Tracking the licensing and permitting requirements for all the locations your business operates in can be a major challenge for companies operating in multiple jurisdictions. CSC sat down with our director of product management, Licensing, Arianne Turnier, to give insight into the complexity of the landscape companies are navigating and why they should consider using a software solution or outsource provider to manage their licensing compliance work.
What are the trends you’re seeing in the business license (BL) market space?
Arianne Turnier (AT): Let’s go back 20-30 years—there was not as much licensing in general. Fewer products were regulated, and jurisdictions had a much harder time simply finding all the businesses operating within their borders.
That has changed dramatically.
The trend we’re seeing is that more products and services are now regulated. Over the course of the Great Recession, local jurisdictions needed to find additional revenue because businesses were closing, and that prompted a big change in the business of managing licensing.
How does all this affect licensing?
(AT): It affects licensing because it changed the concept of doing business.
Historically, a jurisdiction would require a license for every brick-and-mortar business within its borders, but then the internet happened, so how do jurisdictions get their revenue? They started looking at where revenue is being generated and began to move away from location-based filing requirements and toward gross receipts and sales-based requirements.
Jurisdictions also started looking into where companies were filing taxes to determine where companies are doing business, and finally, local sheriffs and other jurisdiction representatives might send notice to a company just from spotting a service truck or company vehicle. These notices often come with penalties if the jurisdiction can prove the company has been doing business within their borders without the proper licensure in place.
Determining where business is occurring seems complicated, especially with the introduction of eCommerce websites.
(AT): Here’s an example—there’s a furniture store in “Fictional City,” and next to the city is an island with a tiny, gated community on it—the only way to get to the gated community is to go over a bridge. Let’s say someone on the island drives over the bridge to the furniture store and buys a couch, and then they take their new couch back home. The point of sale is at the furniture store because that’s where money was exchanged for the couch.
But what happens if the couch was ordered online and gets delivered to the island? Where is the point of sale then? What happens if the couch is bought in the store while in the city, but the store transfers to couch to a third-party delivery service that delivers the couch to the buyer on the island? The point of sale happened in Fictional City, but did the point of transaction occur when the item was delivered to the logistics company, or to the buyer’s home? This is the kind of decision-making process jurisdictions are increasingly involved in to be able to claim revenue from business licenses.
The example you just made references third-party delivery services, such as USPS, FedEx, etc. How are common carriers wrapped up in all of this?
(AT): If you think about common carriers these days, it isn’t just exclusive with companies like UPS®, USPS®, DHL—common carriers now include companies like Uber, Lyft, Shipt, and it also includes independent contractors delivering parcels for Amazon®. All of this creates a vastly different landscape for jurisdictions to navigate.
Have brick-and-mortar type businesses been affected in any way?
(AT): If you’re still a brick-and-mortar business, you’ve probably only seen a difference in terms of an increase in products and services being regulated, especially so if you’re a grocery or convenience store where you’re bringing in new products like eCigarettes or CBD products.
How can a company figure out how and where it should be filing?
(AT): This is why it’s complicated. A company would need to research each jurisdiction they generate revenue in to determine if there is some type of local or state requirement. And if it has products or services that are regulated, additional research might be needed to verify if it needs to file additional licensing. This level of research is incredibly time consuming.
It sounds like at the end of the day, jurisdictions see that there’s a lot of money left on the table if they don’t make changes to be able to capture more of it, but corporations are making changes of their own to avoid paying fees whenever possible. And the game of cat and mouse continues.
(AT): Little by little, all of this puts companies into a decision-making mode—do they cross their proverbial fingers and hope they don’t get caught or do they disclose everything and voluntarily file where they’re doing business? Do they only look at every city where they have a significant amount of revenue?
In the real world, it often comes down to simply cost versus resources. Most companies don’t have the personnel to research every jurisdiction they’re generating revenue in, and most don’t have the money to pay a third-party to do the research. That’s how companies big and small get to this point where they don’t see a solution, so they just keep doing what they’re doing and cross their fingers that it doesn’t get worse.
How can CSC help?
(AT): CSC’s been in the business of business licensing for a long time. We have learned that different companies have different needs, based on their industry, size, and workforce. For companies that need help with business licensing work, or are short on resources, we offer full-service outsourcing in addition to research services to help companies that may be out of compliance get back into good standing.
For companies that prefer to manage their licensing in house, we provide a self-service licensing management solution called CSC License Pro®.
About the author
Industry-recognized expert Arianne Turnier is an advocate for supporting the needs of licensing professionals and recognizing the value they bring to their respective workplaces. Arianne has been at the forefront of CSC’s license compliance technology for 15 years.
Visit cscglobal.com for more information on CSC’s portfolio of business licensing and permitting solutions.
Join Arianne on an upcoming webinar, where you can hear her talk through common licensing challenges and hear more information about CSC’s portfolio of business licensing solutions.