State tax policies need to be updated to better address new business models such as cloud computing, as well as a change that began long ago—the nation’s shift toward a service-based economy, according to the just-published Bloomberg BNA’s 14th annual Survey of State Tax Departments.

Both of these trends have highlighted the types of transactions that can be subject to a state’s tax. As the role of geographical boundaries continues to diminish as a factor in modern commerce, uncertainties appear to be multiplying for both states and businesses over basic issues such as which states are allowed to impose their corporate income tax on sales of services, intangibles or cloud-based transactions.

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