New Sales Tax on Services Key to State Budget Deal
Initial interpretation of a new tax on services, passed by the State Legislature in the early morning hours on Monday, Oct. 1, indicates that CPA services such as tax preparation, accounting and auditing
will not be subject to the new service tax. However, consulting services and investment advice services are subject to the new tax, both of which may directly impact the CPA profession. Effective December 1, 2007, the new service tax will generate an estimated $613.8 million in the portion of fiscal year (FY) 2008 it will be collected. Anticipated revenue balloons to $751 million for the full FY 2009 – clearly a significant portion of the revenue enhancements contained in the late-night deal. Coupled with an income tax hike and government reforms, the service tax was part of a three-fold deal to avert a government shutdown. This
article provides details on the new tax measure, including a list of taxable services.
