Make No Simple Assumptions About Taxation of Services, CCH White Paper Warns
Monday, January 18, 2010
Posted by: Boomer Consulting, Inc.
Professionals and businesses should make no simple assumptions about the taxability of services, according to a white paper from CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services (CCHGroup.com). To access the white paper, click here or visit: http://www.cch.com/Press/news/CCHWhitePaperTaxabilityOfServices.pdf.
In the white paper, CCH Sales and Use Tax Product Manager Phil Schlesinger points out that while some states generally exempt services from sales taxes and other states generally tax them, exceptions abound in either case.
"In reality, only a few states exempt all services. On the other hand, only a few states tax all or almost all services,” Schlesinger says.
Schlesinger notes that nexus issues, general presumptions of taxability or non-taxability and distinctions made among categories of services can all come into play.
The white paper examines five main service categories in detail: standalone services; tangible personal property services; real property services; bundled services; and digital and information services. Complexities abound. For example, while some "standalone” services such as legal and accounting services might be exempt in a state that broadly presumes non-taxability of services, the same state might tax interior design or executive search services.
"It is advantageous for both ‘service providers’ and ‘purchasers of service’ to have a reasonable understanding of how and what constitutes nexus in the service industry, as well as the taxability rules associated with services in the states and localities that they are located in or otherwise have sufficient nexus by virtue of an agency or affiliated relationship,” Schlesinger concludes.
About the Author
Phil Schlesinger has been in the sales and use tax field for 22 years and has been involved in all areas of sales and use tax, including compliance, audit, tax research and automation, both in a corporate environment and in a consulting role. While in consulting, he prepared taxability matrixes for dozens of companies representing numerous types of industries such as software, manufacturing, services, food, medical, advertising and construction. Over his career, Schlesinger has also been heavily involved in the design, testing and operation of several sales and use tax software tax calculation engines and tax return processing systems including those of CCH, Vertex, Taxware and AvaTax.
For More Information
Members of the press interested in speaking with CCH’s Phil Schlesinger should contact: Leslie Bonacum at 1-847-267-7153, firstname.lastname@example.org; or Neil Allen at 1-847-267-2179, email@example.com.
For information on CCH CorpSystem sales and use tax solutions, call 1-866-513-2677 or visit salestax.com.
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading products are The ProSystem fx® Suite, CCH® TeamMate, CorpSystem®, CCH® IntelliConnect™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.
Wolters Kluwer is a leading global information services and publishing company. The company provides products and services for professionals in the health, tax, accounting, corporate, financial services, legal, and regulatory sectors. Wolters Kluwer had 2008 annual revenues of €3.4 billion, employs approximately 20,000 people worldwide, and maintains operations in over 35 countries across Europe, North America, Asia Pacific, and Latin America. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Visit www.wolterskluwer.com for information about our market positions, customers, brands, and organization.