In the Halls of Power & More: Hot Topics with Diane Yetter

Hosts & Guests

Meredith Smith, State and Local Tax Senior Manager

Stacey Roberts,  State and Local Tax Senior Director

Diane Yetter, President and Founder of YETTER Tax and the Sales Tax Institute

What You Will Discover:

In this episode of the SALTovation podcast, Diane Yetter, Founder of the Sales Tax Institute,  returns to share valuable insights into sales tax education, significant legislative updates, and advances in the industry. Diane discusses the challenges businesses face with Nexus, audit complexities, and the importance of choosing the right sales tax software. She also shares her experience testifying before the U.S Senate Finance Committee, emphasizing the need for standardized e-commerce thresholds and reduced compliance burdens for businesses. 

Topics Discussed in this Episode:

  • Sales Tax Nexus: Nexus remains a critical topic, with ongoing debates about physical and economic standards across different states.
  • Audit Preparedness: Post-COVID, states are reactivating audits. Proper documentation and exemption certificate management are more vital than ever.
  • Software Solutions: Companies must carefully select sales tax software that fits their specific needs, considering evolving sales channels and technological changes.
  • US Senate Testimony: Diane Yetter highlighted the importance of reducing compliance burdens and achieving consistent economic Nexus thresholds.
  • Continuous Education: The Sales Tax Institute offers numerous resources, including webinars, on-demand classes, and community forums that help professionals stay updated on tax laws and best practices.

    Quotables:

    • We really need to reduce the burdens on business. Physical nexus standards and inconsistent application of them across the states is an issue. We need to have some sort of consistency so that businesses know exactly what is going to create nexus.” -Diane Yetter [06:32]

     

    • “There are many more products on the market today, so being able to share about that and also sharing: How do you go about selecting the right one for your business? There are so many out there, it’s so easy to get confused about which one should I actually use. Which one meets your needs?” -Diane Yetter[18:06]

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    Transcript

    [00:00:00] Meredith Smith: Welcome to SALTovation. 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. Well hello everyone and welcome back to the SALTovation Show. Diane Yetter, founder of Sales Tax Institute, was our very first guest on this podcast over 80 episodes ago.

    [00:00:25] Can you believe it? Um, and back then we talked a lot about. your background, Diane, which diverged early into tax education. But for those who have not listened to that first episode, and I have listened to it ad nauseum, and a lot has changed over those 80 episodes. Can you provide a brief background on what you're doing with the Sales Tax Institute?

    [00:00:51] Diane Yetter: Sure. And it's great to be here again, um, and talking with With both of you. So the sales tax institute is one division of our company, and it is where we focus on sales tax education and resources. So we have a very robust website that has a lot of different resources from economic nexus charts and sales tax holiday charts, um, and tax amnesty charts.

    [00:01:19] So lots of information like that. Some white papers, um, We have FAQs. We publish our, uh, sales tax news and tips items, which are updates on, uh, legislation, litigation, new rulings that come out, just different things that the states are publishing. So we have all of that type of information out there on our website.

    [00:01:40] So I'd encourage all of your listeners to go out and check that out. Um, but then through our, training part of the business. We offer a variety of different training, all specific to sales tax or sales tax related items that, uh, we deliver in monthly live webinars. So we do those every single month. And then we also have an on demand library of many of our most, uh, effective favorite and most needed types of webinars.

    [00:02:10] So we've got, I think, 16 or 17 out there right now that are available. And then we have what we call our signature classes. So we have our sales tax jumpstart class, which we started the fall after the Wayfair decision came out. So that's a nine week online class getting people. jumpstarted for sales tax.

    [00:02:30] Um, so it runs nine weeks live, two hours a week taught by me. And we just cover everything from definitions to automation, um, and everything in between. And it is a class that every week or almost every week, there's some homework to go back and apply what you've learned, uh, to your business, or if you're a practitioner to one of your clients, businesses to reinforce what we've learned so that we offer, um, Every year, February through April and then September through November.

    [00:03:02] And then our live in person classes, we have our basics of sales tax class, which is expanded this year to three and a half days. It was two and three quarter days in the past. Um, we will be teaching that at the end of July, but again, that is a foundational class. So everything from definitions, nexus, exemptions, audits, um, Automation registration compliance.

    [00:03:27] So really all of the building blocks, somebody needs to know about sales tax. So that will be in Chicago the last week in July. And then our advanced sales tax workshop, we had that already this year. We were in new Orleans, Stacey joined us for that. And that is where we do, um, deeper dives on usually six different topics.

    [00:03:47] Um, so Stacey joined us. to do a topic on local taxes. We did one on manufacturing. We did actually a really great in depth topic on AI this year. And so we are able to get into a lot of details about those topics. And then we do industry updates. Uh, so, you know, about an hour on the different industries that represent the attendees there.

    [00:04:14] And then we have what we call our potpourri topics, which is, you know, to start selling the class, we have to announce what we're going to cover, but then there's always new topics that come up. And so we ask, you know, the students as they register, what's top of mind. And so we were able to cover a couple of additional topics with that.

    [00:04:31] So those are always great, uh, classes. And then our last, uh, product that we have, we have our sales tax nerd community, which is an online, uh, community portal that, uh, is where sales tax together. Share information. Um, we have a lot of resources and tools available. It also includes access to our webinars, uh, live and on demand along with a lot of special things like a quarterly office hour session with me.

    [00:05:01] We have sponsors. That come in and do education sessions and demos of their products or other discussions. And it's just a fun way for sales tax professionals to all come together. So that's, that's what we do in the Sales Tax Institute.

    [00:05:16] Meredith Smith: Yes. And plug for Nancy Steele, our very own tax. She was a sales tax nerd, what, two years ago, I think?

    [00:05:24] Two

    [00:05:24] Diane Yetter: years ago. I think that's right. Yeah. Yeah. And so.

    [00:05:27] Meredith Smith: She loved having that honor and loves being part of that community. So, and we love Nancy. So thank you for fostering Nancy. We love that. And so with all of that, it sounds like you're very bored. So, you know, in your, in your free time back in 2022, you testified before the U S Senate finance committee.

    [00:05:46] on the impact of Wayfair and what was your general message to Congress? Because I can't imagine they had a whole lot of, we know what happened. Realistically.

    [00:06:01] Diane Yetter: Yeah. You know, that that was a bucket list experience to the extent you have bucket list experiences professionally, you know? Um, And it was, it was really interesting.

    [00:06:13] There were two small business owners on the panel. Craig Johnson from Streamline was on, I was on, and then a representative of the Government Accounting Office was on. And I was the last one to speak. And, you know, my message really kind of fell into two buckets. The first is we really need to reduce the burdens on business.

    [00:06:37] Um, and within that, I focused on a couple of things. First, physical nexus standards and inconsistent application across the states. So things like somebody go in for a trade show, you know, a one day visit by a salesperson going in or inventory in something like an Amazon warehouse or a third party logistics warehouse.

    [00:06:59] So I said, you know, I really think we need to have some sort of, um, consistency so that businesses know exactly what is going to create nexus. And then also what I really suggested is if it really is a temporary or not a physical store sort of location, you know, you've got your headquarters, you've got a retail store, you've got your own warehouse, that's physical nexus, you should have nexus in there regardless of your economic threshold.

    [00:07:31] But for all those other sorts of things, eliminate physical nexus. You know, let's just let sellers look at economic nexus and not have to worry about those little temporary sorts of things. Then I focused on non uniform thresholds and all the different combinations. I actually put a number of charts in there that showed all the different combinations between, is it gross sales, retail sales, or taxable sales?

    [00:07:57] Do you include or exclude marketplace sales? Is it 100, 000 and 200? 100, 000 or? 100, 000 alone? 250? 500? And the number of permutations of that was just overwhelming to put it into a chart like that. Here's all of the different combinations. So I said we really need to have some sort of Consistency there. I was not promoting that everybody had to have the same dollar, uh, threshold because I think there is differences between a state like South Dakota and a state like California.

    [00:08:31] But I think how you calculate that, um, should be a little bit more consistent. You guys are in Colorado. You know the complexity with local taxes. That was another thing that I focused on. Uh, local tax compliance and the home rule localities, I think, are just really out of control. You know, I'm, I'm grateful and I wish the Wayfair 2 case in Colorado would move a little bit further along so that we can get that answer.

    [00:08:56] But that certainly is, uh, one of the, one of the things that I talked about. And then the compliance burden, I actually talked about You know, I've got, I've got companies that because states start you out with monthly compliance and you know, we're paying less than a dollar in sales tax and we're paying, you know, 40 to 70 a return to get that return filed.

    [00:09:21] You know, how, Burdensome. That is the deposits the weekly deposits like in Illinois. You know that it's just a lot of work for businesses to be compliant. And then I really also focused on the 200 transaction count being an overly burdensome requirement. And luckily, you know, last year we saw four states, South Dakota, uh, between last year and this year, South Dakota, Louisiana, Indiana, and Wyoming eliminate that.

    [00:09:50] Utah proposed it. We thought for sure that was going to pass. Um, it did not at the last minute due to some budget concerns. Um, you know, three out of the four of those and, and if you count, uh, Utah, four out of the five are all streamlined states. And so that was the second part of what I focused on is really the participation and expansion of the streamlined sales tax project and really, you know, asking, you know, the committee to focus on trying to make it beneficial for states to join streamlined.

    [00:10:22] So in that regard, following Craig. From streamlined in his discussion, I was able to kind of reinforce that from a little bit of an unbiased perspective, centralizing or coming up with some easier way for return filing, whether that is through streamlined or some other way to do some centralized compliance, eliminating that physical nexus that I talked about earlier, and then creating some of those uniform economic nexus rules and streamlined really wanted to take a leadership role.

    [00:10:54] in eliminating that 200 transaction count. And that's why South Dakota did it. When they did it, they said, it's our case, we should be the one to take the leadership. And I was very pleased to see that Louisiana kind of surprised me that they were going that they did that, but, but thrilled with that. And that's really why Indiana, Wyoming and Utah as streamlined states, you know, there was a real push for that.

    [00:11:17] So that's a lot of what I focused on in that conversation. Um, Um, and it was, you know, it was a thrill to be there. Um, a bit nerve wracking, um, but still a thrill to be there. And I was honored.

    [00:11:32] Meredith Smith: Did you get many questions from the committee or were they all just deer in headlights? I'm like, whoa, that's a lot to take in.

    [00:11:41] What is this?

    [00:11:44] Diane Yetter: I personally did not get that many because what they did was they asked the small businesses a lot more. I did get asked a few, you know, what was, what was interesting, which watching it on TV, you don't get this, but the senators are in and out. Like there was never a time where the entire panel was there at once.

    [00:12:04] And so what was a little frustrating for those of us on the panel is you'd get asked a question by Senator one, and then they would leave the room and a different Senator would come in and ask the same question of the same panelists. And, you know, we would just kind of look at it and go, okay, well we already answered that, but let's answer it again because they weren't in the room when it got asked before.

    [00:12:28] So I think there could have been more questions asked. Um, but you know, it makes sense that they asked more of the small businesses. You know, but, but I did get asked some questions. Luckily, I didn't ever feel like I was put on the spot that I wasn't able to answer it.

    [00:12:47] Meredith Smith: That's awesome. What a really cool experience like to get to check in and be front and center.

    [00:12:54] That's awesome. Well, thank you for your work that, you know, is, is helping get that message out there. Thank you.

    [00:13:00] Tram Le: Yes, absolutely. And we know that some of these changes. Move at glacial paces. So, um, you know, we just gotta keep at it, right? And so kudos to you for getting in front of them and helping make a difference.

    [00:13:16] Diane Yetter: Thanks.

    [00:13:18] Tram Le: Um,

    [00:13:19] Meredith Smith: and so I want to go back to, and you had briefly mentioned this as you were kind of refamiliarizing us with, um, sales Tax Institute. Mm-Hmm. where. Um, you know, you had, you said that you kind of solicit what your attendees want to hear. I think we're going to transition and talk through, you know, some of the changes and some top tens and things that we're focusing on as, you know, people who live in the weeds day to day.

    [00:13:45] But what do you find that your attendees want to kind of talk about, or are there any themes that keep kind of coming up as they want to continue to discuss and, and hear about?

    [00:13:58] Diane Yetter: There are a few and certainly nexus is always a hot topic. What's changing? Um, you know, do I really have to worry about it? How do I deal with it?

    [00:14:09] Joe

    [00:14:09] Meredith Smith: moved from Kansas to Iowa. Now do I have to close Kansas and

    [00:14:13] Diane Yetter: set up Iowa and exactly exactly. And so that is always a hot topic. for the first couple of years after Wayfair and even probably the one or two years leading into Wayfair because we had states passing legislation that they couldn't enforce as Well as you know, keep in mind that that economic nexus wasn't the first attempt that states had in trying to broaden nexus.

    [00:14:44] So we would spend time talking about click through nexus and affiliate nexus and those sorts of changes. So it was probably, you know, probably 2014, 2015, we started doing it on a pretty regular basis. Like almost every offering of the advanced workshop, we had some sort of a topic on nexus. It might've been an hour or an hour and a half instead of our two hour full topic.

    [00:15:10] But it is certainly one that we continue, uh, to get asked about. We don't offer it every single time for our advanced workshop now, but we've been doing an annual, uh, Nexus update in our webinar series. So we've been doing that on a very regular basis annually, usually. Um, so that's always a hot topic and, and it still is coming up so often.

    [00:15:34] I think the second that we get a lot of questions about our audits, um, you know, we had a period of time during COVID where the states didn't quite know how to do audits remotely, you know, which I always found a little bit interesting because Most audits or most auditors work remotely, you know, they're not in the office every day.

    [00:15:55] They're at taxpayers offices and And many of them because so many states have remote auditors in different states, but not enough of them that they actually have an office here in Chicago. We've got, I don't know, 25, 28 states that have auditors here. Many of them have audit offices, you know, California, Massachusetts, New York, they've all got offices here in Chicago, but there's a lot of other auditors that live, you know, one person is in Ohio, one person is in North Carolina and you know, they're used to working out of their home, but the states didn't know how to make the audits happen, particularly the kickoff of the audits.

    [00:16:36] And if it's a manufacturing type of taxpayer to go in and do those plant tours, how do they do those remotely? So we did see kind of a pause and delay on some of those audits. If the audit was far enough along that you were just You know, getting additional documentation that seemed to move, keep moving.

    [00:16:58] It moved a little bit slower just because taxpayers may not have been able to get into the office to get what they needed. But I think audits are, are definitely picking up. We've got, know, a couple of different states in doing audits on some of our remote sellers as well as audits of their home state.

    [00:17:17] We've got one client that has a manufacturing facility in California and they're being audited, uh, now, but I've also got, you know, a couple of other remote sellers that are being audited by random states. So we certainly are seeing that and. And I think there are issues that are coming up in terms of exemption certificates and documentation and tax mapping and taxability rules that kind of tie into audits and the complexity of that.

    [00:17:49] So, so that's probably my second one. And then the third one that always comes up is sales tax software solutions. So, you know, even if we don't have a topic on that, you know, Um, it is something that we get questions about, you know, from the attendees in our live classes. It is one of the topics in our jumpstart class, um, that people are always looking forward to, you know, there's many more products on the market today.

    [00:18:16] So, you know, being able to share about that and also sharing, um, how do you go about it. Selecting the right one for your business. There's so many out there. It's so easy to get confused about which one should I actually use, which one meets my needs. And so talking through that is probably the third topic that we get asked for a lot.

    [00:18:38] Meredith Smith: Yeah. And that makes sense. And it's hard to probably, cause we've done webinars and whatnot on kind of tax automation and just what to think about when you're selecting it and none of them are perfect and none of them will solve all of your problems. Right. And it's, you know, you never want to kind of talk bad about options that are providing, you know, that are helping our clients do the right thing, but none of them are perfect.

    [00:19:11] Right. And so that's a really difficult thing to teach because it's like, well, what system, what, how do you keep your books and records? What are you connecting to? What do you sell? You know, especially, yeah, there's now a market where, you know, we've seen some of the newer vendors in play being like, well, we're going to focus on this niche, right?

    [00:19:32] We're just going to do. Kind of software as a service and products related to that. It's like, okay, well, but what if my company, cause it's a tough, a software company wants to start selling swag and t shirts and or stickers or hardware. Right. And it's like, well, we don't really do that. Or tech companies like to hold conferences.

    [00:19:53] And yeah, so it's just really difficult to, you know, there's a best solution for right now, but what do we know about sales tax and taxes in general? They're not static.

    [00:20:04] Diane Yetter: Right. Right. Exactly. And your solution might change your, not your tax solution, but your billing solution or your shopping cart. And, you know, so part of what, particularly in our jumpstart class, in our basics class, what we teach on automation is, you know, is I've got like the key criteria and we go through what are the most important things that you need to think about when you are selecting a solution.

    [00:20:34] And you know, the first one is what part of your, of your tax needs are you automating? Is it only sales tax? Is it consumers use tax? Is it compliance? Is it exemption certificate management? You know, if you only need one of those, well then that opens it up to many more solutions. If you need all of that, um, you have fewer solutions to select from.

    [00:21:01] And then what is your selling system that you need to connect to? And do you need it to be in the cloud or on premise? You know, for the first time in a long time, I talked to somebody just last week that uses a Unix system. And so he has a custom built solution because he didn't think there were any sales tax solutions that would work in a Unix environment.

    [00:21:23] And I said, well, there actually is. And he was just, You're kidding me, you know, and I was able to tell him that yes, there are actually solutions out there that will work with that. And that's where I think many of the software companies maybe could do a better job of educating their prospects about how to select the right one.

    [00:21:47] And that's something, you know, that I've been involved with. for, you know, decades now, uh, helping companies really go through and refine their requirements and their needs in order to make that right decision. You know, changing out a tax engine is not for the faint of heart. No, it, it is a big ordeal to change out a tax system and none of them are perfect.

    [00:22:15] All of them have challenges. All of them have challenges with support and you know, part of what you need, and this is the part that all of the vendors could do a better job of, is. explaining what they take responsibility for and what you as the seller or the business is responsible for. And particularly with so many small businesses that don't have a sales tax department, don't have a tax department, may not even have a finance person on staff.

    [00:22:50] You know, it's the CEO or, you know, a, a, an operations person that has responsibility for getting all of this set up and they just don't know what to do. And, and that is on the consulting side of our business where we've really come in and started working to get this done. help businesses better manage their tax solutions.

    [00:23:17] So we're coming in and, you know, we're doing monthly checks for different things and, and making sure that their configuration is set up right. And coming in after the fact, you know, maybe they implemented themselves or they relied on the tax solution provider to implement it and they missed that.

    [00:23:34] things like configuring Illinois wrong or turning on all Colorado home rule locals that are not registered to remit. You know, so we find all of those sorts of things that nobody told them about or nobody warned them about. And sure, the tax engine Documentation tells them what to do, but they don't tell them to go look at those pages or watch out for these specific states, um, you know, where there are, you know, things that could really get you into a pickle if you don't have them configured, right?

    [00:24:05] Meredith Smith: The people sometimes who are going to be in charge of the day to day sales tax don't really have the authority. And it's not necessarily top priority to someone who might be higher up, you know, in the hierarchical. You know, structure where it's just like, just, just get it done, make it happen. And then when you talk through like the costs associated with all of these things and doing it correctly, it's like, well, I don't want to pay 75, 000 a year to collect sales tax.

    [00:24:30] Like that's too expensive, find something else. And it's like, but that's not, you know, we want, we're in the business to make money, we're in the business to sell things and you know, what do you want me to do? Like we can. You know, and so a lot of times we find, you know, the people that we're working with who have to kind of implement this and do it are stuck between a rock and a hard place of like, well, it's too expensive.

    [00:24:54] But these are all the things that I need in order to do it correctly. So what do you want me to do? And we have to come in sometimes and kind of be the bully and it's like, well, you can get stuck with 100, 000, you know, deficiency in one period extrapolated and, you know, get stuck for an audit that you may or may not have had had you not kind of half the implementation.

    [00:25:16] Pardon my French.

    [00:25:17] Diane Yetter: Right. Well, and, and this is actually something I talked about a little bit in my Senate testimony Sales tax is one of those obligations of being in business, just like payroll tax and filing your, uh, withholding and getting registered with the secretary of state and having your business license and all of those different sorts of things.

    [00:25:44] And a lot of businesses I think don't put sales tax into that same bucket. You know, there's no way, I would hope, certainly we've run across some people that are, are doing this incorrectly, you know, that they're withholding pay, you know, they know they're supposed to withhold from employees paychecks, their, their income tax.

    [00:26:06] But it's rare that we find somebody that doesn't realize they have to pay that over to the state or to the IRS. But how many, and I'm sure, you know, both of you have, have certainly seen plenty of sellers that say, Oh, I'm supposed to collect the sales tax. And they, it doesn't dawn on them that, you know, Okay, I don't get to keep that.

    [00:26:29] I'm supposed to pay it over to somebody. And who do I pay it to? You know, so they, they start doing the little piece of, oh, I should collect it, but don't realize then what they need to do.

    [00:26:42] Tram Le: Right. Or we hear a lot about how it will dig into their margins, for example. And, you know, a lot of times we're like, well, understand, but it is a cost of doing business.

    [00:26:54] Well,

    [00:26:55] Diane Yetter: and if you do it right, the tax amount. Is a pass through, you know, it's when you do it wrong that it really impacts your marketing.

    [00:27:07] Tram Le: Correct. Correct. And I think all of us have seen a lot of it done wrong. So, you know, coming back around, right? I mean, talking about the software piece, it's really, really important to try to get that right so that then the rest of it can be done correctly on a go forward basis.

    [00:27:25] Meredith Smith: Yeah. And we have one client that, you know, their FPNA is just like, well, why does this cost more money? Why does this cost money? Money? It's like, well, because we're selling more things. We are doing business everywhere. We file in all 46 States. We file in some Colorado locals. We do all of these things.

    [00:27:42] Like if you know, if one, if our company has a, has a policy of letting Joe move from Kansas to Iowa, you know, now we, we're not going to close Kansas, but we're now we got to open Iowa. Yeah. And all of these things like that cost money. It's not my fault. Look, do we want to do it? We're, we as a culture have decided we are going to do our taxes correctly.

    [00:28:04] We're going to, you know, follow the rules to the best that we know how at this situation and that's just what it costs. So, I'm sorry. that we're selling more and we're making more money, but it's not my fault.

    [00:28:21] Diane Yetter: Well, and that I think is the point where businesses don't always recognize as they grow, sometimes it's time to bring things in house.

    [00:28:33] You know, so certainly the tax calculation as you grow, either depending upon how the solution invoices, but whether it's on transaction or revenue volume, your license for that is going to go up. You know, but one of the places that there are, you know, we've seen companies decide they now get big enough.

    [00:28:54] They had outsourced their sales tax compliance and now they bring it in house and it now makes sense to hire somebody. You still need. A solution, you know, you may may choose to do a different type of solution and on premise or a cloud based where you're the one preparing the returns. So you have a lower license fee for that return software or you're creating Excel spreadsheets because so many of the states you just don't have the file online now?

    [00:29:21] And you know, do you need something that can generate a signature right of return? So there are ways to progress in your sales tax solutions, um, and finding the right one depending upon what you actually need.

    [00:29:36] Meredith Smith: But yeah, that's a really good point. We've had those conversations too. It's like, well, what is it going to cost me to do this?

    [00:29:41] It's like, well, you could, here's what it would cost. For an in house, we've kind of built out some things to think about and then here's what it is to outsource and, you know, what do you value? Because then there's also some of those costs that you don't think about if you have an internal person, it's like, okay, well, do you need a research platform?

    [00:29:58] Do you need, you know, so that you can test the rules? Do you need, You know, I don't know, this list was buried deep in the archives at this point, but yeah, all interesting things that it's, you know, that's just part of our job as, you know, educators for our clients to think about how to do the right thing.

    [00:30:19] This podcast is for educational purposes only and is not intended, nor should it be relied upon as legal tax accounting or investment advice should consult with a competent professional to discuss specifics of your situation and the applicability of the information presented.