Vertex Releases Annual Report Detailing Trends Around Sales Tax Rates and Rules

Rhea-AI Summary

Vertex, Inc. (NASDAQ:VERX) released its annual report on sales tax rates and rules changes, highlighting unique challenges for businesses as jurisdictions seek to recover lost revenues from the COVID-19 pandemic. Key findings include that 70% of new tax rates were enacted at the district level, with 65% of changes originating from cities. The report also notes the highest number of new taxing cities (69) and district taxes (177) in a decade, with the combined average U.S. sales tax rate reaching a 10-year high of 10.12%.

Positive

• Vertex's annual report is widely referenced by industry groups, enhancing its market position.
• The company's detailed tracking of sales tax rates positions it as a reliable source for businesses needing tax compliance information.

Negative

• The rising sales tax rates and new taxation jurisdictions may increase compliance costs for businesses.
• The 10-year high average U.S. sales tax rate could deter consumer spending and impact market growth.

KING OF PRUSSIA, Pa., Feb. 08, 2021 (GLOBE NEWSWIRE) -- Vertex, Inc. (NASDAQ:VERX) (“Vertex” or the “Company”), a leading provider of tax technology and services, has released its annual report detailing sales tax rates and rules changes. The report uncovers emerging trends that may create unique challenges for businesses, specifically as jurisdictions look to make up for lost revenue caused by the ongoing COVID-19 pandemic.

Vertex consistently tracks sales tax rates and rules and produces detailed mid-year and end-of-year reports featuring tax data over a 10-year period. These reports are widely referenced by industry groups and indirect tax thinktanks.

The 2020 end-of-year report includes the following jurisdictional highlights:

• 70% of new rates occurred at the district level;
• Although city rate changes returned to their normal pace of change after a spike in the second quarter, 65% of all rate changes were enacted at this level;
• The number of new taxing cities (69) and new district taxes (177) that materialized in 2020 mark one of the highest in each category during the past 10 years;
• Sterlington with the Sterlington Economic Development District No. 1, Ouachita Parish, LA now has the highest combined sales tax rate of 12.950; and
• The combined average U.S. sales tax rate (10.12%) across all jurisdictions also reached a 10-year high.
  

“Although the frenetic pace of rate-change activity we saw in early 2020, in particular with cities, slowed in the second half of the year, indirect tax teams still need to keep their eyes on several possible tax trends this year as all jurisdictions look to recover lost revenue and close COVID-related budget deficits,” said Vertex Vice President of Tax Research Bernadette Pinamont. “Given the number and size of state and local budget deficits, a ‘new normal’ for indirect tax policy and activity is almost certain to emerge.”

Click here to read more detailed trends and analysis from Pinamont. Download the full 2020 report here.

About Vertex

Vertex, Inc. is a leading global provider of indirect tax software and solutions. The company’s mission is to deliver the most trusted tax technology enabling global businesses to transact, comply and grow with confidence. Vertex provides cloud-based and on-premise solutions that can be tailored to specific industries for major lines of indirect tax, including sales and consumer use, value added and payroll. Headquartered in North America, and with offices in South America and Europe, Vertex employs over 1,200 professionals and serves companies across the globe.

For more information, visit www.vertexinc.com or follow on Twitter and LinkedIn.

Copyright © 2021 Vertex, Inc. All rights reserved. The information contained in this press release is intended for information purposes only, may change at any time in the future, and is not legal or tax advice. 

Company contact:
Tricia Schafer-Petrecz
Vertex, Inc.
tricia.schafer-petrecz@vertexinc.com
484.595.6142

Investor Relations contact:
Ankit Hira or Ed Yuen
Solebury Trout for Vertex, Inc.
ir@vertexinc.com
610.312.2890

FAQ

What are the key findings from Vertex's 2020 annual report on sales tax rates and rules?

Vertex's 2020 annual report reveals that 70% of new tax rates occurred at the district level, with a combined average U.S. sales tax rate reaching 10.12%, the highest in a decade.

How might the new sales tax rates affect businesses in 2021?

The new sales tax rates may increase compliance costs for businesses, posing challenges as jurisdictions recover revenue lost during the COVID-19 pandemic.

What is the significance of the increase in taxing cities reported by Vertex?

The report highlights 69 new taxing cities and 177 new district taxes, indicating growing complexity in compliance for businesses and potential cost implications.

What are the potential implications of the 10-year high in average U.S. sales tax rates?

The increase in average sales tax rates may deter consumer spending, impacting overall market growth and business revenues.