SALTovation: Navigating the Complexities of State and Local Tax by Aprio

In this episode, Meredith and Judy speak with Nick Richards, an expert in taxation for the cannabis industry, and partner and co-chair of the cannabis law group at Greenspoon Marder LLP. Nick shares his journey from working in the IRS to becoming an expert in cannabis taxation. He also discusses how he navigates the ever-changing landscape of taxation for cannabis businesses. Together, they discuss the high taxes and legal challenges that cannabis businesses face. They also explore the recent changes in the classification of Delta Eight and Delta Nine and psilocybin, and how they impact the industry.

Topics discussed in this episode:

• Nick's Journey to the Cannabis and Psilocybin Industries
• Regulatory Changes in Colorado for Psilocybin and Cannabis
• Mycelium and the Cannabis Industry

What You Will Learn:

04:34 Tax Ops' Proactive Approach to Cannabis and CBD Companies

06:11 Tax Implications of Hemp and Psilocybin in the Cannabis Industry

13:48 Understanding the Language of the Psilocybin Space

15:14 The Benefits of Psilocybin and Mushrooms

Quotables:

• “There are not robust regulations around the marijuana industry. So this year what we're seeing in that space is that a lot of those CBD manufacturers went ahead and were doing something called Delta Eight and Delta Nine, which is THC derived from hemp. Now many states are going back in and saying they think you're a marijuana company. Guess what tax applies to all of your sales for the past four years? The marijuana tax.” -Nick Richards [05:16]

• “There's just so many things I think that are still wrong about how we're handling this legal industry. And now we're, like, going after it more for classification issues when there's no alternative substance in a THC, going back to penalties.” -Judy Vorndran [06:31]

• “The rules are still being written in the mushroom space. It looks to us like it's sort of less retail and more medical, which is good for the industry if that allows them to be profitable. Because it starts to align with a case out there in the marijuana space called Champ rather than subsequent cases that found that all the activities of a cannabis-related enterprise were subject to a code section called 280 E rather than just the specific area where the sale of marijuana was occurring.”  -Nick Richards [09:20]

• “The problem with a lot of the cannabis cases was that they put so many expenses on the other non-280 E company that it could never make a profit. So it was found to be not a legitimate company and merely just part of the cannabis company. And again, that's because they're so limited, the only other thing they can sell are bongs and T-shirts. -Nick Richards [13:24]

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Introductory Call

Meredith Smith and Judy Vorndran continue their conversation with Wendy Walker, a Solution Principal at Sovos, in the latest episode of the SALTovation podcast. They talk about the state of the IRS, federal tax legislation, and how the current policies are trickling down into states. Ohio, Colorado, the District of Columbia, and Maryland eliminated paper processing for withholding taxes, 1099s, and W-2s, drastically reducing electronic filing threshold requirements. Wendy, Meredith, and Judy discuss the challenges that come with trying to stay on top of different reporting regulations across different legal entities, both at the federal and state levels.

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 Learn:

• 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:

• “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]

• “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]

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Introductory Call

Meredith Smith and Judy Vorndran host Wendy Walker, a Solution Principal at Sovos, in the latest episode of the SALTovation podcast. They discuss the Inflation Reduction Act, which provided the IRS with $80 billion to upgrade the taxpayer experience. The recent Taxpayer Advocate Report to Congress, however, revealed that the IRS is short-staffed and underfunded, resulting in a surge of unanswered phone calls and delayed correspondence, which is causing a rising federal deficit. Wendy and Meredith suggest potential solutions for the IRS, such as acquiring funding to improve their service and transitioning from conventional communication methods to modern ones.

Topics discussed in this episode:

• What is the Inflation Reduction Act?
• IRS Funding and Taxpayer Experience Improvement
• Potential Improvements for IRS: Modernization 

What You Will Learn:

• 7:53 IRS Focus on Digital Asset Reporting, Modernization, and Tax Literacy
• 15:00 Benefits of the Child Tax Credit and Taxpayer Education Efforts
• 16:04 IRS Funding for Pre-Filing Services, Education, and Taxpayer Advocacy

Quotables:

• “In 2020, the Taxpayer Advocate Report to Congress indicated that the third most serious problem that the IRS faced is that they are significantly underfunded to service taxpayers and collect tax. The report cited that they're unable to answer millions of taxpayer phone calls, they're unable to process timely correspondence, and that our federal deficit continues to grow as a result of that underfunding.” -Wendy Walker [00:55]

• “How many people want to do a job that feels like everybody's mad at you? Right. How do you encourage a culture that takes care of these people who are trying to care for the people? So we have to make it like, less adversarial, but then also generate those people to come in.” -Judy Vorndran [07:09]

• “99% of the revenues that our federal government operates on get collected by the IRS. So you would think that we would be more concerned with ensuring they had the funds and the people right to make sure those systems can do that efficiently.” -Wendy Walker [07:53]

• “The IRS doesn't have funding to do any of that education outreach on their normal appropriations that they're given from Congress. So funding is important for the IRS to be able to bring things out of paper publications that are really hard to find and are buried and get them out onto the Internet leverage searches so that taxpayers can really take advantage of some education before filing.“ -Wendy Walker [16:47]

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Production Support

This episode was produced with support from Truth Work Media. www.truthworkmedia.com

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Introductory Call

In this episode of the SALTovation podcast, Stacey Roberts is joined by Tim Noonan, Tax Lawyer and Partner at Hodgson Russ in New York, to discuss state and local tax issues. They talk about tax and legal issues related to private equity firms targeting certain companies and the importance of understanding where the target companies operate to determine any filing obligations. Stacey and Timothy also discuss the 2018 Wayfair case, and why tax professionals need to be knowledgeable to help clients navigate the process within state and local jurisdictions. 

Topics discussed in this episode:

• The need for expertise in transaction tax matters during big deals
• What is the 2018 Wayfair case?
• Tax implications of private equity and hedge fund transactions

What You Will Learn:

• 2:10 State and Local Tax Considerations for Private Equity Firms
• 8:07 Understanding Nexus and State Tax Implications for Business Transactions
• 11:54 Residency Rules and Tax Audits in Different States

Quotables:

• “State tax issues and private equity deals are an underrated issue. You and I think it's the most important issue because that's what we do every day. But we've gotten called in on both sides of these deals where someone's getting acquired and they haven't collected sales taxes in many years. We have to clean that up and figure out if your sales are taxable in this many states. We clean that up through voluntary disclosure.”- Timothy Noonan [04:22]
• “With the Wayfair case in 2018, you now have all these sellers who might not be watching what happens at the Supreme Court level and don't realize that every state has come out and said if you have a certain amount of sales in the state, which isn't very high threshold, you should be collecting sales tax in 46 different states and thousands of local taxing jurisdictions. So that can be messy.”- Timothy Noonan [07:11]
• “The rules in most states are either similar or the same. Someone leaving Colorado has the same residency test as someone leaving New York. There's a domicile test. California's rule is a little bit different, but they all sort of sound like the same concepts of this domicile test. So in that sense, the rules are the same.”- Timothy Noonan [12:02]
• “A lot of wealth creation that happens for folks in the private equity world is through pieces of their target companies they acquire and then they sell again. It is carried interest. It is the piece of these companies that are treated as capital gain. It's intangible. So in addition to that capital gain benefit of carried interest, it has an important effect on state taxes too.“- Timothy Noonan [16:34]

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Production Support

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Introductory Call

In this episode of the SALTovation podcast, Meredith Smith and Judy Vorndran continue their conversation with Alex Oxford, Founder of TaxValet. Alex discusses how businesses have begun to shift their traditional cold and concrete environment to one with more emotional intelligence. He shares why he believes this shift has allowed for more of an emotionally safe environment for people to work in and how creating a culture with more emotional intelligence, allows for better communication and collaboration between teams, ultimately leading to more success for companies.

Topics discussed in this episode:

• The value of creating emotionally safe and open work environments 
• Assigning tasks to team members based on individual strengths
• Using data to help your client make the best decisions

What You Will Learn:

• 1:47 Creating a Safe and Accepting Work Environment at Tax Ballet
• 9:37 Sales Tax Registration and Employee Engagement Platforms
• 12:41 Exploring the Emotional Side of Business

Quotables:

• “Every single person is unique in their own way, even the people who aren't that unique, because sometimes tax accountants, are just kind of tax accountants. And that's okay. Creating an environment where it's okay to show up and be who you are, and you will be loved, accepted, cherished just as you are is important.” -Alex Oxford [02:27]
• “If our core purpose is to transform negative emotions and it's something positive for our clients, partners, and employees, if we have too many clients, then we're not going to be able to deliver on that promise for new clients coming in the door. And we're not going to be able to deliver it for our employees because they're going to be overworked and stressed out.” -Alex Oxford [07:08]
• “We're able to do surveys for different departments. But when we talk about data, I think it's really easy for a lot of business owners and data junkies like myself to just think about the quantitative. But a lot of it is the qualitative information gathering.” -Alex Oxford [11:19] 

“One of the things that I'm the most excited about is being able to proactively identify issues with our clients that need to be escalated higher up in the chain of command before the client realizes it needs to be escalated and before the employee realizes it needs to be escalated and then being able to look at these issues and pinpoint what the root cause is.” -Alex Oxford [12:21]

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Introductory Call

In this episode of the SALTovation podcast, Meredith Smith and Judy Vorndran speak with Alex Oxford, Founder of TaxValet, a company focused on providing innovative tax solutions and helping clients navigate the complexities of the tax system with comprehensive solutions that are tailored to their individual needs. Alex discusses common emotional reactions clients have, like stress, anxiety, and overwhelm, when walking through sales tax problems and why it is important to create positive experiences for them. He also talks about TaxValet's core purpose: to transform negative emotions into something positive for its clients, partners, and employees.

Topics discussed in this episode:

• TaxValet's core purpose and approach to sales tax
• Building a client experience tailored to their individual needs
• Creating psychological safety in the workplace and in client relationships

What You Will Learn:

• [02:07]  Exploring the need for professional services in the SMB Market
• [06:26]  Streamlining tax solutions for E-commerce and software businesses
• [15:40] Creating a culture of safety and transparency in the workplace

Quotables:

• “Our purpose as a company is to transform negative emotions into something positive for our clients, our partners, and our employees. We are looking at sales tax not just being about the numbers, but understanding our clients are stressed out and overwhelmed and that is the problem we are solving.” - Alex Oxford [04:37]
• “We know that as a company if we are there to support you as an employee you will be there to support the business later on. Focusing on trust and creating psychological safety so that people feel safe to talk about things and will challenge each other.” - Alex Oxford [16:32]
• “I’m a big believer in honesty, transparency and taking care of the people that work with you and are a part of your family.” - Judy Vorndran [17:20]
• “As leaders we owe it to our team to be the best leaders we can be, to show up as servant leaders and help them grow, develop, and realize what they are fully capable of.” - Alex Oxford [17:26]

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Production Support

This episode was produced with support from Truth Work Media. www.truthworkmedia.com

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Introductory Call

In this episode of the SALTovation podcast, Meredith Smith and Judy Vorndran continue their discussion with Jenn Penn, a Contract Lobbyist at Dome Strategies in Colorado, on simplifying tax through lobbying and other special interest groups. Jenn talks about TABOR, the Tax Payer Bill of Rights, and discusses how much power, because of the constitution, can the state impose on cities. She also shares the 2023 goals of the Colorado Sales Tax Coalition and what they hope to see the legislator consider in this next session.

Join us in simplifying Colorado’s Sales Tax at simplifycosalestax.com.

Topics discussed in this episode:

• TABOR and the Colorado Municipal League 
• Non-partisan legislation and 
• 2023 goals of the Simplify Colorado Sales Tax Coalition 

What You Will Learn:

• [01:15] SB 2232
• [06:08] TABOR
• [13:02] Goals for enhancing the SUTS program in 2023

Quotables:

• “The Colorado Municipal League is a non-profit that represents the municipal governments at the legislator but they are also an advocacy and informational arm back to those local governments for all of the things that pass.” - Jenn Penn [04:12]

• “A lot of cities don’t have captive legal teams and have to source that with a third party. A municipal league is the keeper of the information for all the different cities and a tremendously helpful resource.” - Judy Vorndran [04:43]

• “Joint resolutions direct local governments and the business community to work together and have conversations to find a better, more simplified way to work on building permits and building permit process.” - Jenn Penn [14:53]

• “Colorado is one of the first states to implement the retail delivery fee. What is to prohibit another state from doing the same thing? There is a lot of precedent nationally that could be set based off of this delivery fee.” - Meredith Smith [18:54]

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Production Support

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Introductory Call

In this episode of the SALTovation podcast, Meredith Smith and Judy Vorndran talk with Jenn Penn, a Contract Lobbyist at Dome Strategies in Colorado. Jenn works with businesses to simplify tax and build coalitions for other special interest groups. Jenn talks about legislative sessions and shares the vision of the SUTS system, a sales and use tax online filing system within the Colorado Department of Revenue for businesses and local governments to work together and have one place to file their sales and use taxes. 

Join us in simplifying Colorado’s Sales Tax at simplifycosalestax.com.

Topics discussed in this episode:

• The formation of the sales tax coalition
• Legislative sessions and lobbying
• The SUTS System 

What You Will Learn:

• [01:21] Jenn’s professional journey 
• [11:45] The Sales Tax Coalition 
• [19:22] Creating a competitive economic environment in Colorado 

Quotables:

• “Lobbyists are really an integral part of the process. We are targeted communications. A lot of businesses hire PR. Lobbyists really help businesses, non-profits, and other organizations communicate with the state legislator.” - Jenn Penn [02:37]
• “The mission of the sales tax coalition is to reform Colorado’s complicated sales tax system with the goal of making it fair, simple, and predictable for businesses in a way that is revenue neutral to have any adverse impacts on local and state public services and create a competitive economic environment for Colorado that will attract additional employers and trade organizations.” - Jenn Penn [18:53]
• “The general view of taxpayers isn't such that they won’t file. They just need to know how to file  and they need to have a mechanism that is easy enough to understand to make it happen.” - Meredith Smith [21:16]
• “People are starting to see with technology getting better and better, there is more compliance. This is good for business. Because it is meant to be a voluntary system, not an extractive system. It is a win-win for business and governments. ” - Judy Vorndran [17:13]

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Introductory Call

In this episode of the SALTovation podcast, Alex Korzhen, Tram Le, Meredith Smith, and Stacey Roberts discuss the importance of having a state and local tax provider that is knowledgeable about all tax types that states impose. They also discuss the importance and value of taking a holistic approach to tax services and how sales tax software vendors tend to not offer that approach.

Topics discussed in this episode:

• What to think about when you buy state and local tax services
• Multi-industries and multi-tax types
• Risk analysis and evaluating circumstances for your business

What You Will Learn:

• [01:21] Overlapping complexities of state and local tax laws
• [03:55] Sales tax software vendors
• [07:23] Making decisions and understanding risks with your SALT provider 

Quotables:

• “It is important to make sure your tax provider is knowledgable and they have that big picture understanding of all tax types and not just a narrow understanding.” - Tram Le [00:52]
• “We are a multi-state provider. It sets us apart. We are well-versed in all states, not just one or two. We bring a different perspective to taxpayers who are in multiple jurisdictions.” - Stacey Roberts [02:01]
• “We can see the big picture and we can see the macro ramifications. We can make decisions, not in a vacuum and it is one of the biggest advantages of working with a group like us.” - Alex Korzhen [03:02]
• “We will always give you what the law says but we are nimble enough to also say it is up to you to make what that business decision is and to make a practical decision based off of your circumstances.” - Meredith Smith [07:24]

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Production Support

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Introductory Call

In this episode of the SALTovation podcast, Meredith Smith, and Tram Le talk continue their discussion with Dan DeLau, a founding partner of TaxOps, and Professor at the School of Business at Colorado Christian University. DeLau shares the important attributes of students that are considering pursuing an accounting major. He talks about why individuals need to possess the ability to interact with clients so they can provide excellent tax advice that clients can benefit from. 

He also shares his thoughts on how recruiting students before college could bring more people into the accounting profession.

Topics discussed in this episode:

• Attributes of successful accountants
• Recruiting high schoolers into accounting programs 
• Misconceptions about what accountants do

What You Will Learn:

• [01:34] Daniel DeLau on advising students pursuing business majors
• [11:38] The need for accountants as complexities in state and local tax grow
• [18:29] Presenting accounting opportunities to students before college

Quotables:

• “It is not just green visors, playing with numbers, and auditing bank records. Something that has kept me in the accounting profession is all the different types of businesses and industries I get to work with on a daily basis.” - Meredith Smith [04:04]
• “There are more and more rules and complexities that accountants have to deal with. Whether they are focused on tax work or auditing, those additional complexities are the reason we need more and more people going into the profession to respond to the situations that our clients might be up against.” - Daniel DeLau [11:30]
• “Data is showing that students by the eighth grade are making career choices. As they choose classes to take in high school they are already deciding what career path they desire.” - Tram Le [19:45]
• If we want to increase the pipeline of individuals going into accounting, we need to start well before the college level. We need to hit the high schools and have the high schools highlight the benefits of what an accounting profession can be.” - Daniel DeLau [16:48]

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Production Support

This episode was produced with support from Truth Work Media. www.truthworkmedia.com

Mentioned in this episode:

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Introductory Call