Category: Blue Sky, Compliance

Read My Lips – No New Taxes


Remember that infamous quote by George Bush Sr.? A campaign slogan that came back to haunt him when he did raise taxes. It seems states have a similar sentiment, no new taxes for their taxpayers, so the revenue needs to come from elsewhere.

On Tuesday March 17th, I spoke on a State Issues panel at the ICI 2015 Mutual Funds and Investment Management Conference in Palm Desert, California. Aside from the amazing weather, I was impressed with the elevated attention on state regulatory issues at an event that typically discusses SEC regulatory issues. Certainly, a majority of the presentations carried a theme that the federal regulators are becoming aggressive, but one of the general sessions actually uttered the word “blue sky”, which is a nod to the state regulators.

My panel, “State Issues Affecting Mutual Funds: Wait, Didn’t NSMIA Preempt the States?” concentrated on blue sky, state tax, state sponsored plans, and abandoned property. (For an explanation of the session title, refer to my last blog post “Why Does Blue Sky Compliance Remind Me of the IRS?”.) The message was clear from all the panelists. States are looking at all possible channels to generate revenue without upsetting key constituents (in other words – don’t tax the residents). Blue sky, in states with no-cap on the fees to file, represents substantial revenue. See chart for some examples.

*Texas source – ** Nebraska source -

*Texas source –
** Nebraska source –

The same can be seen with abandoned property and business taxes for out of state companies operating within the state. These sources of revenue have zero impact on voters in the state, so they have become areas of focus.

We feel the trend toward aggressive fee collection and investigation will continue and we work to prepare our clients for all that may come. To do this for blue sky, we perform annual reviews of client filings, data sources and system settings. We are currently in the process of developing a best practice document reflecting what we believe to be the standards for a successful blue sky compliance program.  Our goal is to educate our clients on the regulatory environment, and help them maintain compliance, manage costs, and mitigate risk.

Kevin Caravella

Kevin Caravella

As Vice President, Kevin is responsible for all aspects of Blue Sky Administration including service delivery excellence, relationship management and business development. He has over 26 years of Blue Sky administration experience, including systems and infrastructure development, operations and product distribution. Prior to joining Boston Financial, Kevin served as Vice President in the Asset Servicing Division at Bank of New York. Kevin led the Information Technology and Special Project teams as well as created information technology strategies for numerous product lines associated with state compliance and securities laws. He was also a founding partner at Automated Business Development (ABD) and instrumental in developing the company into a premier software and consulting firm. Kevin holds a Bachelor of Science in Business Administration from Boston University with a concentration in Management Information Systems.


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