{"id":15720,"date":"2026-04-24T01:23:30","date_gmt":"2026-04-24T01:23:30","guid":{"rendered":"https:\/\/taxops.com\/?p=15720"},"modified":"2026-04-24T01:23:31","modified_gmt":"2026-04-24T01:23:31","slug":"section-174-decoupling-what-tax-pros-need-to-know-state-by-state","status":"publish","type":"post","link":"https:\/\/taxops.com\/section-174-decoupling-what-tax-pros-need-to-know-state-by-state\/","title":{"rendered":"Section 174 Decoupling: What Tax Pros Need To Know State By State"},"content":{"rendered":"\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" src=\"data:image\/gif;base64,R0lGODlhAQABAIAAAAAAAP\/\/\/yH5BAEAAAAALAAAAAABAAEAAAIBRAA7\" data-src=\"https:\/\/taxops.com\/wp-content\/uploads\/2026\/04\/Section-174-Decoupling-1024x576.png\" alt=\"\" class=\"wp-image-15726 lazyload\" data-srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2026\/04\/Section-174-Decoupling-980x551.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2026\/04\/Section-174-Decoupling-480x270.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><noscript><img decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/taxops.com\/wp-content\/uploads\/2026\/04\/Section-174-Decoupling-1024x576.png\" alt=\"\" class=\"wp-image-15726 lazyload\" srcset=\"https:\/\/taxops.com\/wp-content\/uploads\/2026\/04\/Section-174-Decoupling-980x551.png 980w, https:\/\/taxops.com\/wp-content\/uploads\/2026\/04\/Section-174-Decoupling-480x270.png 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/><\/noscript><\/figure>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><em><a href=\"https:\/\/tax-intelligence.captivate.fm\/listen\" target=\"_blank\" rel=\"noopener\" title=\"\">TaxOps Partners Jamie Overberg and Sean Espy navigate the State By State Decoupling from Federal Section 174 Capitalization Rules <\/a><\/em><\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Section 174 Decoupling: What Every Tax Professional Needs to Know<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If you are filing state tax returns this spring and assuming the rules around Section 174 capitalization are settled, think again. The landscape is shifting so fast that even state departments of revenue cannot keep up. That is the central warning from a new episode of the TaxOps podcast, where partners<a href=\"http:\/\/www.taxops.com\/jamie-overberg\" target=\"_blank\" rel=\"noopener\" title=\"\"> Jamie Overberg<\/a> and <a href=\"http:\/\/www.taxops.com\/sean-espy\" target=\"_blank\" rel=\"noopener\" title=\"\">Sean Espy<\/a> unpack the state-by-state chaos surrounding 174 decoupling.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The result is a candid, deeply informed conversation that every tax professional, CFO, and controller navigating multi-state compliance needs to hear.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The Research Problem No One Is Talking About<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here is the uncomfortable truth: no two sources agree on how many states have decoupled from federal Section 174 capitalization rules. Jamie Overberg puts it bluntly during the episode: &#8220;Google, GPT will tell you one answer. I&#8217;ve listened to a presentation from Deloitte and they had a map. I&#8217;ve seen a map of states that have decoupled from PwC and it doesn&#8217;t match what we had.&#8221;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The count hovers somewhere between 20 and 30 states, but the number keeps moving. States have been issuing guidance late, reversing positions, and in some cases, their own departments of revenue lack clarity on where things stand. &#8220;We&#8217;ve found sometimes if you contact the DOR that says, &#8216;Are you guys doing this?&#8217; They don&#8217;t even know,&#8221; Overberg notes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For practitioners filing returns right now, this means the only reliable approach is going directly to each state&#8217;s website for the most current guidance, and even then, exercising extreme caution.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The District of Columbia Standoff<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Perhaps the most dramatic example of the current volatility involves the District of Columbia. DC passed a law decoupling from both individual and corporate provisions under OBBA, a move that hit particularly hard given its concentration of tipped and overtime workers. The federal government responded by telling DC it could not opt out of OBBA. DC fired back with a lawsuit.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8220;I honestly don&#8217;t even know where that stands,&#8221; Overberg admits. It is a telling moment: when a seasoned tax professional cannot pin down the status of a major jurisdiction&#8217;s conformity, you know the terrain is genuinely unstable.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Arizona: A Case Study in Legislative Whiplash<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Arizona offers a textbook example of how quickly things can change. The governor initially issued an executive order decoupling from both individual and corporate provisions. The legislature then wrote a bill to conform. The governor vetoed it. Negotiations followed, resulting in a compromise: decouple from corporate provisions, but conform on the individual side.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This kind of back-and-forth is playing out across the country, and it underscores why tax professionals cannot rely on a single snapshot in time.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Why States Are Decoupling (and Why Some Are Not)<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The pattern is largely fiscal. &#8220;It&#8217;s kind of been the states that have the worst budget crunches that are the ones that are decoupling,&#8221; Overberg explains. States need revenue, and requiring companies to capitalize research expenditures at the state level, even when federal rules no longer demand it, generates taxable income.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Colorado offers a notable exception. Despite facing a billion-dollar budget shortfall, the state chose not to decouple. Overberg attributes this to the governor&#8217;s centrist approach and willingness to ease the burden on taxpayers, particularly lower-wage earners affected by tip and overtime taxation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The 174 Compliance Trap<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sean Espy raises a critical point that many companies overlook: Section 174 applies wherever technical uncertainty exists, which can be anywhere. Unlike the R&amp;D tax credit, which requires qualified research expenditures in a specific state, 174 captures a broader universe of costs, especially after 174A expanded the definition to include all software development expenses.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8220;The states are certainly allowing, or requiring rather, any activities outside of the state to be included in your 174,&#8221; Espy explains. For companies with operations spanning multiple jurisdictions, this creates a compliance obligation that cannot be ignored simply because they would prefer not to claim R&amp;D.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The silver lining: now that federal capitalization is no longer required, companies are more willing to embrace R&amp;D claims. As Overberg observes, &#8220;If they only have a 5% apportionment in Arizona, it&#8217;s not going to hurt them as much.&#8221;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>State Credit Changes Worth Watching<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Beyond 174 decoupling, the episode covers several significant state-level credit changes:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u25cf California has finally adopted the Alternative Simplified Credit, though at lower rates (3% with a three-year base, 1.3% without). One catch: switching back to the regular credit method requires a formal methods change, unlike the federal election which can shift year to year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u25cf Michigan has restored its research credit, but with tight deadlines (April 1 this year, moving to March 15 next year) and a calendar-year-only requirement that creates complications for fiscal year filers. The state&#8217;s $100 million budget will be divided proportionally among applicants.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u25cf Oklahoma has launched a &#8220;research rebate&#8221; that appears to be refundable, with a budget of approximately $30 million and a first-come, first-served application window of just one week.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u25cf Texas has increased its credit rate from 5% to 8.6% and eliminated the outdated discovery test, updating its static conformity date to January 1, 2025.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u25cf Minnesota now offers a partially refundable credit, creating potential cash benefits for companies with losses.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u25cf Iowa has re-included supplies and lease computer costs in its credit, but now requires pre-application and certification before claiming.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The International Wrinkle<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As the conversation wraps up, Espy delivers one final reminder that is easy to overlook amid the domestic chaos: Section 174 capitalization for international R&amp;D activities still applies. Companies conducting research overseas must still account for those costs on their returns, regardless of what has changed domestically.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>What This Means for Your Filing Strategy<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The message from Overberg and Espy is clear: do your research, verify it against the most current state guidance, and have your numbers ready. Modeling calculations across multiple scenarios, particularly when considering interactions with AMT, FDII, and NOL limitations, is not optional. It is essential.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8220;We live in a wild, wild west era right now,&#8221; Overberg says. She is not exaggerating.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Listen to the full episode of the <a href=\"https:\/\/www.youtube.com\/watch?v=p1X54mJc4Ps\" target=\"_blank\" rel=\"noopener\" title=\"\">TaxOps podcast<\/a> for the complete conversation between partners Jamie Overberg and Sean Espy, including detailed examples and practical guidance for navigating this unprecedented compliance landscape.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>About the Hosts<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"http:\/\/taxops.com\/jamie-overberg\" target=\"_blank\" rel=\"noopener\" title=\"\">Jamie Overberg<\/a> \u2014 Partner, TaxOps Minimization. Jamie has more than 20 years of R&amp;D tax credit experience, with deep expertise in credit execution, tax minimization strategies, and ASC 730\/740 and FIN 48 reporting. She previously spent 13 years at Ernst &amp; Young, including a national role in E&amp;Y&#8217;s Washington, D.C. R&amp;D practice.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"http:\/\/taxops.com\/sean-espy\" target=\"_blank\" rel=\"noopener\" title=\"\">Sean Espy<\/a> \u2014 Partner, TaxOps Minimization. Sean brings more than 25 years of consulting experience across public accounting, legal, and industry, specializing in Research Credit consulting. He has represented clients before the IRS and state tax authorities in nine states and is admitted to the U.S. Tax Court and the Supreme Court of the United States.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Listen to the full conversation on <a href=\"http:\/\/tax-intelligence.captivate.fm\/listen\u2197\" target=\"_blank\" rel=\"noopener\" title=\"\">Tax Intelligence<\/a>, available now.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Tax Intelligence with TaxOps<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is the podcast where experienced tax professionals share clear, practical insight on today&#8217;s most complex tax issues\u2013from SALT and federal tax strategy to ASC 740, tax minimization, and investment fun considerations. Each month, our experts break down what matters, what&#8217;s changing, and how to think strategically about tax\u2013so you can make informed decisions with confidence. <a href=\"https:\/\/tax-intelligence.captivate.fm\/listen\" target=\"_blank\" rel=\"noopener\" title=\"\">Listen today<\/a>!<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>About TaxOps<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">At TaxOps, business tax is all we do. Our teams have the knowledge and focus to solve tax problems with practical tax answers. By hiring our Big Four-veteran leaders and experienced teams, you get tax strategists on your side supporting your strategy wherever business takes you. We deliver the strength, experience, and resources of a national tax brand with the hands-on client engagement of a boutique firm in federal, corporate, state and local and international tax as well as tax minimization strategies for businesses. For an introductory call, visit <a href=\"https:\/\/taxops.com\/contact\/\" target=\"_blank\" rel=\"noopener\" title=\"\">TaxOps.com\/contact<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>&nbsp;<\/em><\/p>\n\n\n\n<div style=\"height:57px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-fe48e5de wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/taxops.com\/contact\/\">Talk to a Business Tax Advocate<\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Read more<\/h2>\n\n\n<ul class=\"wp-block-latest-posts__list wp-block-latest-posts\"><li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/auditor-independence-in-the-age-of-private-equity\/\">Auditor Independence in the Age of Private Equity: What CFOs Need to Know<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/r-d-credits-for-software-companies\/\">R&amp;D Credits for Software Companies: Scrum Teams, Qualifiers, and Section 174 After OBBBA<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/section-174-decoupling-what-tax-pros-need-to-know-state-by-state\/\">Section 174 Decoupling: What Tax Pros Need To Know State By State<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/sean-espy-new-partner\/\">TaxOps Welcomes Sean Espy as Partner, Tax Minimization<\/a><\/li>\n<li><a class=\"wp-block-latest-posts__post-title\" href=\"https:\/\/taxops.com\/state-nexus-demystified-navigating-tax-compliance-after-wayfair-episode-1-2\/\">Your Tax Footprint Is Probably Bigger Than You Think: What Finance Leaders Need to Know About State Nexus<\/a><\/li>\n<\/ul>","protected":false},"excerpt":{"rendered":"<p>TaxOps Partners Jamie Overberg and Sean Espy navigate the State By State Decoupling from Federal Section 174 Capitalization Rules Section 174 Decoupling: What Every Tax Professional Needs to Know If you are filing state tax returns this spring and assuming the rules around Section 174 capitalization are settled, think again. The landscape is shifting so [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":15726,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"<!-- wp:spacer {\"height\":\"41px\"} -->\n<div style=\"height:41px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:image {\"id\":14221,\"sizeSlug\":\"large\",\"linkDestination\":\"none\"} -->\n<figure class=\"wp-block-image size-large\"><img src=\"https:\/\/taxops.com\/wp-content\/uploads\/2025\/01\/2025-Colorado-State-and-Local-Tax-Legislation-1024x576.png\" alt=\"\" class=\"wp-image-14221\"\/><\/figure>\n<!-- \/wp:image -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><!-- wp:paragraph {\"align\":\"center\"} -->\n<p class=\"has-text-align-center\"><em>Judy Vorndran, lead partner of state and local tax at TaxOps, testified before the Colorado Senate Finance Committee on January 28, 2025. She addressed SB25-018 and SB25-046, proposed legislation that would create a searchable database and enhance audit confidentiality. Below is a summary of her remarks<\/em>.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph {\"align\":\"center\"} -->\n<p class=\"has-text-align-center\"><em>Following testimony and discussion, the Finance Committee unanimously passed both bills. SB25-018 now moves to the Committee on Appropriations while SB25-046, as amended, has been referred to the full Senate and placed on the Senate consent calendar.<\/em> <\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph {\"align\":\"center\"} -->\n<p class=\"has-text-align-center\"><em>\"It was an amazing experience to look in all of their faces and explain why these laws make Colorado more competitive and are good for both government and taxpayers<\/em>,\"<em>  ~ Judy Vorndran <\/em><\/p>\n<!-- \/wp:paragraph --><\/blockquote>\n<!-- \/wp:quote -->\n\n<!-- wp:group {\"layout\":{\"type\":\"constrained\"}} -->\n<div class=\"wp-block-group\"><!-- wp:spacer {\"height\":\"34px\"} -->\n<div style=\"height:34px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:heading {\"textAlign\":\"center\"} -->\n<h2 class=\"wp-block-heading has-text-align-center\">Testimony on SB25-018, Online Search of Sales and Use Tax, and SB25-046, Local Government Tax Audit Confidentiality Standards<\/h2>\n<!-- \/wp:heading -->\n\n<!-- wp:spacer {\"height\":\"42px\"} -->\n<div style=\"height:42px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer --><\/div>\n<!-- \/wp:group -->\n\n<!-- wp:paragraph -->\n<p>Good afternoon, members of the <a href=\"https:\/\/leg.colorado.gov\/committees\/finance\/2024-regular-session\" target=\"_blank\" rel=\"noopener\" title=\"Senate Finance Committee\">Senate Finance Committee<\/a>. My name is <a href=\"https:\/\/taxops.com\/judith-vorndran\/\" target=\"_blank\" rel=\"noopener\" title=\"Judy Vorndran\">Judy Vorndran<\/a>. I am a partner in the tax specialty firm TaxOps and a member of the &nbsp;Sales and Use Tax Simplification Task Force.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>I am here to testify in support of two bills, SB25-018 and SB25-046. A summary of my statement follows.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:spacer {\"height\":\"43px\"} -->\n<div style=\"height:43px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3 class=\"wp-block-heading\">SB25-018, Online Search of Sales and Use Tax<\/h3>\n<!-- \/wp:heading -->\n\n<!-- wp:paragraph -->\n<p>SB25-018 aims to create a searchable database for sales and use tax licenses and exemption certificates. This bill is crucial for improving transparency and compliance in our tax system.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3 class=\"wp-block-heading\">Key Points<\/h3>\n<!-- \/wp:heading -->\n\n<!-- wp:list -->\n<ul class=\"wp-block-list\"><!-- wp:list-item -->\n<li><strong>Importance of a Searchable Database:<\/strong><\/li>\n<!-- \/wp:list-item -->\n\n<!-- wp:list-item -->\n<li>SB25-018 proposes the creation of a database at the state and department of revenue level, allowing taxpayers to look up licenses and entities.<\/li>\n<!-- \/wp:list-item -->\n\n<!-- wp:list-item -->\n<li><strong>Benefits for Taxpayers:<\/strong><ol><li>Having access to a searchable database would be a significant advantage for taxpayers. It would help them ensure that vendors are properly licensed and collecting the correct tax amounts.<\/li><\/ol><!-- wp:list {\"ordered\":true} -->\n<ol class=\"wp-block-list\"><!-- wp:list-item -->\n<li>This measure would also align Colorado with other states, such as Texas, which already have similar databases in place. These databases have proven to be extremely helpful for taxpayers in those states.<\/li>\n<!-- \/wp:list-item --><\/ol>\n<!-- \/wp:list --><\/li>\n<!-- \/wp:list-item -->\n\n<!-- wp:list-item -->\n<li><strong>Improved Compliance:<\/strong><!-- wp:list {\"ordered\":true} -->\n<ol class=\"wp-block-list\"><!-- wp:list-item -->\n<li>The searchable database would facilitate better compliance with tax laws. Taxpayers would be able to verify the status of vendors and themselves, reducing the risk of errors and ensuring accurate tax collection.<\/li>\n<!-- \/wp:list-item --><\/ol>\n<!-- \/wp:list --><\/li>\n<!-- \/wp:list-item --><\/ul>\n<!-- \/wp:list -->\n\n<!-- wp:paragraph -->\n<p>SB25-018 is a vital step towards enhancing transparency and compliance in Colorado's tax system. I urge the Committee to support this bill and help create a more efficient and taxpayer-friendly environment.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:spacer {\"height\":\"46px\"} -->\n<div style=\"height:46px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3 class=\"wp-block-heading\">SB25-046, Local Government Tax Audit Confidentiality Standards<\/h3>\n<!-- \/wp:heading -->\n\n<!-- wp:paragraph -->\n<p>SB25-046 addresses the confidentiality standards for local government sales or use tax audits. This bill would both protect taxpayer information and ensure fairer audit practices.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:heading {\"level\":3} -->\n<h3 class=\"wp-block-heading\">Key Points<\/h3>\n<!-- \/wp:heading -->\n\n<!-- wp:list {\"ordered\":true} -->\n<ol class=\"wp-block-list\"><!-- wp:list-item -->\n<li>Confidentiality Concerns:<ol><li>SB25-046 aims to establish uniform confidentiality standards for local government tax audits. This is important because third-party auditors often conduct these audits, and there are concerns about how taxpayer information is handled and shared.<\/li><\/ol><!-- wp:list {\"ordered\":true} -->\n<ol class=\"wp-block-list\"><!-- wp:list-item -->\n<li>Currently, third-party auditors are not always licensed professionals, and there is no regulation ensuring their confidentiality practices. This raises significant concerns about the protection of sensitive taxpayer information.<\/li>\n<!-- \/wp:list-item --><\/ol>\n<!-- \/wp:list --><\/li>\n<!-- \/wp:list-item -->\n\n<!-- wp:list-item -->\n<li>Issues with Third-Party Auditors:<ol><li>Many home-rule cities do not have captive auditors and rely on third-party auditors who may conduct audits on behalf of multiple jurisdictions. This can lead to inefficiencies and increased taxpayer burdens.<\/li><\/ol><!-- wp:list {\"ordered\":true} -->\n<ol class=\"wp-block-list\"><!-- wp:list-item -->\n<li>There are instances where third-party auditors may target large taxpayers, leading to multiple audits across different cities. This practice is also burdensome and raises concerns about the confidentiality of taxpayer information.<\/li>\n<!-- \/wp:list-item --><\/ol>\n<!-- \/wp:list --><\/li>\n<!-- \/wp:list-item -->\n\n<!-- wp:list-item -->\n<li>Need for Regulation:<ol><li>There is a need for stricter regulation and oversight of third-party auditors to ensure they adhere to uniform confidentiality standards. This includes establishing ethical and fiduciary duties similar to those required of licensed professionals.<\/li><\/ol><!-- wp:list {\"ordered\":true} -->\n<ol class=\"wp-block-list\"><!-- wp:list-item -->\n<li>The bill also highlights the importance of transparency in the contracts between cities and third-party auditors. These contracts should be subject to public scrutiny to ensure accountability.<\/li>\n<!-- \/wp:list-item --><\/ol>\n<!-- \/wp:list --><\/li>\n<!-- \/wp:list-item --><\/ol>\n<!-- \/wp:list -->\n\n<!-- wp:paragraph -->\n<p>SB25-046 is essential for protecting taxpayer information and ensuring fair audit practices. I urge the Finance Committee to support this bill and help create a more transparent and accountable audit process. <\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>I would be happy to answer related questions you may have, and I thank you for the opportunity to weigh in on these important pieces of legislation.<\/p>\n<!-- \/wp:paragraph -->\n\n<!-- wp:spacer {\"height\":\"57px\"} -->\n<div style=\"height:57px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:buttons {\"layout\":{\"type\":\"flex\",\"justifyContent\":\"center\"}} -->\n<div class=\"wp-block-buttons\"><!-- wp:button -->\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/taxops.com\/contact\/\">Talk to a Business Tax Advocate<\/a><\/div>\n<!-- \/wp:button --><\/div>\n<!-- \/wp:buttons -->\n\n<!-- wp:spacer {\"height\":\"53px\"} -->\n<div style=\"height:53px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n<!-- \/wp:spacer -->\n\n<!-- wp:separator -->\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n<!-- \/wp:separator -->\n\n<!-- wp:heading -->\n<h2 class=\"wp-block-heading\">Read more<\/h2>\n<!-- \/wp:heading -->\n\n<!-- wp:latest-posts \/-->","_et_gb_content_width":"","spt_transcript":"","footnotes":""},"categories":[230,225,723,1166,1167,1165,229,226],"tags":[252,1145,284,1144,361,126,26,265,1135,492,41,1134,18,19,316,222,30,810,101,799,605,38,262,79,267,620,80,1138,1137,74,128],"class_list":["post-15720","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asc-740","category-events","category-podcast","category-rd","category-section","category-section-174","category-state-and-local","category-tax-news","tag-accountant","tag-advocate","tag-cfo","tag-colorado-society-of-cpa","tag-continuing-education","tag-cpa","tag-cpe","tag-finance-professional","tag-iaas","tag-leadership","tag-nexus","tag-saas","tag-sales-and-use-tax","tag-sales-tax","tag-salt","tag-software","tag-state-and-local-tax","tag-state-income-tax","tag-state-tax","tag-tax-advisor","tag-tax-automation","tag-tax-compliance","tag-tax-planning","tag-tax-preparer","tag-tax-professional","tag-tax-professionals","tag-tax-provider","tag-tax-tools","tag-tax-vendors","tag-taxops","tag-wayfair"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/taxops.com\/wp-content\/uploads\/2026\/04\/Section-174-Decoupling.png","_links":{"self":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/15720","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=15720"}],"version-history":[{"count":4,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/15720\/revisions"}],"predecessor-version":[{"id":15728,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/posts\/15720\/revisions\/15728"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media\/15726"}],"wp:attachment":[{"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/media?parent=15720"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/categories?post=15720"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxops.com\/wp-json\/wp\/v2\/tags?post=15720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}