State governments are not just realizing the revenue potential that indirect taxes in general – and sales and use tax in particular – possess. Until recently, however, legislatures were wary of expanding the scope of such taxes to apply broadly to services and business inputs. Indeed, prior efforts to do so have been met with strong taxpayer resistance, leading state tax administrators to rethink their approaches. However, in the current inflationary environment, where cost increases to businesses and consumers are almost expected, taxpayers should expect more states to strongly consider – if not rapidly enact – new indirect taxes and sales and use tax base expansions to cover transactions that historically were not subject to tax.
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