Vibrant State Income Tax Reform Likely Culprit
A new Grant Thornton survey revealing that 
regulatory and compliance burdens top the list of concerns for finance chiefs has once again brought state income tax reform and its impact on businesses into the limelight. Nearly half (45 percent) of CFOs say that increasing costs of compliance present the biggest challenge to growth, and nearly a third (31 percent) say that keeping up with the volume and complexity of regulations is their number-one challenge.
The Grant Thornton survey market sentiment is in line with current regulatory changes we have seen of late, particularly at the state corporate income tax level. While Federal corporate income tax reform seems to be at a standstill, state income tax reform is alive and well. Based on a Bloomberg BNA study conducted earlier this year, state governments appear to be shattering their stereotypical image, by swiftly enacting new laws to meet their budgetary or political goals.
The Grant Thornton survey results also support sentiments from BNA State Tax Analyzer beta testers, with nearly all respondents (94 percent) experiencing tax reform in the states they file in. In addition, the majority of respondents (88 percent) believe that state tax reform will make their job more challenging, while half (50 percent) believe state income tax reform will cause increased audits.
The root of their problems? The complexity of analyzing the plethora of tax regulations and then calculating the corresponding tax liabilities, which both ranked as top state income tax compliance challenges (50 percent).
Surprisingly, antiquated spreadsheets, notorious for human-error and lack of scalability, are still being used by over 80 percent of beta testers to currently manage state tax planning and provision. Plus over one-third (34 percent) of beta testers spend four or more weeks on spreadsheet maintenance annually.
So what are finance executives doing about it? Half of our beta testers are starting by putting state income tax on the their strategic agenda; and 44 percent plan on getting a leg-up on state income tax compliance through the use of new software such as our recently launched BNA State Tax Analyzer.
What are you doing to ease regulatory and compliance burdens? We’d love to hear your thoughts.
