BUSY SEASON MANAGEMENT

When Tax Collectors Go Digital

…Where will you hide?

COLLECTING TAXES UPFRONT: In Mexico, tax returns, accounting records, and other tax disclosures must be filed in standard electronic format, driving down the cost of tax collection by 57 percent between 2006 and 2018. Meanwhile, revenue generated by audits rose an astonishing 117 percent between 2015 and 2020. (Source: Better Than Cash Alliance, The U.N., via Avalara)

By CPA Trendlines

Accounting professionals may be focused for now on Tax Season 2022. But right around the corner, a revolution in tax is coming, if the United States can get out of its own way.

Ready or not, here it comes: digitized sales tax compliance. The compliance might happen immediately after a transaction or right in the middle of it with a tax agency in between the buyer and the seller.

MORE: Brain Drain Hobbles IRS | Crisis at the IRS | The IRS’s 10 Biggest Problems | Fear and Loathing for Tax Season ’22 |  Padar Joins VC-Backed Tax Fintech for Banks |  COVID Chokes an Already Crippled IRS | Tax Regs for the Metaverse | 10 Steps to a Superior Tax Department | Accountants Critical of Competitor Price-Cutting |  Automate Busy Season with Apps You Already Use | Sales & Use Tax Costs Are Higher than Anyone Thought | Survey: Nobody Loves the Wayfair Decision | Busy Season Forecast: More Chaos  | A Woman Named Wanda Leaves an IRA Nightmare  | Are You Under-Pricing Your Client Accounting Services?  | Your Best Advice: Get Smart, Get Tech, Get Moving | Worries for Small Business Clients |

GoProCPA.comPRO Members: Log in here or upgrade to PRO today.

It isn’t happening in the U.S. yet, but at least three states are thinking about it, and in 83 other countries, it’s already a thing. In California, Florida, and Massachusetts, it may soon be a thing. The Federal Reserve and the Business Payments Coalition have already launched a pilot program to standardize electronic invoicing systems.

Digitized tax compliance is far more than the mere e-filing of invoices and tax returns. It’s the movement of paper compliance activities to the cloud, where tax authorities can not only see transactions but, in some countries, actually, get involved in them.

The potential opportunities for accountants, auditors, and tax practitioners are as yet unknown, but where there is change, there is opportunity.

Also, danger.