction state and this year they passed legislation that it moves it out to the first of the month following 30 days.<\/p>\n<p>&nbsp;<\/p>\n<p>So south Dakota is definitely taking the lead on making these changes, which I think is great since they were the state in the case.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:14:34\">00:14:34<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Right, right.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:14:35\">00:14:35<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>And so, you know, we&#8217;ve talked about Illinois already, which is, you know, for those who haven&#8217;t listened to Diane&#8217;s first and second previous episodes, you know, is based in Illinois. And we talked about the last time we talked pet meds was still, you know, we hadn&#8217;t gotten a decision out of pet meds.<\/p>\n<p>&nbsp;<\/p>\n<p>And so do you want to maybe talk us through or catch us up on, you know, the results of pet meds, what the legislator did as a result of that and how that&#8217;s kind of impacting taxpayers and, you know, maybe we need to bemoan some things, maybe not, but kind of catch us up on kind of what happened with Illinois and the leveling the playing field and what&#8217;s come out of that?<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:15:25\">00:15:25<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Sure.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>, Illinois, probably prior to:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"2021\">2021<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>And the tax rate is dependent upon where the seller is located for sales that originate outside of Illinois or where inventory comes from outside of Illinois that is subject not to the retailer&#8217;s occupation tax or sales tax, but to the use tax. And the use tax has no local tax. It is only the six and a quarter percent rate.<\/p>\n<p>&nbsp;<\/p>\n<p>So for any sellers, remote sellers or even sellers with physical presence in Illinois, but maybe the inventory and the order acceptance and everything came from outside of Illinois, the they would only have a requirement to collect tax at the 6.25% rate. Now there&#8217;s a long sordid history of how you determine what is the origin of the transaction.<\/p>\n<p>&nbsp;<\/p>\n<p>With the leading case back now, gosh, I&#8217;ve lost track of what year it was. The Hartney Oil case, I think that&#8217;s the right name, Hartney Oil.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>ay. And so that was in place.:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"2018 \">2018<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>So the only rate that is being charged is the six and a quarter percent state rate. And all of the locals are up in arms screaming where&#8217;s our wayfair money? Where&#8217;s our way for money? We&#8217;re not getting any of this money money.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>ve, why am I drawing a blank?:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"2020\">2020<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>And that meant that all of these remote sellers were required to charge sale, state and local rate at the destination. So that remote seller, let&#8217;s say it&#8217;s you guys, you&#8217;re located in Colorado, you&#8217;re a retailer, you&#8217;re selling to me in Chicago.<\/p>\n<p>&nbsp;<\/p>\n<p>The Chicago rate is 10 and a quarter percent, but the use tax rate was just six and a quarter. So you were charging me six and a quarter percent rate. This law went into effect, you now had to charge me 10 and a quarter percent rate.<\/p>\n<p>&nbsp;<\/p>\n<p>And so the argument that was made because Illinois is an origin state is I could buy from a vendor in another city in Illinois at a rate lower than 10 and a quarter percent. And now this out of state merchant is disadvantaged and is required to charge a higher rate than what an in state vendor.<\/p>\n<p>&nbsp;<\/p>\n<p>And so for a constitutional challenge to this is what happened with Petmeds was the first one that that did that.<\/p>\n<p>&nbsp;<\/p>\n<p>There&#8217;s been a number of other cases that are in the works right now that made the argument that this was a unconstitutional law change because it did put a higher burden on out of state sellers than on in state sellers.<\/p>\n<p>&nbsp;<\/p>\n<p>We have a prior case from Missouri, the associated industry case from the late 90s that went to the Supreme Court that said you can&#8217;t have a higher rate imposed on out of state sellers than in state sellers. So that was the argument that Pepmeds made along with these other cases. We were hopeful that we were going to get a decision on this.<\/p>\n<p>&nbsp;<\/p>\n<p>That petmeds case ended up settling, so we don&#8217;t have a decision on that yet. There are still some other cases in there. But what happened In January of 25, Illinois changed the law once again.<\/p>\n<p>&nbsp;<\/p>\n<p>That said now all out of state sales, whether the seller has physical nexus in Illinois or not, if they were only required to collect six and a quarter under our crazy 11 prong test, they now have to collect tax at destination sales tax. And so I think Illinois thought that this change would make their constitutional challenges go away.<\/p>\n<p>&nbsp;<\/p>\n<p>But all it did was it made more businesses now subject to this unconstitutional challenge. And discrimination really is what it is.<\/p>\n<p>&nbsp;<\/p>\n<p>Because still if I buy from an in state seller that has a lower rate than this out of state seller, I as an out of state seller am discriminated against. So it&#8217;ll be interesting to see what happens.<\/p>\n<p>&nbsp;<\/p>\n<p>This bill that I talked about to eliminate the 200 transaction count, it has included language that I think is very onerous that says if the seller does not provide all of the documentation of where all the sales went, the department, instead of asking the seller to perfect their return.<\/p>\n<p>&nbsp;<\/p>\n<p>So in essence, if they submit an unprocessable return, which would probably mean they didn&#8217;t attach their local schedule, the ST2, instead of waiting for the taxpayer to submit that to perfect the return, the department has the right to just assess a tax of 15%, which is higher than any other tax rate that exists in the state. So I think they just keep piling more and more discriminatory provisions into their statute.<\/p>\n<p>&nbsp;<\/p>\n<p>And I&#8217;m hoping to God we get a case that actually gets to the courts.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:21:32\">00:21:32<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Well, and that, you know, kind of language in the bill about perfecting the return for those who have never tried to file an ST2. Stacey and I had a conversation about this the other day.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:21:45\">00:21:45<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>It&#8217;s hard, it&#8217;s hard.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:21:48\">00:21:48<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>It&#8217;s very difficult. Um, and it&#8217;s long. There&#8217;s not a simple way to file it.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:21:55\">00:21:55<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>You can&#8217;t upload it. You can&#8217;t you know, Missouri is, is notorious also.<\/p>\n<p>&nbsp;<\/p>\n<p>But you can at least, you know, upload or send a file to the department and they&#8217;ll add all the locations for you. Illinois won&#8217;t do any of that. There&#8217;s no easy way to do it. And so it is, it is a huge burden. We&#8217;ve talked to the department about that.<\/p>\n<p>&nbsp;<\/p>\n<p>They seem like they&#8217;re willing to listen, but nothing is changing.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:22:21\">00:22:21<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Yeah, because I mean, not that, you know, we like to win worst state. Right. You know, or nobody wants to. Right.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>d so when the rules change in:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"2021\">2021<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Okay, now you know, we know that we need to collect and all, you know, for all the locals, let&#8217;s start reporting. And then that, you know, became an eye opener where it was, no, this is a very onerous return and takes a lot of time.<\/p>\n<p>&nbsp;<\/p>\n<p>And if anybody&#8217;s familiar with the Colorado return, it&#8217;s also very onerous and you know, large. But I think Illinois actually might have, have beat us with this, you know, with those changes so. Well, what was funny, you guys might win now.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:23:17\">00:23:17<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>We might, we might. Which we have said to Illinois, you know, you are trying to beat out Colorado, notoriously known as being, being the worst.<\/p>\n<p>&nbsp;<\/p>\n<p>And you know what, what I think you know, was, was a little bit comical was when that happened in 21.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:23:39\">00:23:39<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Was.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:23:41\">00:23:41<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>You had to go in and register at least one locality and then it was supposed to be the rest. As you filed, you would just add them in and it was supposed to be no big deal.<\/p>\n<p>&nbsp;<\/p>\n<p>We had a couple of clients that when they did the first return that activated all of these locals, it automatically triggered the mailing of. For every different location you get like a sub license from Illinois. That is a copy of your sales tax license that you&#8217;re supposed to post.<\/p>\n<p>&nbsp;<\/p>\n<p>And each location got their own. They ended up with like 3 copy paper size boxes of licenses that got shipped to them. And I was like, what did this cost the department to print?<\/p>\n<p>&nbsp;<\/p>\n<p>And then nail all of these. I&#8217;m like, that is insane. And we called the department and said, what do we do with all these?<\/p>\n<p>&nbsp;<\/p>\n<p>And they were like, yeah, we couldn&#8217;t figure out how to suppress that. Just, just shred them all. There&#8217;s no need to hold on to them. And it was just like, oh my God. What?<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:24:51\">00:24:51<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Wow.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:24:53\">00:24:53<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>You know, at least they got that figured out. That I Haven&#8217;t heard of that happening again, but that was insane.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:24:59\">00:24:59<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Yeah, but like, I mean, your earlier point that you made was well heard because we&#8217;ve pushed back on the department as well with, you know, even voluntary disclosure data to say, okay, can you run this through your system? And they will not do it.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:25:17\">00:25:17<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Right.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:25:18\">00:25:18<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>So I do hope that they will streamline some, some of this going forward because it is really time consuming for taxpayers.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:25:27\">00:25:27<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Yeah, well, and if you have to do, whether it&#8217;s a voluntary disclosure, just you have to amended a return, anything for those prior periods. I think they changed the system. I think it was in 24.<\/p>\n<p>&nbsp;<\/p>\n<p>So any dates prior to that, they can&#8217;t take any sort of upload or, you know, you have to manually key it all in to the system. And it is so onerous.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:25:50\">00:25:50<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Correct. And I mean, we have several voluntary disclosures where we&#8217;re doing, where we&#8217;ll have to do PDF returns as well for some of those prior years.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>. Because that all started in:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"2021\">2021<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>And I guess all we can do is hope that the department will streamline it going forward.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:26:17\">00:26:17<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>They&#8217;ve got to wake up.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:26:18\">00:26:18<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Fingers crossed.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:26:19\">00:26:19<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Yes, yes.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:26:20\">00:26:20<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Do you think there&#8217;s any hope that maybe Illinois would go to an election like, you know, Texas did, Alabama did for just kind of like consolidated rate and just be like 9%?<\/p>\n<p>&nbsp;<\/p>\n<p>That doesn&#8217;t violate any sort of, you know, key TAM stuff that you can just kind of elect to be a remote seller, charge a single rate as kind of a troubleshooting mechanism?<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:26:45\">00:26:45<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Yeah, they did.<\/p>\n<p>&nbsp;<\/p>\n<p>There is a proposal, and I, and I forgot about this, to check on the status before our call, there are two amnesty proposals that are pending, one from the governor and one from the department.<\/p>\n<p>&nbsp;<\/p>\n<p>And in the amnesty proposal by the department, which is only for remote sellers, it is only under that amnesty, instead of having to do all of the locals, that you could do a flat rate. And I believe that flat rate was a 10% rate, I think. And then I think it was a 2% rate if it&#8217;s the food and drug rate instead of the local on that.<\/p>\n<p>&nbsp;<\/p>\n<p>But it was only under that amnesty provision. So, you know, I think that at least helps with the VDA sort of situation. But it&#8217;s only if you qualify as a remote seller.<\/p>\n<p>&nbsp;<\/p>\n<p>And we&#8217;ll see if those competing, you know, which, which of those competing amnesty bills might actually pass.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:27:54\">00:27:54<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>When would an amnesty be eligible for kind of. Is it only net new sellers or is it, you know, hey, I either am non compliant because your return is too hard or any sort of.<\/p>\n<p>&nbsp;<\/p>\n<p>Just like, hey, we just want to get taxpayers caught up and get the money in the state.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:28:13\">00:28:13<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>It was a little unclear on that, Meredith, because of how the bill was written. I think the governor&#8217;s proposal is a more traditional amnesty, and it applied for all tax types and for registered and unregistered.<\/p>\n<p>&nbsp;<\/p>\n<p>But the department one, I think was only only for unregistered remote sellers, if I remember right.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:28:35\">00:28:35<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Well, lots to lots to keep our ear out of the ground.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:28:39\">00:28:39<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Yes.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:28:40\">00:28:40<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Going on in, you know, mine and Stacy&#8217;s former home state.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Diane:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:28:43\">00:28:43<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Yes.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Intro:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:28:44\">00:28:44<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>Right.<\/p>\n<p>&nbsp;<\/p>\n<p><cite>Meredith:<\/cite><span>\u00a0<\/span><time><a class=\"cp-timestamp\" data-timestamp=\"00:28:45\">00:28:45<\/a><\/time><\/p>\n<p>&nbsp;<\/p>\n<p>This podcast is for educational purposes only and is not intended, nor should it be relied upon as legal tax, accounting or investment advice. You should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/section>\n<\/article>\n<\/div>\n<\/div>\n<div class=\"episode-sharing d-lg-none\"><\/div>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=&#8221;1&#8243; admin_label=&#8221;Comments&#8221; _builder_version=&#8221;4.16&#8243; background_color=&#8221;#FFFFFF&#8221; background_image=&#8221;https:\/\/taxops.com\/wp-content\/uploads\/2021\/05\/podcast-01.png&#8221; parallax=&#8221;on&#8221; global_colors_info=&#8221;{}&#8221; background_size__hover=&#8221;cover&#8221; background_size__hover_enabled=&#8221;cover&#8221;][et_pb_row _builder_version=&#8221;4.16&#8243; locked=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;4.16&#8243; custom_padding=&#8221;|||&#8221; global_colors_info=&#8221;{}&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_text _builder_version=&#8221;4.16&#8243; 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Diane shares why relying solely on transaction counts is no longer enough and what small businesses need to know to stay compliant across state lines.<\/p>\n<p>We discuss the benefits of these reforms, ongoing challenges, and practical steps businesses can take in today\u2019s shifting tax landscape.<\/p>\n","protected":false},"author":3,"featured_media":15027,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"2880","spt_transcript":"Meredith Smith: Let's make sure we're recording. That would be bad. All right. Kim, thank you so much for joining us today on the Saltivation Podcast. It's great to have you here. \r\nKim Blascoe: Well, I'm very excited to be joining you as well. So hopefully we have some really good conversation on different things that we're doing in the industry.\r\nMeredith Smith: Yes. And on that note, so can you give us, um, kind of what your professional background is? \r\nKim Blascoe: Sure. So I'm a CPA by trade. I still am licensed. I practiced for a little over 30 years before I joined CPA.com last year in June. Originally I had a tax and accounting practice, which basically at that point in time had SALT and payroll as part of the service offerings that we did.\r\nAnd then in December of 2010, I was actually merging with an Illinois regional firm when the Whipley opportunity came back around for them. So, I tailcoat merged into Whitley, and at that point, I actually took over the national accounting practice that Whitley had. Now, at that point in time, Whitley was a large regional Wisconsin regional firm. So, we were the first Illinois merger, and we had two offices in Minnesota and two offices in India. And when I actually left Whitley, we were a top 20 firm. So many, many, many mergers later. Uh, I got a lot of experience in adding other accounting practices to the one that I was working with. \r\n[00:03:12] Meredith Smith: Yeah. So then why choose to leave public accounting for CPA. com? What was that drive? \r\n[00:03:19] Kim Blascoe: I'd spent 30 years in practice, like I mentioned, and I loved mentoring younger associates or people that were early on in their careers.\r\nIt was one of the best things that I did. And also I loved working with clients, but I really felt like I wanted to do something more and I had all this experience with, you know, everything I had done. Like I said, you know, with Whipley was a regional firm. And when I joined, I had my own small firm. They were a medium sized firm.\r\nIf you want to look at that way. And when I left, they were a very, very large firm. So I had done the gamut of understanding the opportunities and the challenges of being in different size firms. And I just felt like I really had more to share. So, um, the cpa. com opportunity. Came up and I kind of thought that my background was perfect for the opportunity.\r\nAnd I just jumped at the chance to make a change, which was kind of scary because for 30 years, I'd been doing, you know, really predominantly the same thing, although in in different size environments. But I just kind of switched my mentoring, even though I'd still do mentoring on an individual basis. But I switched my mentoring over to firms.\r\nI look at it just as a different mentoring challenge and an opportunity that I've been given, you know, a little bit later on in my career. \r\n[00:04:32] Judy Vorndran: Interesting. That makes a lot of sense though, at a certain point in my, I'm at that. Getting close to retirement age and kids are almost launched and I'm like, what am I doing?\r\nI have a firm. So, you know, trying to support the younger generation on our team to have a future at our firm and wherever that lies. Yeah, super interesting. And obviously encourage the younger generation to pursue these careers because they're really great.\r\n[00:05:01] Kim Blascoe: Yeah, and I think, you know, when you say, you know, people wanting to become partners, I think 1 of the things that we really work with, um, when we talk to firms as having a career path, especially inside of the cast practice, but even inside of assault practice, you know, salt didn't exist when I came into the practice.\r\nRight? And we did most of those services inside of cast. It kind of more and same with our payroll group. They were all part of CAS originally. And then when I, by the time I left, those were all separate service lines and had matured and added advisory to all of them as well. So, it was no longer a compliance based business.\r\nIt was now a compliance and advisory based business. So, you know, we've seen a lot of changes happen over the years inside of practices. And I think the importance of that is, is all the service offerings that have been added really need to have career paths so that individuals feel like they can, if their desire is to become partner and not everybody's desire is, but if the desire is to become partner, that we give them those opportunities in these other areas of service.\r\n[00:06:03] Judy Vorndran: Right. It's a real great opportunity, I think, to be entrepreneurial, which is why I stayed in public accounting, despite multiple offers to go into industry. I thought, well, once I figure out the problem, because clearly you have 1 that I want, what am I going to do? It's become wrote and no, not the same, but just similar.\r\nAnd so I'm like, I really love the diversity of lots and lots of clients and lots of issues and trying to figure it all out. Yeah. And it's a giant puzzle. \r\n[00:06:26] Kim Blascoe: Yeah, I never did the private side either. And maybe that was part of it. I always thought I'd get bored working with just like 1 company versus the opportunity to work with many companies.  \r\n[00:06:35] Judy Vorndran: yeah. And you're always on the curve. You're always learning. There's always something new to learn in this and all of it. You know, new accounting practices, international, national, new rules, new laws, all the good things. So it's a constantly learning profession, which. \r\n[00:06:49] Kim Blascoe: I'm not going to lie to you, though. I always tell everybody if I had to practice in the salt space, you would probably have to stab my eyeballs. So I'm always so incredibly thankful that there are people that love that space. \r\nJudy Vorndran: I mean, like, why is it though, do you think people hate it so much? I mean, it's just such a negative. \r\n[00:07:09] Kim Blascoe: I think for me, it's like, it's so like standard driven.\r\nLike there's so many rules and regulations that you need to understand. I was always just incredibly happy. Like Jessica Macklin at Whipley is who I always worked with. We were kind of in the same region and actually I'm going to do a session with her at DCPA on the crossover between Salt and Kaz. I saw that on that schedule.\r\nOkay. Okay. So I'm excited about that because I think now it's, it's an opportunity out there that is still very, very, it's a very underutilized practice. Right. So, you know, it's just not experienced.\r\n[00:07:44] Judy Vorndran: I'm an attorney and a CPA, which is probably why I practice in the area because. I think it's incredibly creative to look at the rules and see how they apply, right?\r\nBecause it's not black and white, especially with software and information services and tech and biotech. And there's just so many nuances to business. It's not like everybody sells a thing, right? And that's taxable. So sales tax is very nuanced. Income tax dates are very nuanced. So the creativity aspect of like, what's your position?\r\nWho are you in this state allows for some reattribution of income and also some, you know, obviously some compliance services that you need to manage the expectations of each of those governments to manage your business risk. But, um, yeah, I think that's really interesting though, because so many people do really hate our area.\r\nAnd I really wish that we didn't have that negative spin because it creates like bad energy around it. I mean, all of us on the team, like we dig on it. Like we don't look at it as negative. We look at it like, oh, it's a really cool puzzle. We're going to have to go figure out how to do it. And then we have, you know, because business has one sort of rule.\r\nAnd so, we just have to apply those rules by state. It's not that hard if you know the business, but we get to dive into the business transactionally, which a lot of providers don't. They roll it up. They do what? What is the gross revenue? They don't look at the nuances. We look at the transactions. So, I think it's really interesting as you look how Business makes money.\r\n[00:09:05] Kim Blascoe: And I think a lot of people go, we need all sorts to make the world go around. That's always incredibly happy that people like to actually, even in the payroll space, the payroll space, the payroll tax return space in the sales tax space, but I also think are in salt all the way around, I think the other thing on the SALT side of the house is that, you know, a lot of businesses don't even realize that there's a lot more to salt than a lot of them.\r\nThink of it as sales tax. Right. And even then. They don't know the rules from state to state and the pandemic has so changed the dynamics of how businesses work that a lot of businesses have become national and they don't know what the rules are. Sometimes they think, well, I'm not selling a product.\r\nOkay, but you're sending somebody into that state for a product that you shipped, right? You know, so, like, what are all the rules on that? Where do you have to file? Where do I need to get registered as a business? You know, most people just skate right past all of that. And, you know, I always look at it as, is ignorance bliss, but is it really ignorance? I think it's more of like, they don't even know what they don't know. Right. Right. \r\n[00:10:03] Judy Vorndran: And it's fear. There's a lot of fear of like overwhelm and stress, which I find very interesting because they figured out, I mean, I have clients that have sold 46, 000 products. Right. I'm like, you know, how to like, A plumbing company knows how to tell you this is all the things you buy in order to replumb your kitchen.\r\nHow did you do that? You can absolutely do tax. Absolutely, because if you could figure that problem out, it's very similar. Logical, you know, add the things. But there is this thing out there of complexity, and I think tech has tried to solve some of it, but they lack the knowledge of the tax background.\r\nThey have the tech, but without the tax acumen. So, we've got this marriage happening in, In a software automation, that's not allowing both sides to be the way it needs to be to advocate on behalf of clients, which I know is why CPA dot com years ago chose Vertex as its chosen provider. I don't think that's so much the case anymore. I'm not sure. Cause they were like the preeminent. They've been around the longest and all that good stuff. So yeah, but there are a lot of providers out there now. \r\n[00:11:04] Kim Blascoe: There are. And there are a lot of choices. It's just like all the rest of the technology too. And it's like fairly overwhelming sometimes how many options you have out there, but the importance of those options, I think, especially in the salt spaces, it is an area that, that, that you have to have some expertise and you have to spend some time digging into it.\r\nAnd businesses don't do that on their own. Right. And I think the other thing, you know, the other thing that maybe has some bad connotations around it on the salt side is it's another tax, right? You're telling your clients that. Oh, now you might have to do sales tax, or you might have to do income tax in multiple states.\r\nAnd they're just like, taxed out, right? They're just tax, tax, tax. Everybody always wants money from me. And so it's not always even a pleasant conversation. It's not an area where you can work with client. I mean, you have to work through the value side of it. Right. And, and even like the compliance side of it and like ease of mind that you're doing the right thing, or at least you've been told like what, you know, that right thing is.\r\nI, prior to me leaving Whipley, I actually did a wealth and asset management build out and CAS was one of the service offerings that we did. And when you think about what that wealth and asset management industry does, they have clients everywhere all the way across the United States, right? And they're flying to all of these places.\r\nAnd I used to have, I used to bring Jessica into my conversations all the time and say, talk to them about nexus, talk to them about their, what their state filing requirements are. They may not have a sales tax, but they may also have a sales tax, some state stacks on service, right? You know? So it's like they need to understand. And then from there, they can make the decision about where they want to file and where they don't want to file. \r\n[00:12:37] Judy Vorndran: want to \r\n[00:12:37] Kim Blascoe: file. \r\n[00:12:37] Judy Vorndran: Well, it's funny being at the big four because I was national. So I really cared about the big states, Illinois, New York, California, Texas, Florida, 10, you know, 10 percent of the U. S. nation. I cared less about South Dakota, North Dakota, but then I worked for Eide Bailey and they were sited in North Dakota, South Dakota.\r\nSo, that was our biggest offices and the build out sprung for there. So I had, I had, Went to, you know, I went to hearings in those states. I flew into Pierre, South Dakota to do a hearing on behalf of a taxpayer. I mean, there are big taxpayers in South Dakota, North Dakota. You would have never known, you know, and also as you get to see America, you see there's a lot happening in our country that a lot of people that the CPA community doesn't understand, which is why I think SALT is so important for the CPA to build that tech stack or that competency so that the CPA firms can be successful.\r\nAnd then they're not. Blame for not telling them because there is this thing I feel like maybe mentioned that before my husband, you know, I'm a lawyer and a CPA and I, my specialty is state and local, but not income anymore from a federal perspective. Right? Even though I have a master's of tax, I've rolled away from being a federal tax practitioner.\r\nI'm state and local. So I can't even do my own personal income tax return. And I think a lot of people think, why, why not? Like, cause I don't know, keep up with the personal deductions and so forth. And my husband says to me, who is a securities lawyer and litigator, he says, I don't understand why CPA say they can do all these things when they can't, they can't do accounting services and compilations and audits and tax returns and, and, and financial accounting and income tax.\r\nAnd there's a lot of things in the CPA world that you could do for a living, and you could silo it and get that great, good competency. You don't have to be a generalist, even you running your own practice that was audit and tax. I can't even imagine. How hard that must have been. \r\n[00:14:18] Kim Blascoe: Well, you know, back then though, most practices were generalist practices. They were about the practices that we merged in at Whipley. Most of those practices were generalist practices. Now I would say, probably maybe 10 years ago, five at for sure at the minimum, that started to change inside of practices. And we started doing exactly what you were saying is like maybe moving towards a focus.\r\nSo a practice focus and an industry focus that became very relevant inside firms. And I think even in the smaller firms, they started thinking about what are we good at and what are we not good at, right? Let's focus on that. And now you see cast practices that are really what we call to as BPO business process outsourcing practices that only focus on CAS. They don't do anything else or they have cast and they have tax and they don't do anything beyond that. There's not a test type of services. So I, I think we're seeing that that transition happen within terms and I, but I will also tell you, there are a lot of firms that are still working on getting rid of the generalist concept.\r\nOh, yeah. It's a hard push to get people. \r\n[00:17:14] Kim Blascoe: I think we look at the CAS side of the practice as an opportunity for individuals that went through accounting curriculums or maybe economics or business majors or something like that, that really thought their only option was to go into private, to go to work for a company because they didn't want to do the commitment of the tax season hours or the audit season hours.\r\nAnd so cast gives them an opportunity and potentially Salt would as well, but it gives them an opportunity to stay into or enter into public practice or come back to public practice because there is now this, you know, these consulting opportunities that didn't exist originally. And they looked at it as all compliance based, and it was a drug of ours.\r\nAnd so we feel like we're transforming that whole. You know, space from the advisory aspect of it, so that there are opportunities for individuals that really aren't compliance based because a lot of practices that a lot of cast practices look at the financial statement as a byproduct of the service offerings that they're doing.\r\nSo, if we have that mentality, and we're thinking cast practices are. You know, focused on the advisory piece that do the transactional and accounting controller type of functions so that they have good data in order to do the CFO and the trusted advisor. You know, that's all really important for firms. And firms are still very much struggling to try to get there. \r\n[00:18:35] Judy Vorndran: Well, yeah, and the data thing, too, we actually hired someone who didn't get a CPA, but is a CPA kind of by training and decided to become a data wrangler, basically, which is not what is he's got some extra studying and understanding all data management.\r\nSo, we can assimilate data with lots of different repositories to get good filing information because people roll things up at the transaction level data is so important. And so that has been an interesting pivot for our team to think that way, because we're really good with Excel and, making spreadsheets and all that. But is there other things that we can do to ingest to create, what do you call it, some kind of a process that's not like us moving it into a spreadsheet and wrangling it.\r\n[00:19:14] Kim Blascoe: Yeah, and I think with all the technology changes that are happening now, one of the things that that we are very focused on in the whole discussion around and what does that mean to practices public accounting firm and cast practices is looking at the processes that you're doing manually, looking at the things that you're still doing in those Excel spreadsheets and saying, this is what kind of technology can help replace this so that I can move on to the advisory piece?\r\nRight? So we're trying to automate as much as we can on that back end. So that the value that we're bringing to clients is the conversations we're having with them and the knowledge that we can share with them. And the, uh. Um, the opportunity to help them grow their, their businesses and, you know, maybe potentially meet their goals, right?\r\nSo that's all, that's our goal is their goal, right? So figuring out how do we work with firms so that we can help or practice businesses so that we can help them, you know, meet their goals and their growth. So I'm not sure how much we got to raid. \r\n[00:20:08] Judy Vorndran: Meredith, \r\n[00:20:09] Kim Blascoe: but you take the rest of it. \r\n[00:20:12] Meredith Smith: So Kim, speaking with that, what is the mission of cpa.com? \r\n[00:20:18] Kim Blascoe: So CPA.com, um, actually started as the technical arm of the CPA. And so we really started with a whole concept of, um, helping firms and practices grow in the digit in a digital transformation space. So, very focused on technology, what has been added over probably the last. Few years is we now have a full professional services practice, which is the cast side of the house is what I lead.\r\nWe also have an audit side of the house, which is the technology that was built. So, you know, working with on the CAS side, working with firms to help transform their practices. Right? So working with them on potentially what's their, you know, what's their vision and mission? What service offerings are they going to have?\r\nWhat clients do they want to work with who's going to do the work? You know, what does that work look like? What processes are there? What technology are we throwing at it? How are we going to price it? You know, how are we going to assess clients coming in? So that we know that we're scoping that work appropriately.\r\nAnd ultimately, how are we going to market all of that? So that people know what we're selling right from a, from a firm perspective. So we're very focused on that side of it. We have a lot of, um, education and training that we focus on. We have coaching and consulting programs that we do. So we've changed a lot from just being the technology arm, but technology is still a very big focus for cpa.com and a huge part of our mission. \r\n[00:21:45] Judy Vorndran: Is that like a fee for service thing as well, though, that part of it? \r\n[00:21:49] Kim Blascoe: So, so we do a lot of different things. So we do have, offerings that there's a fee attached to them. But we do a lot of freemium type of stuff. So we do tons of webinars that are free and we do it on our topics that we help practices transform our coaching and consulting is a fee based practice. Uh, some of our education is free base. The webinar stuff is, uh, is free. And some of it is fee. Like, we do some workshops and stuff like that that are have fees attached to them. We do tons of white paper. Um, if you go out on the CPA dot com website, there's a ton of resources out there that are all free to firms.\r\nAnd we are getting ready to launch a toolkit in our professional practices for transformation, because we have a lot of firms that are DIY firms. They like to do things themselves, but they want. They want the tools that we use, and it's not all the tools that we use, but it's a lot of the tools that we use in our coaching and consulting program.\r\nSo if they want to transform their own practice, we're going to give them the essential tools that they can use to get there. Right. So, but we have a lot of firms that are going through the coaching program and we kind of took our workshop that we've always done the CAS roadmap workshop. That we've done for like 15 years.\r\nI went through it in 2017. Maybe it's only been 13 years. I went through it in 2017 and I was like, so invigorated on what I learned. And I'm like, oh, this is so cool. I'm going to go back to my practice and I'm going to start implementing. Well, then you go back to your practice. Cause this was back pre COVID.\r\nSo we were on site for a few days together. So we went back to our practices. Got busy with my day to day, you know, responsibilities, my leadership role and stuff like that. And then a year later I reached out to my cpa.com rep and I'm like, okay, what do you have for me? Like I'm, I'm ready to get started now.\r\nAnd she goes, well, the workshop is all we have. I mean, this is a long story that I'm going to bring around short. I'm like, oh, okay. So I took it upon myself. So I really took that DIY role and I, I worked through transforming. Now, what was a fairly major CAS practice? Because our accounting practice, because we had done all these mergers, right?\r\nSo I had 37 offices. Everybody was doing everything differently. And we're like. Where do we start? So when I came to cpa.com and one of the reasons I joined cpa.com is they asked me to build out our coaching program, our coaching and consulting program. So I took what I wanted, what I was looking for back in 2018, when I came back and said, I've now spent a year not doing anything, can you help me?\r\nAnd I built it. I you know, with a team of people inside of cpa.com, we literally built out. An accountable program, so we took some content of the roadmap workshop and dove deep into a lot of that content. And now it's an 18 month program. We do a variety of, um, group sessions, and then one on one coaching sessions and round table sessions.\r\nAnd we pick a new topic each quarter, and we work through those topics, building it out with the firms. We provide them with the tools they have homework. So there's accountability. So you don't go back to your practice and not do anything and then wonder why. You know, your practice isn't transforming. So, you know, that was, that was one of the big reasons why I did come to cpa.com so that I could help other firms work through what took me two years to do. It was a two-year project. We had a huge human capital piece of it. So anytime you're working with human capital and change management, there's a lot of warm, fuzzy stuff and, and. You know, our HR team was telling us, you know, you just can't do that.\r\nYou have to go about it this way, you know, so just the human capital part of it for me, because I had a team of like 180 people at that point in time that were between India and the U S you know, so we had a lot of changes that we did inside of our practice and you know, all of that kind of got rolled and rolled into our coaching and consulting.\r\nInteresting. So, freemium and stuff that you have to pay for. Because is it self report? Well, yeah, go ahead. I was just going to say a lot of our freemium stuff also comes with CPE, so if you join our webinars and stuff, you get free CPE hours, and you can get a lot of them. And I think it's like, a lot of CPAs that are looking for CPE don't realize that there's so much free CPE out there with really good topics and substance.\r\n[00:25:50] Judy Vorndran: Yeah, we've really got, we've taken advantage of it because we're a small firm. We teach and go to things just because we want to stay current with the legal changes and so forth. But we've done it, taken advantage of a lot of that because there's so much out there that's free content that'll give you the CPE hours you want and get some information.\r\nIt's very interesting the way how that shifted. You know, I know a lot of, and a lot of associations made their money off the CPE, right? Or the, I'm a lawyer to continually education, but now other providers are giving it and they're being paid sometimes by a vendor or something. So it's really transformed the way you and I get up to date as opposed to sitting in a conference room, you can get an hour and still move on with the rest of your day and not be completely bonked down, losing several days at work. Yeah. Super interesting. \r\n[00:26:34] Kim Blascoe: I will tell you though, when we went virtual with everything during the pandemic, I'm like, I missed people. I missed going to conferences. I missed my friends like Jenny Hattori that had the same pain points back then as I had, cause our practices were very similar that you can't shift that part of it but you definitely can look at other opportunities.\r\nAnd there's so many now, from a virtual perspective, there's just so many that you certainly can solve a lot of that with freebies. \r\n[00:27:42] Meredith Smith: So then with that coaching and mentoring, what do you see CPA firms struggle with a lot? Or is there a common denominator of just kind of reoccurring items that just continually come up when you work with various CPA firms and leadership and whatnot?\r\n[00:27:59] Kim Blascoe: Tom Hood just, um, put out a new slide that I thought was really, really interesting. I asked him if I could steal it and I told him every time I talked about it, I'd throw his name out there. Um, and it talked about, it looked at April, 2023 and April, 2024. And it was talking about exactly what you just asked me, like, what are firms struggling with?\r\nRight. And I thought it was interesting to see some of the movement of the topics and like, You know, one topic actually went away, but for 2024, it was literally like technology, keeping up with technology due to accelerated digital transformation in gen AI and how AI is like in every conversation that we have these days.\r\nRight. Almost like it had never existed before. And, and really, I talk about it all the time. It's like I do a lot of work with Sage Intact and Nicole Kasich is always like, we had AI. It's just people didn't know we had AI. Right. So now it's like, A buzzword, so that's our, that's our current buzzword.\r\nThe other 1 was upscaling existing talent, which is still a big struggle with firms, even though we are making some headway on resolving that, especially in the cast practice space and then finding and retaining talent is another 1. now, finding and retaining talent was at the top of the list in 2023 and it moved down to, I think, number 3 or 4 in 2024.\r\nSo. Maybe we've made a little headway on it, but it's not going away. And part of that is probably because we know that there aren't as many accounting candidates coming out of universities as much as we had, like, you know, when I came out of university. So that's a little bit different. And then the last 1 is, you know, still working through maintaining a firm culture and a hybrid environment.\r\nI think, you know, there's still our struggles with that. We, we hear firms are talking about pulling people back in a couple of days a week. So that there is some of that. Sense of community inside of the firms and, you know, kind of continuing to build culture because it is kind of hard to build culture when you spend all your time on virtual calls.\r\nRight? You know, so. We're seeing a lot of those changes, but, you know, the people side of it is still a big struggle and technology, you know, is changing faster than it ever has before. So people trying to keep up with all of that is, you know, also a big pain point for firms.  \r\n[00:30:13] Meredith Smith: So, when you talk about upscaling existing talent, what exactly does that mean?\r\n[00:30:19] Kim Blascoe: Yeah, so, so I'll speak from a CAS practice perspective, but it really is something across the, across the entire gamut of public accounting firms. So, we have people that come out of school, And have basically been taught compliance based stuff, right? It's all still technical training, not very much, even soft skill training.\r\nWhen you think about that. So, we have these kids coming out of school and, and we're looking at them and we're saying, okay, it took me 20 years to build my advisory level skill set that I have. You don't have 20 years. So how can we get you to an advisor level type of role? So, as quickly as possible and, and, and what do we, what can we do to do that?\r\nSo, first of all, you know, we're looking at our practices and we're saying, you know, let's take a skills gap assessment on what you have today, because if you want your services to include advisory services, you have to have the people that actually can deliver the advisory services. And so often in our practices right now, we don't have that, especially in our cast practices.\r\nWe have a lot of cast practices that are really, really good at transactional through. Um, consult or controller type of services and they can't figure out how to move beyond that. So, you know, that's one of the things we work with firms on in our coaching program is, you know, thinking about the whole build.\r\nSo we call it kind of building a factory. Like, you wouldn't open a door to a factory with only 1 piece of equipment. If you need 6 pieces of equipment to do the, to deliver the product that you want to deliver. We need our cast practices to think that way too. So if you look at your services. We look at who you're going to work for, like the clients, basically the industry niche that you're going to work in, like who's going to deliver that and how do we get those people upskilled to those, to those different skill sets that we have today.\r\nSome people will never be able to deliver. Consulting services and advisory services. It's just not in their DNA. They're technical people. We need technical people. That's all good. I think we just have to, embrace the fact that not everybody's going to be an advisor, but the people that you do see, like, a glimmer, like, early on in their, in their careers, it's like, those are the individuals you grab, you mentor, you put in upscaling programs.\r\nWe're actually working. I'm hoping by will have a launch on this for 2025, or at least, uh, um, uh, here's what's coming in 2025. We are building out kind of like, how to build a trusted advisor. How do you build an advisor type of role that will have, like, a boot camp basket aspect to it. So, like, they can come and spend 3 days on site somewhere, and it literally is like, you know, doing, like, um.\r\nWorking with other people and doing role play type of stuff, you know, so that individuals get more comfortable doing that. Because again, we don't have 20 years to build these advisors. We need it now. Clients are asking for these services that they weren't asking for 10 years ago. Certainly the pandemic has changed a lot of that too.\r\nThat scared a lot of people. There were a lot of businesses that ended up not making it because they didn't have the cash flow. That they needed to sustain a pandemic, right? So there was no cash flow planning. There was nobody. I mean, nobody realized a pandemic was going to happen. Right? I don't know.\r\nMaybe some doomsday people were saying it was going to happen. Most of us didn't believe it. Right? And I think even when we were still home, almost a year later, we still didn't believe we were like, in the situation that we were in. But, you know, you think about, like, how do we get the, how do we get individuals.\r\nTo a point where, where the skillsets that they have match the services that we're providing inside of practices. And, and firms are looking all the time for opportunities to upskill those individuals. There's just not a lot out there. That's still an area that's being widely built out from a training and education perspective.\r\n[00:34:04] Judy Vorndran: For sure. Because you learn rules and we should clarify that CAS means client advisory services, which is a very broad based word. I mean, right, acronym because honestly, client advisory, like. What does that mean? \r\n[00:35:14] Kim Blascoe: One of the things that we're really working with now advisory leaders.\r\nSo one step up from CAS leaders, because most of our cast leaders roll up through advisory inside of public practices, especially the large firms. Right? So one of the things we're working on at CPA.com is how do we take all those advisory services, right? There's a lot of them. Anything that doesn't fall into tax or audit or a test.\r\nFalls into advisory or consulting services, right? So how do we take all of those services and start focusing on the client centric model where what's the best for the client? So like not thinking about a lot of times in bar, which is the direct technology build for a client rather than going through like a client advisory services practices, where we build the technology for the client, right?\r\nThat we're going to use for that client. So a little bit different. Model like they're very focused on a get in and get out model. CAS is very focused on get in and stay model, right? You know? So it's a, it's a very, very different model, but you know, one of the things on the bar side of the house is they're very focused on selling this and moving on to my next sale.\r\nWe're not like that, right? So we're like, how do we get everybody thinking bigger? So, and also a lot of the larger firms have an outsource CFO practice. So if you take those, the bar, the outsource CFO, the cast practice. And you start getting them to work together on what's the best opportunity for the client?\r\nWhat's best for the client? And what's also then does that make it good for the firm? Right? So, you know, we want to say to the bar practice is just building out that technology for client the right move. Or should you be talking to the client about potentially client advisory services? Maybe they don't need a tech build.\r\nMaybe they just need outsourced accounting and CFO services. So, and that could solve their problem. And then the firm benefits from that too, because it's not a one time fee and it's recurring revenue. Yeah, it's recurring revenue and everybody loves recurring revenue. You think about all the, oh yeah.\r\nStuff that's happening now. They love the re recurring revenue, so they immediately go to the advisory. They love cast practices because it is based off of recurring revenue. \r\n[00:37:20] Judy Vorndran: Yep. No, it's a huge. And I found that myself, cause we've done a lot of automation where we'll set people up to click sales tax, get them licensed, all the things, and then they don't maintain it.\r\nOr the people that started it helped get it set up, leave. And you're thinking, oh, my gosh, nobody's watching it anymore. You were watching it. Who's going to watch it now? And I think there's a lot of that happening in the co sourcing outsourcing area and in software where people are thinking, set it, forget it is just not correct.\r\nIt's not set it, forget it. So there's a huge disparity between what software companies and tech, you know, all the things is just rolling up where people like, I don't know. They want to hand it off because they're CEOs that are visionaries, but they are like, I didn't pick the right pieces to get my business in order.\r\n[00:38:16] Meredith Smith: So then kind of in the, in the spirit of that kind of dynamic, Software recurring revenue kind of changes in what ways are you seeing CPA firms kind of pivoting and transforming their practices?\r\n[00:38:32] Kim Blascoe: Yeah, so I think 1 of the most important things that we need to think through is that. We are still a fairly compliance based industry, right? And there's so much competition other than a test, which we own, right? The audit space. Accounting firms own that space. Other than a test, though, we really public accounting firms don't own anything else.\r\nRight? So tax, CAS services, all these additional advisory services, technically, anybody with a skill set can do those. And we are seeing competition come into the space that is very compliance based, but also very client centric. Right? So they throw a bunch of technology at it. They're they have a very specific ideal client profile that they're going after and they have way more money.\r\nA lot of them are back, so they have a lot more money to throw at things. So I think the importance to the accounting industry is to take a step back and say, where are we only doing compliance? And can we add advisory to everything that we're doing from a compliance perspective? And then also looking at what advisory and outsourcing opportunities are we not, do we not have in our, in our toolkit today that we should potentially look at adding.\r\nAnd the importance of that is, is that CPA firms still have the relationship with the majority of clients, right? So if you look at we mentioned in the beginning, there's 46,000 CPA firms out there, right? And you think about that. So they're the ones that hold the majority of the relationships. If we don't keep up with the competition or stay ahead, really, I think I look at adding advisory to everything we do as staying ahead of the competition because the competition is still very compliance based.\r\nIf we don't do that, we're going to lose our leg in the industry and we don't want to do that. So it's very, very important to AICPA and CPA. com that we continue to advocate. For that, um, in, in the industry for adding advisory services to everything we do for compliance so that we maintain the relationships and stay ahead of the competition.\r\n[00:40:36] Meredith Smith: Well, and that's where we even see from, we work with, with sales tax software vendors to help our clients solve a problem that they have, right. They need to collect sales tax. They need to get on an invoice. What's the best way to do that? And so often we partner with various sales tax software platforms to But what we also are finding them doing, it's like, you know, that same kind of vein of, well, we can solve this problem by way of putting tax on an invoice.\r\nOh, but then we can help you register. Oh, and then we can help you research the tax rules. And then we can help you put all of that collected tax on a tax return. So they are. Expanding and kind of, I would say, kind of doing what you're suggesting CPA firms do, but at the same time, you've got to understand, like, really, what's your core competency and what are you really good at?\r\nBecause as a software vendor, you're not good at advisory services when you're also not an advisory firm, but also the advisory firms, it's like. We do, and kind of going back to some of our earlier conversation, we do want to be kind of like all things for our clients, because that is that relationship.\r\nAnd we value that connection and want to assist you with your problems. But at the same time, that's where we look at it. And it's like, well, we've got to also partner with other firms because we can't be all things to all people. So let's get to know really good people that we can refer you to. And us as state and local tax experts, we don't have to also be competent in.\r\nPermanent establishment for some of our non U. S. based businesses, but let's partner with some of those other firms that are really good at that. \r\n[00:42:16] Kim Blascoe: Yeah. And you know, I think we, a lot of times talk, even in our coaching program, we talk about, we work, cause we work a small, medium and large firms, right. When we do coaching and consulting and you know, I always tell everybody, I'm like, okay, think about, think about the difference in the service offerings that you have between small, medium and large firms.\r\nRight. So your large firms, they probably have a huge. Amount of service offerings that they do, including assault practice, including a payroll practice or an HR consulting practice. So they have, they have like, you know, really like honed in on different services that in a generalist practice, they're going to keep it high level.\r\nAnd the large firms have kind of scoped that much in more, much more detail. Then you think about the medium sized firms and they probably have a good number of services, but not as many. So, they have to go to find resources in other places, and they just build those relationships. And then you think of the small firms where they're really focused on maybe a small number of services that they have to offer, and they absolutely have to go out and find other resources to help them. I always said, you know, one of the, you think of one of the beauties of merging in like a smaller firm, merging into a larger firm, it's like heaven on earth. The first year, when it comes to the service offerings you have available to your clients, right?\r\nSo you have like all this growth in the very first year, because you're like, Oh my gosh, we can do cyber. We can do R&D credits, you know, like all these things that before you had to go find resources for, and, and you realize like how many more. Service opportunities your clients have inside of those large firms, but, you know, there's trades to everything you do, you know, you get into a large firm environment and it becomes a little more of like.\r\nI hate to use the word silo, but, you know, like, you've become more practice and industry focused and now that generalist concept is a little bit different and not all clients like that. So some clients like working with small firms because it's a more intimate relationship. But then you have to go and find some of those additional resources. \r\nI don't know if we talked about this, but, you know, this whole India thing, we had a huge facility in Hyderabad at Deloitte. And what I found that was challenging for our team was we had to do things, have them do things 3 times. So even though we got this huge cost differential and the salaries, we have this huge training cost to the people in the US and these 4 people had to work in the middle of the night.\r\nAnd I see this going on this, this dilution across the nation, where using different countries to take advantage of wage disparity. And I wonder how you feel about that, given the CPA community in America, because it's almost like we're lowering the costs by giving other work to other countries, instead of making American business recognize the true cost of doing business in America by paying US wages. And sometimes I don't, I struggle with that, even though there's a need for it. \r\n[00:46:25] Kim Blascoe: Yeah. So, I mean, I guess I have maybe a couple of thoughts on that one. I think the philosophy today is different than when we first started getting into the foreign countries from a workspace. I think now we have, we, we really have a problem filling seats in the accounting space and hiring offshore helps solve some of those problems.\r\nI think initially the, the stars in the eyes were all about, Oh my gosh, we can get these individuals. For a much smaller fee, but I agree with you, it wasn't a dollar for dollar trade. There definitely was a, a learning and education difference between the individuals. in the offshore teams in some of the offshore countries versus, you know, what we saw on the US side.\r\nSo it really did require additional training. The other thing is, is I think when we 1st went into the offshore world and with at least have their offshore world for a really long time. They had it when I came in in 2010, we already had a cast practice, like a bonafide cast practice offshore, which was kind of cool because they were way ahead of their time.\r\nI had nothing to do with it. It already existed. I inherited it, but it already existed. But I think back then, you know, it was like, you know, let's, let's look at the profitability aspect of it. Then we very quickly learned that it is really important. Yeah. To do a very defined job description and what you're looking for skill sets on the offshore piece so that you make sure that everybody's hired for success.\r\nOtherwise, you're going to constantly be disappointed in the quality of the work that that you're getting over on the U. S side. And I think we all learned from that, right? It was very much a struggle and we all learned from it. And I tell my firms that I'm coaching with that are looking at doing an offshore piece because that's the other thing that offshore piece used to be a very big firm.\r\nThing right now, everybody does offshore. \r\n[00:48:17] Judy Vorndran: I get pitched for it every day. Somebody's finding me and say, I have resources in India, Philippines. I'm like, holy moly. I don't even know who you are, but they're pitching me to use them. \r\n[00:48:25] Kim Blascoe: It's all over the place and, you know, and all different service offerings.\r\nIt's just the way people are solving. You know, some of their employment issues nowadays, but, you know, I think the importance of that, you know, goes back to make sure that, you know, what you're hiring, right. And make sure that the skill sets that you're hiring fit the service offerings that you expect them to do.\r\nBecause when I talk to firms that I'm like, what do you want your offshore piece to do? And I've been here, right? Like I have done the offshore piece. I get it. And they're like, I want them to do everything from transactional to controller. Everything that's not automated. And I'm like, okay, but you understand controller type of services is a higher-level service.\r\nThat's a manager level service on the U S side, right? So, think about who you're hiring over on the offshore side, because in order for them to do those services, they have to have the proper training to do them. You can't expect, you can't expect those individuals to be able to do it on their own and their education systems.\r\nAre different than the U. S. education system. So, you might need to send some people over to do some training and, you know, maybe the, I always said the beautiful thing would have been to have had somebody that was willing on the U. S. side, a couple of people that were willing to maybe go spend a year over.\r\nYeah. We did a ton of secondments at the light tons of people spend, we would send a lot of people over there. I went over there many times, you know, so we send a lot of people over there, but nobody was there for the long haul, right. You know, go spend a year, help us train up our people. So, I think that's all really important and something to take into consideration when you're looking at the officer.\r\nSo, I don't think it's necessarily about profitability anymore. I think it's about finding people to do the types of services that we need to do for our individual practices because we just don't have as many bodies on the US side\r\nI think younger generations just wants more time and not as much, you know, hands on and wants to utilize tech.\r\nBut there's, there's a dichotomy going on here where they think tech solves all and there's still talent and operations that need to be done. In fact, Just talking to some other firm leaders recently at this boomer conference, which I assume is kind of similar to the cpa. com is doing, which I didn't realize was doing something similar.\r\nThat's why we're talking to you, but I'm lucky to these other teams. And they're like, well, I did it all the way. Like I know how it needs to be filed. So now I know the automation is right. And there's something to be said about that. You count on automation. We don't, I was taught never to count on automation.\r\nThat was just my training. You can't trust it. But I think we've got a generation that's saying, well, trust it. Yeah. But verify, right? We don't know how to verify it, though. So we've got to kind of figure some of that out nationally, nationally. \r\nMeredith and I years ago, we wrote this article about Sweden because Sweden loves their taxing authority. They love the part of their government that's involved in their life from birth to death.\r\nAnd so there's something about it. They've done really well, maybe because they're a homogenous society. I don't know. But we have this very anti tax. Thanks. Culture in America. And I'm like, but you know, you have roads and schools and fire departments and police and, and, you know, people taking care of science and airports.\r\nI mean, that all took tax dollars. Like you didn't, it didn't get built out. People were going on their wagons and riding horses just a little while ago. So that all paid for people coming together. \r\n[00:53:27] Kim Blascoe: Yeah. You know, an interesting story about that. Back when I was doing tax work, I had a. Client a new client they came into the country.\r\nThey were Canadians. They came into the country And so they were living here full time and so they had to file a tax return So I did their tax return form and I told them and he was he was a contractor So he had to pay social security tax and income tax and they They had not been paying at all. Right.\r\nHe was a 10 99 subcontractor. And so I prepared the tax return for him. I'm like all stressed out because like they owed just a ton of money. Right. In my mind, they owed a ton of money in company. Cause there was no planning. There was no planning on the upfront. It was like, they walked in my office. They said, do this tax return for me.\r\nAnd I'm like, Oh, where are you from? They're like, Oh, we're Canadian. And I'm like, Oh, cool. Okay. So we did the tax return. I handed them the bill and they go, that's all we owe. And it was, it was a husband and wife. They were sitting in front of my desk and I'm like, Oh, Really? I thought that was horrible. And they're like, Oh my gosh, no, in Canada, we give minimum 50 percent of our income back to taxes.\r\nAnd he's like, we think nothing of it. And you all complain about, you know, how much it costs you in income tax. And even if you ask social security and Medicare tax to that, you're not giving 50 percent your state tax. You're not giving 50 percent for most people. Right. So I thought that was a really interesting, like eye opener, like You know, it's a us problem, right?\r\nOur, it's like our, our, um, you know, kind of thought process about our taxing system and how everybody feels like they get taxed all the way around. And in all actuality, most countries are much worse than ours. \r\n[00:54:55] Judy Vorndran: They're much worse. And I feel like I wish people would appreciate that. I always try to get from a perspective of appreciation.\r\nI mean, certainly we advocate on behalf of taxing. Fairs, but we also recognize that got, they haven't complied. So we've gotta rep, you know, rep say with governments like, Hey, you know, give these guys a little grace so that we can get them in compliance. 'cause they do wanna do the right thing they just didn't know.\r\nSo, you know, but you can only plead the fifth so long . \r\n[00:55:19] Kim Blascoe: Right? And you know, the acknowledgement that government is a business, right? So if you're running a business. Which the government should be running a business. You have to be able to make money in order to do things like you said. Nice roads, clean cities, you know, like all those things that take a lot of money, people's time, and infrastructure to do.\r\nSo somebody has to pay for it. Right, but also, you know, I don't want to pay any more than my share. So that's right. My whole deal, but that's the challenge But I feel like everybody needs to actually pony up some money But it does it \r\n[00:55:51] Judy Vorndran: actually I feel it works out from my experience big Porter regional to small.\r\nI'm like the big firms The big companies bear the brunt of the tax obligations and small companies get away with murder, which is why the Wayfair decision did even the playing field. And there's no reason that decision need to go forward. Wayfair could have given a rip about South Dakota. They did it out of the goodness of their hearts because they're very wealthy individuals that started that company and they and Newegg and overstock.\r\ncom all came together, paid the legal fees to hide that fight on behalf of taxpayers. And I think there you have 3. Come some young tech entrepreneurs who are open to this process as they've learned to deal with America. Right. Okay. If I've got to do it because I've made myself a big name, I'm going to sue, get sued, get audited.\r\nI'm going to kind of settle. I'm going to let it go forward. And that's how that decision came forward. Because it was 100 percent a plan thing. It was not, it did not need to go to the Supreme Court. It was, it was a deprived, uh, procedure. And the fastest way the great Supreme Court was to go through South Dakota.\r\nBut it did even the playing field. To some degree from a regulatory things. \r\n[00:56:53] Kim Blascoe: Yep. Yeah. Definitely changed things and I think, you know, to some degree made things a lot more complicated or maybe. Yeah, \r\n[00:57:02] Judy Vorndran: oh, \r\n[00:57:03] Kim Blascoe: way complicated. \r\n[00:57:04] Judy Vorndran: I've never seen states act that quickly in my whole flipping life. I've been doing this almost 30 years.\r\nI've never seen every state get on board within 3 years. Every state has a wayfair law. Now they all are varied, but they all have 1. you just do not see that kind of conformity. Ever, but they're like, there's a huge amount of money not coming to my front door because it's coming to my, I'm getting packages delivered to my front door now.\r\nAnd so I'm going to even it. And you know, the other thing, the cost of doing business is slower now because of tech and people are open for business everywhere, including myself. I don't just have Colorado clients. We have clients all over the world. We can help anybody because we have tech. We can talk to you like we're doing now.\r\nWe're not barrier. We don't have barriers to entry by having someone drive up to our office. So, and even though we have offices, we work remotely because why go in if we don't need to. So it's really changed the dynamic of our ability to help 1 another. And with tech, we can do it. I would, of course, we were pandemic proof because.\r\nYou know, we're we're we're a necessary job. Yeah. \r\n[00:58:03] Kim Blascoe: Yeah. I did say it was 1. I thought that the 1 thing 1 really beneficial thing for cash practices coming out of the pandemic was clients now realized that you didn't have to be sitting in their office to have a conversation with them. Right? Yes. You know, even though a lot of, um, staff on cast practices were already working remotely, they still had a regional draw to them to some degree.\r\nSo like, if they had clients that still wanted them to come and sit in their offices, they did that. Yeah. When the pandemic happened and we spent a year on zoom and then like, I'd have clients and they, I'd be like, do you want me to start coming out again? They're like, no, like we like this. We're used to it.\r\nRight. And it was really the birth of virtual. Um, the virtual conversations and the, and CFO and trusted advisor conversations that individuals were having, having with their businesses and the feeling that sitting next to them wasn't as important anymore. \r\n[01:00:52] Meredith Smith: Well, and as we wrap up, and I can't believe we're kind of coming to the end of Q3, right? Looking into the end of Q4. As 2025 quickly approaches, does cpa.com have a focus that they're looking into that could impact the industry and kind of forward thinking? \r\n[01:01:09] Kim Blascoe: Yeah, so I think 1 of the, you know, I've, I probably mentioned today already, like, one of the big things that we're focused on is the advisory transformation piece.\r\nRight? So we will continue to focus on our audit and cast transformation and offerings that we have. And and we have a lot of firms that haven't even started any of that. You know, I think if you think about the audit transformation, it's a. It's a much slower move than cast transformation has been right, you know, because audit has been the same for many, many years.\r\nSo we now have, um, you know, things being built that change the way audits are done and and that's. Amazing and there's technology being thrown at it. So spreadsheets may be a thing of the past, even in the audit world. Um, so that's really cool. And we continue to work with cast practices on their transformation as well.\r\nBut I think overall, that whole, you know, discussion that we had earlier on the advisory piece of it and what that advisory transformation looks like, um, from an overall firm perspective, and then how do we get things, you know, aligned appropriately, you know, From a service offering perspective, so that we are more client centric and thinking about what that client experience looks like working, you know, with the firms, which is maybe a little bit different approach than we've had in the past.\r\nYou know, we've been very practice or service offering focused, not necessarily thinking about the client experience. So that's a big part of it with what we're doing today. We upscaling piece because we have a long way to go. And there, you know, you had mentioned when we were talking about. Like, you know, things that the younger generation doesn't know how to do a bank reconciliation.\r\nThey don't know how to do bank reconciliations. They grew up on their computers. Everything is on their phones. Everything is in real time. They don't have any of those skills yet. We still do that inside of cast practices, uh, from a business perspective. So, you know, building out even some of those, what we would consider to be entry level skills into a cast practice, because the service offerings in cast.\r\nAre different than what they need from an audit and tax perspective. So we continue to work on our upscaling programs and education that we have. Um, and I think, you know, that is 1 of the areas we know that firms come to us all the time and say, we need this. Right? So we have this thing called cast core at, which is.\r\nUm, an education packaged education platform for, uh, cast. Associates that they can go, they also have something called MBA express, which is really like a leadership soft skills thing, but we don't really have anything on that, that lower end, you know, in our, in our cast leaders are saying to us, you know, could you please build something so that when we have new people coming into our cast practice, we can give them, uh, you know, uh, cast 101 training on what cast is, because this is not something that is being.\r\nUm, trained and educated inside of the university level stuff. So we're working on a lot of that as well. So very much still focused on the education and training piece of it. But transformation is our number 1 focus and continuing to build vendor relationships that help the firms that we work with.\r\nYeah, \r\n[01:04:13] Meredith Smith: that's awesome. And I think we're so kind of grateful and helpful that there are resources out there like cpa. com. Um, especially because I think the industry is changing. We're not just green visors sitting in a desk, you know, not moving anymore, not talking to any people and, you know, it is truly a relationship.\r\nField, and so, Kim, we really, really appreciate your time today and thank you so much for being here and we look forward to continuing the relationship. \r\n[01:04:45] Kim Blascoe: Yeah, so much fun. Thank you for having me. \r\n[01:05:19] Meredith Smith: Well, this has been another episode of SALTovation. \u2018Til next time.\r\n","footnotes":""},"categories":[723,229,226],"tags":[252,167,284,126,265,476,999,30,1007,80,141],"class_list":["post-15002","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-podcast","category-state-and-local","category-tax-news","tag-accountant","tag-california","tag-cfo","tag-cpa","tag-finance-professional","tag-franchise-tax","tag-public-law-86-272","tag-state-and-local-tax","tag-tax-cases","tag-tax-provider","tag-tax-returns"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2025\/05\/dy1.webp","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/15002","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/comments?post=15002"}],"version-history":[{"count":5,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/15002\/revisions"}],"predecessor-version":[{"id":15026,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/15002\/revisions\/15026"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/15027"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=15002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=15002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=15002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}