A Conversation with Wendy Walker, Solution Principal at Sovos: Part 2

Hosts & Guests

Wendy Walker, Solution Principal at Sovos

Meredith Smith, State and Local Tax Senior Manager

Judy Vordran, Leader, Educator, Advocate, J.D., CPA

Topics Discussed in this Episode:

  • Tax compliance challenges for businesses and governments
  • Tax Reform in Colorado 
  • Understanding the challenges of the IRS caseload

What You Will Discover:

  • 03:20 The Challenges of Tax Reporting and Government Iteration
  • 15:31 Tax Compliance Challenges for Businesses
  • 25:02 Practical Solutions to Simplify Taxpayer Systems
  • 33:06 Cybersecurity and Taxation

Quotables:

    • “The IRS is promoting more bank account reporting or expanded bank account reporting for certain taxpayers. So if we’re going to fix them, let’s fix the problem. If they need transparency, let’s find a way to give them transparency instead of giving them more information that just sort of directionally gets them there from a compliance perspective.” -Wendy Walker [23:10]
      • “We see the IRS reducing the electronic filing threshold requirement so that they can get at paper processing. They’re trying to eliminate paper, they’re kryptonite according to the taxpayer advocate. Even the IRS recognizes that there’s a subset of the population that’s never going to get off paper so they do need to offer that.” -Wendy Walker [01:23]

       

      • “There is no happy medium. It’s like the government’s forcing businesses into sending it into their formats and their requirements. But on the flip side, business needs to conform to gap rules and other regulations and legal requirements. So it is very difficult, particularly when there’s such disparity across so many agencies.” -Wendy Walker [05:09]

       

      • “Small startup businesses are not complying for good reasons. They can’t they don’t have the wherewithal, and they don’t have the tools. But here they are taking a chomp out of the native businesses, taking away from all the bricks and mortar, but they’re not fully compliant. So they’re taking tax dollars away from governments to change the character of how you and I do business. And all those legacy companies are gone.” -Judy Vorndran [05:36]

       

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. There's efforts at, you know, the IRS, and I think we've also seen it at the state level. You know, we've got some states updating their systems, integrating new portals.

[00:00:23] Meredith Smith: I just set up, you know, Transitioned a couple of clients from e tides in Pennsylvania to the new system in Pennsylvania. Saw some stuff with Oregon. Are there any examples that you have that, you know, the federal tax legislation and policy is trickling down into

[00:00:38] Wendy Walker: the states? Yeah. Yeah. A couple of different areas.

[00:00:41] Wendy Walker: It's, um, what's interesting, those, those, that you just mentioned, because they are like one of, I think, eight states this year that migrated to new tax systems. And I know that some of that definitely, you know, is related to kind of what we were talking about before, just growth in, in, um, tax [00:01:00] policy and, you know, um, all of that.

[00:01:01] Wendy Walker: wanting to, or needing to, you know, have updated systems to address that. But following, I would say in terms of policy coming down, following the IRS lead, we did see, um, Ohio, Colorado, District of Columbia, Maryland, and some others, um, we've seen them basically eliminate. paper processing, which for withholding taxes or for 1099 or W 2 information, so just completely eliminating paper processing of those things, or we see them drastically reducing the electronic filing threshold requirement so that they can really get at paper processing.

[00:01:42] Wendy Walker: And You know, even the IRS, obviously, they're trying to eliminate paper. It's, you know, they're kryptonite, according to the taxpayer, uh, advocate, but, you know, even the IRS recognizes that there's a subset of the population that's never going to get off paper and you, you do need to, you know, sort of, um, offer that.

[00:01:58] Wendy Walker: But from a state perspective, [00:02:00] I, I was really amazed at how many states are just like, oh, No more. Everything is electronic. No more. Um, so we're seeing a lot of that. The other thing I would say is that we see the states often follow the IRS in terms of, um, the actual statutory reporting requirements. So when the IRS introduced the new 1099 NEC form, which was for reporting non employee compensation a couple of years ago, the state soon followed with mandates for businesses to report that 1099 also, right?

[00:02:30] Wendy Walker: So we, we often see the IRS come out with a new 1099 requirement like that, um, and have a state follow. But we've seen it go the other way too. It's not uncommon for us to see the states kind of several states making their own information reporting requirements around something. And then eventually the IRS kind of getting on board with it.

[00:02:49] Wendy Walker: And that. Okay. 1099 K threshold that I mentioned before is a great example of that. A couple of, kind of see it both ways.

[00:02:56] Judy Vordran: I just remember years ago when I started in different [00:03:00] areas and I remember doing a bunch of sales tax returns by hand as I got outsourced as a young staff person to do them. And then all the states were starting to pivot to ACH or e filing.

[00:03:09] Judy Vordran: I'm like, Oh my God, you know, I was going to the copy machine and making copies of the checks and the forms and then going to the post office and State stamping, it was ridiculously manual. But then the problem of course was with states versus federal was everything wasn't the same. So it's like, I wish we had more parity, you know, at least the IRS is the IRS, but even within the IRS, you don't always have parity amongst different types of reporting.

[00:03:31] Judy Vordran: And that is really

[00:03:32] Wendy Walker: challenging because it's a really great point. Different

[00:03:35] Judy Vordran: legal entities have different issues and different reporting. Yeah. It's,

[00:03:39] Wendy Walker: and it spans not just sales and use, that span, I swear, it doesn't matter what area of tax I talk to somebody about, it seems like that issue plagues all parts of tax working with either the IRS or the states.

[00:03:49] Wendy Walker: Absolutely. Yeah,

[00:03:50] Judy Vordran: it's fascinating to me. Like, and you think also, like, why do you need to change the system because you didn't set it up right to begin with, or you didn't anticipate the next thing? Like, [00:04:00] is that the tough part of it as government or was it not funded enough? I mean, we work with software companies and what I've heard over the years is this minimum viable product before you launch.

[00:04:09] Judy Vordran: So you launch it and then you're like, okay, it's going to work. It's going to create momentum. People are going to buy it. Now let's improve it. But when you're a government, Can you do that? It can't. Can it be iterative? So I think that's always really challenging. I mean, like, even with that health care thing.

[00:04:24] Judy Vordran: What was that? That was just a crash

[00:04:26] Wendy Walker: of

[00:04:26] Judy Vordran: Obama was president, right? Like, what a disaster because a rollout was such a mess. People like, Got shut out and there was an explanation for it, but it's, oh, and the ticket master debacle recently for, what's

[00:04:39] Meredith Smith: their names? I was gonna say, names say it's like trying to

[00:04:40] Judy Vordran: get Taylors Swift tickets.

[00:04:41] Judy Vordran: Right, right, right. I think that's kind of good stuff because I think we get this like, oh, this technology is gonna work. App, app, app, great, great, great. But it, it, it has to catch up. So we need to give it a little grace, quite honestly. Um, but I think it's really hard to, I find it very hard to anticipate the needs of all the ways that business moves forward in order to adjust the reporting [00:05:00] and put it in the right buckets.

[00:05:01] Judy Vordran: How the heck is government supposed to figure it out? Taxpayers can't. So fascinating.

[00:05:06] Wendy Walker: Also, it goes back to what you said about that happy, because there is no happy medium there. It's like government's forcing business into sending it into their formats and their requirements. But on the flip side, business needs to, you know, conform to gap rules and other regulations, right?

[00:05:22] Wendy Walker: And legal requirements. And so it is, it is very difficult, particularly when, um, there's such disparity across so many agencies.

[00:05:31] Judy Vordran: Well, and there's not an ability to enforce. I mean, I came to the conclusion a few years ago, after I left the big four to went to a regional firm that the largest taxpayers in this world bear the largest burden of tax compliance and small startup businesses are not complying for good reasons.

[00:05:46] Judy Vordran: They can't, they don't have the wherewithal, they don't have the tools, but here they are taking a chomp out of the native businesses. Amazon being a perfect example, taking away from all the bricks and mortar, breast buy, whatever, you know, but they're not fully compliant. So [00:06:00] they're taking tax dollars away from governments to change the character of how you and I do business and all those legacy companies are gone.

[00:06:07] Judy Vordran: Sears, they're, you know, we don't want the, we don't want to go in and look at all what you picked. We want to look at everything that's out there. So that is, there's a yin and

[00:06:15] Wendy Walker: yang to that. There is, and it's a great example of a company that, you know, it's like, at what point do they, they have that social responsibility?

[00:06:23] Wendy Walker: You know, that wafer thing didn't need to happen, right? For wafer to sort of maybe do the socially right thing there, right? And I say the same thing about, you know, digital assets,

[00:06:32] Judy Vordran: so. Well, I went, so I'm an American borrower, I'm a lawyer and a CPA. So there's this thing called the American Borrower Association, IPT, Institute of Professionals in Tax.

[00:06:39] Judy Vordran: They're the people that do Direct tax or state and local people and then they merge with the America bar and they've been having this co conference for I don't know 20 something years. So I went to it before the Wayfair case and the lawyer representing Newegg, which was one of the three plaintiffs or defendants, whatever.

[00:06:54] Judy Vordran: I guess there were defendants bringing their brief before the Supreme Court. And he's talking about this concept called stare decisis, which is [00:07:00] let things be as they were, leave the case as it is. And I'm listening to him thinking that ain't gonna happen because too much money is not going into the coffers of these governments and they are dependent on it.

[00:07:10] Judy Vordran: So we need somebody to act. And so when the Wayfair decision came out, I'm like, I'm seeing it being perfectly relevant, but if you think Wayfair, New Agar, Overstock wanted to bring a case against South Dakota, you got another thing coming. That is a state of less than 1 million humans. They could apply their easy peasy lemon squeezy.

[00:07:27] Judy Vordran: So they spent the money to get parody for all the benefit of all of us. So thank you for doing that. That's a great point. To be honest. I mean, they had the wherewithal and the financial acumen and the legal team to take those cases forward. And then, you know, we've seen this giant rollout, but you know, it's hard even with the federal government when you bring a case, if it doesn't, it affects you, it doesn't affect them.

[00:07:49] Judy Vordran: Right? Because every

[00:07:50] Wendy Walker: business is unique. That's why they're a business. And when you're, oftentimes when you're trying to help one business, you might be hurting another industry. So it's, that's the other issue is like, well, how do you, [00:08:00] you know, and that's where I think government struggles too.

[00:08:03] Judy Vordran: It does.

[00:08:03] Judy Vordran: Cause you really want everybody, it's a voluntary system. We want people to voluntarily comply. So, and yet we get, we inhibit them with limited resources. So that 90 billion is kind of a big deal because that allows us to hire humans and buy technology and they

[00:08:17] Wendy Walker: agree. I think these headlines about, you know, people, um, you know, look, we all know about the 87, 000 revenue agents or whatever that stupid headline is, but, you know, at the end of the day, it's like, if any of them actually worked with the IRS on a daily basis and understood how painful it is to interact and some of my clients just, you know, the dreadful thought of having to go in and get on the phone again today and try to work this out, like, you It really is that bad, you know, and so that's like my big thing this year is that I know they get a bad rap.

[00:08:50] Wendy Walker: I'm not trying to, I don't work for the IRS. I'm not trying to market for them, but like you said, there are some really good people. We need to give them some grace.

[00:08:58] Judy Vordran: I think that with the states [00:09:00] too, there's a lot of legacy pieces. My husband worked for the attorney general office. And this state of Colorado, a somewhat thankless job, paid relatively well, but not really, not compared to private.

[00:09:09] Judy Vordran: And he is, you know, representing the public fist. He's trying to advocate for tax, you know, taxpayer or whatever government fairness. And I remember, and it's the biggest law firm in the state, by the way, didn't realize that until he worked there. But, you know, it's a, it's somewhat of a thankless job. And so I just, There are legacy people who work for government because they appreciate what they're doing, if that makes sense.

[00:09:30] Judy Vordran: There is a sense of like doing good things for, for the overall community, making the world a better place. So I do agree with you that we need to give them a little grace. And I agree with you. Every time I've interacted with the IRS, I've had nothing but a pleasant experience. They've been kind. They're thoughtful.

[00:09:45] Judy Vordran: They're able to dig into the file, get the answer, but that doesn't take five minutes. I've had situations take hours. Yes. Right. So imagine that multiply that by 330 million Americans, not to mention however many businesses we have in America. That's right. [00:10:00] 87, 000 ain't nothing. There's no way they can handle the caseload with that kind of that many, that few of people.

[00:10:07] Judy Vordran: So yeah, it is a perspective thing. You throw the big number and then you're like, let's incrementally think about how many they can handle per person. Yeah. Fascinating.

[00:10:16] Meredith Smith: Right. If, if one agent was on the phone for an hour a day, you're only talking to eight people.

[00:10:23] Wendy Walker: That's it. Right. Do the math. Right. How many,

[00:10:26] Meredith Smith: how many, how many notices went out that day?

[00:10:29] Meredith Smith: Sometimes it's just as easy. Well, and some of it too. It's. It's by the time I can prove who I am, you know, I, I need a one 47 C letter that proves, you know, the FEIN or the business name, one of the two. Um, because states will require it, I call and it's like, okay, you know, they go through the system. Okay.

[00:10:47] Meredith Smith: Are you authorized? Yes. Okay. Send me the power of attorney. So you fax it. So you have to wait 10 the fax to go through. And then it's like, Hey, confirm this. It takes 14 seconds to confirm it. So the longest part [00:11:00] of that call was waiting for my fax transmittal. Yeah. So it's like, and that's. And it's, so I took up 30 minutes for a two minute issue.

[00:11:10] Meredith Smith: And so, yeah, like when you put it down into simple math. I mean, resources

[00:11:17] Wendy Walker: are strange. I love that you shared that example because it is something that they really struggle with, that they've shared over and over and over with the software industry, that they really struggle with understanding or being able to identify that you You are this authorized tax person for your business that you're not trying to access their systems or something for your individual tax purposes, that you are who you are representing this business.

[00:11:44] Wendy Walker: And they are really struggling with that from a system perspective to automate that taxpayer interaction. But again, I, I'm This is some of the stuff we've pushed for with this funding that we're hoping, I mean, that's one of the main ones right there that we, they [00:12:00] should be able to quickly authenticate you.

[00:12:03] Meredith Smith: Well, and I know, you know, we've talked about advocacy and both Wendy and Judy are advocates for simpler taxpayer systems. We've asked you both. So. Thank you. We usually don't do this and give you guys a little homework pre episode, but we've asked you both to kind of bring three practical suggestions based on your subject matter expertise for how you would make the tax system more transparent and better for both taxpayers and authorities, either at this stage.

[00:12:30] Meredith Smith: national or the state level. So, Wendy, if you wouldn't mind kind of sharing your thoughts, we would, we'd love to hear them. Yeah.

[00:12:39] Wendy Walker: Well, my first one would be that, you know, with that new 1099 reporting system that I was talking about that I should be launching any day here, I, you know, they really have an opportunity right now to completely change this 30 year old process by which they interact with the states.

[00:12:58] Wendy Walker: So, today, you [00:13:00] know, and you kind of talked, you alluded to this a little bit before, but the, the, the IRS shares very limited, uh, 1099 or W, they don't share any W 2, but they share very limited 1099 information. Um, the information they do share is shared long after the tax filing deadline, so it's pretty much stale for the states.

[00:13:18] Wendy Walker: Uh, and because of that, the states have all created their own, uh, filing formats and requirements for businesses to follow rather than relying on that IRS format that can be shared with them through this sharing program that was, you know, established years ago. And with this new 1099 system, I think they could add, you know, common form types.

[00:13:41] Wendy Walker: that aren't supported today, uh, that are required by the majority of the states. One form I would give you an example of is the W2G, which is for gambling and lottery payouts. That form, I think 31 states require that form to be submitted by businesses. So if the IRS could add that form [00:14:00] to the program, it would be a big lift for businesses small and large.

[00:14:03] Wendy Walker: So that would be one of my practical suggestions.

[00:14:09] Meredith Smith: Yeah. Um, I think, you know, and I know Judy's a strong advocate. Um, taxpayers aren't I find that most people, most businesses aren't against paying tax. They understand what it does. They understand it's their duty where they struggle. It's like it's too hard.

[00:14:31] Meredith Smith: It's too complicated. Um, I, there is no good mechanism. I can't figure out the right form to put this stuff on. There's no, there's no easy mechanism to do it. And so if you can just kind of simplify it, one example being, you know, as a tax firm, we do a lot of pass through entities and a lot of states have non resident withholding for profitable shareholders.

[00:14:58] Meredith Smith: And it's like, Okay, I, [00:15:00] I don't know, like, Georgia, why are you making it so hard? This tiny little voucher isn't in, isn't in, supported by any of the tax softwares. It's, or is it, do I need the 592 it, or do I need the 592 PTE in California? What is it? And then if I put it on the wrong form? I get penalized and then I got to go back into the system and again write the notice do the thing pay someone else to write the notice and like so it's just just Making it simpler and I and I can appreciate that There's a lot of things people are doing And it's hard for the states and the jurisdictions and the taxing authorities to keep up but it's like Wouldn't and I and I hate to use it.

[00:15:48] Meredith Smith: It's like, you know the one page like 1040. It's like that's not possible because there are so many. capacities, but how do we find that balance of like making it easy versus getting all the [00:16:00] information that's required? I don't know what that answer is, but it's really hard to comply and to figure out just what you're supposed to do and on what form.

[00:16:09] Wendy Walker: It's getting them to kind of, you know, getting them all to agree. Right. And there are like forums and associations where they work together on certain issues. But to your point, like, because the IRS is not Working with the states alongside on this particular tax issue, you know, it's like the states can go off and do what they want, but they are still very beholden.

[00:16:31] Wendy Walker: They need that information from IRS and so it's like without that, you know, partnership going on between them, business is the one that suffers the most. Yeah, it's

[00:16:41] Judy Vordran: crazy. Yeah, and the Hamilton, if you saw Hamilton, the play Hamilton, yeah, talk about the sausage got made. And you know, there's this whole jockeying about taking the capital from New York to DC, which was a nowhere space to be close to Washington.

[00:16:54] Judy Vordran: And then there was an agreement among like the 13 original colonies to say, we still give you [00:17:00] your autonomy, even though we're gonna have this federal government. So We have this foundation laid between this disparity out of the gate to say you get to do what you need for your citizens versus what we do federally.

[00:17:09] Judy Vordran: So, but we still need like this national, we need a national guard or army, you know, we need protection. We can't just do that at each state level. We need to be efficient, right? So, um, I thought that was really interesting. That, first of all, phenomenal show, of course, but it really hit on and made it fun.

[00:17:26] Judy Vordran: fun to listen to how America started. And I also took from that, like there are three factions. One was cool with what the way it stood to work, hated Britain and three didn't care. So it really wasn't, you know, everybody in agreement, let's go to war. But now here we are. Here we are as a nation, however many years later.

[00:17:47] Judy Vordran: So that was like, I didn't realize like kind of how fragile our nation was in negotiating and so forth. And we certainly deal with that with the state, uh, federal issues. It's fascinating. Absolutely.

[00:17:56] Wendy Walker: Um, just from a culture perspective. Yeah.

[00:17:59] Judy Vordran: [00:18:00] Right. Money, baby. Money.

[00:18:02] Wendy Walker: That's right. That's right. Competing for it.

[00:18:05] Wendy Walker: Um,

[00:18:05] Meredith Smith: and Wendy, so what are, what are some of the other things that you had

[00:18:09] Wendy Walker: come up with? So my second suggestion would be that states need to enhance or improve processes for business to file corrected. returns. So we are finding that more and more states are requiring businesses. We just sat here and talked forever about how hard it is just to get the original version of a return submitted to a state, um, and to the IRS, frankly.

[00:18:33] Wendy Walker: But, but, We have the same issue when it comes to correcting things. It is so common for my clients to issue out 1099 forms, find a mistake after they've issued it and need to make a correction and file it. It's just, it's very common across the industry. And many of the states are just doing it. Their technology again is so far behind here.

[00:18:55] Wendy Walker: Mail and paper copies of that private, you know, information or [00:19:00] email, you know, which is not even secure email, private information over, um, or in, in some cases they, you know, rather than we can send a file, but rather than correcting records, they replace the entire file for that employer with the corrected information.

[00:19:18] Wendy Walker: So now it appears as if you didn't file. Some of your returns. And so it creates these unnecessary penalty issues, right for everybody. Um, and so I just, you know, this again is one of those areas where I would love for them to have functionality for, you know, again, a way for us to electronically file.

[00:19:38] Wendy Walker: Corrected information, and that way, everybody has the most updated taxpayer information, the taxpayer and the agency, right, um, at the same time. Yeah, we even see that

[00:19:48] Meredith Smith: with, you know, income tax returns. Some states have an X form, like a hundred X in California, or some states just have the check the amended box, and it's like, Softwares can't [00:20:00] support them because it's like, well, you already filed this return through your system, so now you have to print it out and mail it.

[00:20:05] Meredith Smith: It's like, well, do you know how big my return is? My return is this big. It has to go in a box. Yes. And it'll just sit there and so then if I've issued corrective K 1s, then my mailed return is sitting out with a reissued K 1 that an individual has shared and it's, you know, and it's different. So yeah, that's a, I hadn't even thought about that until I'm like in the process of doing an amended return.

[00:20:26] Meredith Smith: I'm like, Oh, this is really

[00:20:27] Wendy Walker: annoying. It delays everything. Yep. Push it through. Yep. Very frustrating. Yeah. And then what would be your last suggestion? Oh, what's that?

[00:20:40] Judy Vordran: I'm really falling off you guys. Hold on.

[00:20:44] Meredith Smith: Wendy, go ahead and

[00:20:45] Wendy Walker: continue. Sure. So for my last one, I would say, um, IRS and states need to provide a way for taxpayers to easily reconcile the gross amounts that are reported on 1099 returns compared to the amounts they're reporting on [00:21:00] the income tax return.

[00:21:01] Wendy Walker: You, you know, as a preparer that they, you know, many of the 1099 forms that are issued by businesses are not representative of the Just the flat taxable amount. There are deductions, there are exemptions that taxpayers can take where they don't even have to, you know, claim that, uh, income. And so, um, but the, the way that the IRS and states are set up currently, they have these document matching systems that essentially are looking 1040 information compared to those 1099s or W 2s and oh, something doesn't match and out goes a penalty notice.

[00:21:37] Wendy Walker: Well, you know, in particular with that 1099k that I was mentioning before, that's the one that's been in the news recently, you know, that one, you know, there was such a concern by the PayPal's and the Venmo's of the world that I, as a taxpayer, have never received that 1099k. It's going to report this like huge gross amount on it.

[00:21:56] Wendy Walker: What do I then do in my tax return with it? If I go [00:22:00] look at, you know, Pub 535, it doesn't tell me if I go, you know, in fact, the only place it was giving me some information was maybe some FAQs on an IRS website. And even those weren't, you know, real robust. So I, you know, my, I had one, um, one of my colleagues recommended to the IRS a reconciling form of some type that they could use.

[00:22:20] Wendy Walker: where you could, as a taxpayer, kind of say, you know, this was the gross amount on the 1099 form and then deduct off and be able to submit along with that sort of proof or evidence as to what you deducted off to get to that net amount, because right now, you know, that mismatch happens, they send you a penalty and you, as a taxpayer.

[00:22:40] Wendy Walker: Maybe you have to re engage your CPA, maybe you have to send the paper return, which now takes forever to process. So it's like being able to sort of get at some of that stuff up front, right? Um, and being able to get that transparency so that they can see those deductions would help. The less popular thing would be that [00:23:00] treasury has been, you know, kind of promoting the idea of more bank account reporting or expanded bank account reporting for, um, certain taxpayers They say.

[00:23:10] Wendy Walker: Um, and I, and I, you know, truthfully, the, the proposal was to have like four more amounts added to a form. It wasn't like pages and pages of information, like I think some people thought, but at the end of the day, it still only gets them directionally where they need to go. Right. And so for me, you know, It's like if we're going to fix the, let's fix the problem.

[00:23:32] Wendy Walker: If they need transparency, let's find a way to give some transparency instead of giving them more information that just sort of directionally gets them there from a compliance perspective.

[00:23:41] Meredith Smith: Yeah. And, but what I could see with kind of your coworkers suggestion about like, here's my gross, here's my net, or here's my deductions, here's my net.

[00:23:51] Meredith Smith: It's like, but I don't want you to see the transparency if I'm a 1099 person, like, oh, you spent. This much money on travel [00:24:00] and food and entertainment, like, I can't remember what it was a long time ago, but people were worried about like, well, I'm just going to give them a roadmap. I think it was maybe the, um, the uncertain tax position forms, right?

[00:24:11] Meredith Smith: Where it's like, well, I'm just going to give you a roadmap for what's not correct in my return or for things for you to audit me. So it's like that fine line of that matching. Of you know, you're gonna, you business are going to issue me as an independent contractor, you know, 6000 or Venmo. Right? Like I, I don't have these kinds of friends, but you know, oh, hey, I bought this just just Venmo me and we'll just, you know, we'll settle it up that way.

[00:24:37] Meredith Smith: Like I have, You know, here's your 5, 000 transaction. And it looks like I actually got paid for services when it's like, actually my friend just reimbursed me for, I don't know, half of our rent or half of whatever. Right. Um, and it's has nothing to do with business where, you know, there could be some skepticism associated with that.

[00:24:58] Meredith Smith: So [00:25:00] it's, it's again, that fine line of like what makes things easier and information. The ability to collect data and to have, have access to information always makes life easier, but there are costs associated, right? The tangible and the intangible of providing information.

[00:25:19] Wendy Walker: There is such a thing as TMI.

[00:25:21] Wendy Walker: Isn't that what they say? Right? Exactly. So you're right. I totally agree. And I, that's why I say, you know, I support the transparency of it and I support the expansion of reporting of something there for, for that reason, but. Why, why it feels like we're just still kind of throwing darts at the problem. We need to still kind of maybe hone in on what a good solution would be there.

[00:25:44] Meredith Smith: Um, Judy, and I know, you know, you are an incredible advocate for simplification, at least here in the state of Colorado. Um, do you have any practical suggestions from a state level of what, you know, kind of would, would [00:26:00] simplify taxpayer systems? Well, I think

[00:26:02] Judy Vordran: the biggest thing I've thought about is PR.

[00:26:05] Judy Vordran: Public relations. I think that I think states and the federal government do a really terrible job of telling them what they do for each other. Years ago, Meredith and I wrote an article about Sweden and how tied in their humans are to the Swedish government and how they feel kind of cradled from birth to grave by their government.

[00:26:24] Judy Vordran: So there is a there is a term that we had in our article, which now I don't remember, but it's sort of like. We get it. We understand the value of it. We in order to get our social security card, we go to the government and, you know, it's sort of passed through from life to death. And so the entitlements are kind of explained.

[00:26:39] Judy Vordran: So you feel emboldened by your government. We do a terrible job of that. And I think, you know, I remember years ago thinking who pays for the fireworks the 4th of July. Pretty sure it's not you and me that the government spends and it's a lovely gathering of people together that our government plays that shares with all.

[00:26:58] Judy Vordran: And so I [00:27:00] think those are, there's a lot government does for us. I just drove from here to San Francisco with my youngest daughter and the roads were in pretty good shape and I'm pretty sure I didn't pay for those. And I thought that was really awesome. And there were a couple of accidents because of this crazy river that's going on in San Francisco and the police were on it helping those people.

[00:27:17] Judy Vordran: I mean, there were cars that had spun out and they had were off the side of the road and there was emergency people there immediately. How does that happen without taxes? So I just think people don't realize that they look around them. How much tax influence. So, I think we do a terrible job of that, and we should share, like you said, IRS agents are not evil, they do good things for people, same with state government, they're just trying to help out, and they're not paid an inordinate amount to do so.

[00:27:42] Judy Vordran: It's a little bit of a thankless task, so you have to really believe in it, and I just think we should give a little more grace to them, and every time I go to an airport, I realize I did not pay for that airport, I'm very glad I got safely from here to there, right? And I came through a very orderly process with TSA.

[00:27:58] Judy Vordran: And I'm on a plane and I have not blown [00:28:00] up. So that would be my first thing. And then the second thing I think is wildly failing at our state and absolutely at our city of state of Colorado is our damn home rules. We have 70 home rules in one state and they don't agree on how to tax things. And I think that's just bad.

[00:28:15] Judy Vordran: I think it's just, it's a disservice to taxpayers. You want them to comply. Don't make it so hard, right? Don't ask for this splice and dice rule. Don't expect me to look at 70 jurisdictions in the state to figure out what to do. And I'm not even a Coloradan, come on. So, and I, and you know, what's interesting as practitioners, we buy data, right?

[00:28:34] Judy Vordran: So we can see the differences by state. So we do that analysis to help people like, Hey, this is taxable here. It's not taxable there. How does it cause, how's the taxpayer going to do that and spend the time, money, and effort to collect tax properly when it comes to sales tax? I can't tell you how many conversations I have about what is nexus, right?

[00:28:52] Judy Vordran: So that's, I think, a real problem, and that information is available. Why aren't the governments getting together and doing it? Huge issue to me. [00:29:00] And then the last one is probably some of the ones you thought about, and we're mentioning earlier, is this access. It's how you interact with government. Why is each system different?

[00:29:09] Judy Vordran: Why do I have to remember to click here and there? Why aren't we more similar than different? And those dissimilarities make it very difficult to do the same thing. So I was telling you, I watched this super pumped, um, about Uber. It's. It's fascinating. I highly recommend everyone watching it because it's a fascinating story about how they disrupted the cab industry.

[00:29:29] Judy Vordran: What their goal in the beginning was to have a seamless taxi experience. Get in, pay your fee, know what to expect, don't leave a tip, get from here to there. Awesome. And they created that, right? You knew what you're going to spend and then you, you paid it, you got from here to there, you loved it, right? And it transformed how you and I engage with taxi cabs.

[00:29:49] Judy Vordran: I only took taxis when I traveled. When I was personally traveling, I would never take a taxi cab because I didn't know how fast the meter was going to run up. So I don't really want to, I remember being in New York and I was with my parents many years ago and I'm like, [00:30:00] we're going to walk, let's take the train.

[00:30:01] Judy Vordran: Well, they're older. They didn't want to walk as much. We spent a fortune on cabs because they didn't want to walk the however many blocks. So it was like, I don't want to do this. The Uber has changed how I look at transportation, right? If I don't feel like walking, I'm going to go ahead and take an Uber.

[00:30:16] Judy Vordran: So, They transform the industry similar to Amazon by saying people don't just want to go in a store and shop. They want to go find what they want and Google it, right? They want to look through. I remember redoing my closet and I needed bins. So I go on Amazon and I'm like, Oh my God, there's 400 pages of bins and storage baskets.

[00:30:36] Judy Vordran: And I'm like, how do I even pick? Like I had no idea. So what happens when you go to like a store like Target? They've curated the vendors and pick who they want. Amazon lets the whole cart be available to anybody who makes bins. So I think that's been a tremendous benefit to the consumer, was that information sharing, giving everybody a chance.

[00:30:55] Judy Vordran: So those industries were phenomenal, but the tax structure was not ready to deal with [00:31:00] them. And so I think that access and information and interaction, you've got these high tech, these thoughtful people building this for business, not building it for government. And we got to change that. You know what I mean?

[00:31:11] Judy Vordran: Like, because you're thinking we got 90 million dollars or however, what was it 90 million or 90 billion was a billion or a million? Oh, billion

[00:31:19] Wendy Walker: with a B. So who are you going

[00:31:21] Judy Vordran: to hire? Who's a specialist? Who wants 140 an hour or whatever rate they indoctrinate on you? I'm not going to do that. I'm going to go work for someone who will pay me 300 an hour.

[00:31:30] Judy Vordran: That's a problem, right? You can't just have things be motivated by good thinking, right? People need to survive. They need to thrive. They need to have the life they want. And I don't think we should be thinking that, um, government is a zero sum game. So we can provide better access by investing in better technology.

[00:31:47] Judy Vordran: But how do we motivate that behavior? Is it economic? Is it some other thing to get those high tech wonder wine, wonder, wonder minds on the government side as well. So that's an interesting issue. Cause I've seen [00:32:00] that with our government systems, some use next gen, some use something else. And I'm like, Oh my goodness.

[00:32:05] Judy Vordran: You know, you really don't have apples to apples. So every state's like, who should we buy? How should we interact it? And then they can't rip and replace it. So that's inefficient. So why should they go alone? So that, that access, that parity, I think are really deficient when we do have this supremacy issue at the state government and there's a sharing, but there's still this autonomy.

[00:32:26] Judy Vordran: So it's a problem without sharing best practices. I think that's not happening. Like you said, the communication isn't happening. Everybody's going off and doing their thing and not sharing it back to the universe. And I think that's what should happen to make us more efficient. And it's certainly happening with all the data grabs and all these high tech companies.

[00:32:43] Judy Vordran: They are learning all kinds of things about customer behavior.

[00:32:48] Wendy Walker: You know, just listening to what you're saying too makes me just think about all the data that's moving around, right? Like how much of this could just be in one place and be shared rather than all this private information [00:33:00] and all of that just being shuffled all over the place with all the cybersecurity issues that we have today.

[00:33:04] Wendy Walker: And well, who cares?

[00:33:05] Judy Vordran: I mean, you think I really think this is private? I mean, it knows where I am. I have my GPS on. I don't just turn it off. I don't know that I really care. I don't really have anything to hide. I want to get my bank accounts, you know, but I don't really know if you care where I shop and where I want to do things.

[00:33:23] Judy Vordran: I like that. I like if I do something, something comes to me and says, Hey, you might like this too. I kind of like that because it makes my life easier to consume the right product for myself. It actually makes my me spend less time. for access, right? But, um, yeah, so I thought that was just, it's just been very, I'm a consumer, right?

[00:33:41] Judy Vordran: I shop, I try to find the best deals, but also I, it's not just about the money, it's about the best product for my personal needs or my personal life or whatever that is, right? To make my life easier. So I think we have not done a phenomenal job of that and that's absolutely happening at the business level, but it's not happening at the government level and I think that needs [00:34:00] to

[00:34:00] Wendy Walker: change.

[00:34:01] Meredith Smith: This is a kind of a little, a little different. We spent a lot of time talking about the IRS today, which we don't typically, um, but it's really nice to hear kind of our top side and, you know, cause a lot of what drives, you know, uh, people's perception of tax and whatnot and, you know, sets the standard or the, the cadence for how people view, you know, tax, tax in general, you know, starts at the IRS.

[00:34:27] Meredith Smith: So Wendy, thank you so much for your time and your knowledge. And we really appreciate you, you know, giving us some time for this conversation today. Thank you

[00:34:35] Wendy Walker: both Meredith and Judy for having me. I really appreciate it. It's great talking to you.

[00:34:39] Meredith Smith: That was another episode of SALTovation. Till next time.

[00:34:43] Meredith Smith: This podcast is for educational purposes only. This is 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.[00:35:00]