State Tax Snapshot: 24 Jurisdictions to Weigh Tax on Accounting Services in 2013, AICPA Says


Nearly 60 percent of executives believe that expanding the sales tax base to include various services would have the greatest impact on their business, according to survey results recently released by Grant Thornton LLP.

The executives' concern comes at a time when tax-reform minded governors are proposing to replace their jurisdiction's income tax with a sales tax on a broader array of services. Among these states are Minnesota and Ohio.

One of the most controversial aspects of the proposals in both states is the imposition of sales tax on traditionally exempt professional services, such as accounting and legal representation.

There are only four states (Hawaii, New Mexico, South Dakota, and West Virginia) in which services are presumed to be subject to sales tax.  Of these, Hawaii, New Mexico, and South Dakota impose tax on accounting services, according to the AICPA.  (West Virginia exempts professional services from tax)

But in 2012, additional states ( Arizona, California, Kentucky,  Maryland, Michigan, New Jersey) considered, but did not enact legislation to tax accounting services, according to the AICPA. In 2013, the AICPA anticipates that 24 state legislatures will consider proposals to tax accounting services.

By Steven Roll

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