Vertex 2023 Mid-Year Sales Tax Rates and Rules Report

New District Rate Changes Soared During First Half of 2023

KING OF PRUSSIA, Pa., July 13, 2023 (GLOBE NEWSWIRE) -- Vertex, Inc. (NASDAQ:VERX) (“Vertex” or the “Company”), a global provider of tax technology solutions, released its 2023 annual Mid-Year Sales Tax Rates and Rules report, which found that the number of changes in jurisdiction rates across the U.S. have increased by more than 40% through June 30 compared to the same period last year. Proving once again that agility will be crucial for businesses to meet their compliance obligations.

During the first half of 2022, there were a total of 302 new sales taxes and tax rate changes at the state, county, city and district levels. This year, that total increased to 431—a 43% bump.

Driving this increase is a surge in new taxing cities with 37 so far in 2023 compared to 22 in the first half of 2022. A large increase in district-level sales tax rate changes —148 so far this year vs. 37 in the first half of 2022. Most of those district-level rate changes were decreases. The volume of these changes complicates tax compliance activities for the sales and use tax community.

There are myriad reasons why state and local government organizations have been increasingly relying on sales tax to fund ongoing operations. Other than economic reasons, sales taxes tend to be easier to administer and collect. Over the past 60 years, in times of adverse economic cycles, sales taxes have provided a more resilient method of funding relative to income and property taxes.

“Tax groups must continue to be agile to ensure their organizations address the growing number of indirect taxes that states and other local jurisdictions are enacting,” said Michael Bernard, Vertex Chief Tax Officer and VP of Tax Content. “It is important for tax professionals to monitor what is driving all of these changes as they navigate the ever-shifting indirect tax landscape.”

The dynamics and trends that are impacting sales tax and rates changes and the driving forces behind them, include:

• Taxing districts require more funding: Through the first half of this year, 101 new district taxes (such as fire & rescue and parks) have come online. This explosion in new district taxes is about funding. Districts have seen the cost of goods and services compound due to inflation over the past several years. Issuing additional debt is more challenging today because interest rates have risen and are likely to stay high for some time. All of this means that taxing districts are expected to continue to enact new taxes to address their revenue needs.