Institute for Professionals in Taxation® Sponsored Research: Locally Administered Sales and Use Taxes


IPT seeks to broaden the value it has brought members through tax education over the last 40 years to include in-depth research targeted at issues important to our membership, including our mission of promoting the uniform and equitable administration of  property, income and sales & use taxes and to minimizing the cost of tax administration and compliance. 

We are pleased to release our first commissioned research initiative “Locally Administered Sales and Use Taxes,” which addresses the increased role that sales taxes have assumed in financing local governments.  The research resulted in a three part-report intended to be used by taxpayers and practitioners, and may be considered by policymakers as they seek to improve their states’ tax systems. 

We retained KPMG to research and draft this detailed report to address the increased role that sales taxes have assumed in financing local governments.  Our goal was to review the issues with more rigor and specificity. Building on the extensive survey work and research, which has been reviewed  by a team of academics, this report explains the issues that locally administered sales taxes present and provides an estimate of the incremental compliance costs for both taxpayers and governments, compared to local taxes administered by a single state tax administration agency.  All survey data was collected in late 2015.

We anticipate that this “Locally Administered Sales and Use Taxes” report will be used by both taxpayers, governments and other SALT professionals to help create a tax community that is better informed and, ultimately, tax regimes that better aligns with the needs of both taxpayers and governments. We invite you to review the entire three part report below, or review the executive summary for a high-level overview of the study's findings and recommendations. 


Executive Summar Printable Version of the Complete Study    Summary of Options 

Conclusions

  • IPT’s Sponsored Research Committee analyzed the survey findings and summarized the options that state and localities could pursue  to simplify compliance with locally administered taxes and potentially reduce costs of compliance and administration for taxpayers and governments. 

  • Improve the availability of information on locally administered sales taxes to taxpayers by requiring regular updates of information on (a) which localities self-administer their sales taxes, (b) the rates at which the taxes are imposed, (c) the tax base and administrative procedures for the taxes, and (d) contact information for their local administrators (which should be made available electronically from a centralized source in each state);
     
  • Improve the degree of conformity between state and local sales taxes by (a) requiring that the tax base and administrative procedures for locally administered taxes be consistent with the state sales tax base and procedures, (b) limiting the areas in which local tax bases and procedures may differ from the state base and procedures, and/or (c) requiring that information on any such differences be regularly updated (and made available electronically from a centralized source in each state);

  • Require that all locally administered sales taxes be administered instead by the state tax administration agency; and
     
  • Simplify the rate structure for local sales taxes by (a) establishing a single, state-wide rate attributable to all jurisdictions, (b) not requiring sourcing of transactions to jurisdictions below the state level, and/or (c) not otherwise limiting the degree of rate variation and required sourcing of transactions to local jurisdictions by authorizing different local tax rates at only the county or parish level.

Media questions regarding the survey should be directed to:
IPT Executive Director Chris Muntifering, CMI (404) 240-2318 or

IPT Communications Manager Jennifer Newman (404) 240-2303