Posted by Sarah Salzman
Tax compliance practices are increasingly under the microscope and sales and use tax obligations are not as simple as they used to be.
While manually managing sales and use tax using rate tables perhaps worked in the past, now it can put a company at risk of a negative and costly audit. The reality is that most companies cannot afford to make mistakes.
With the average audit penalty of $34,000, consequences of making mistakes are dire, especially in a time where states are short on revenue and looking to uncollected sales tax to help make up that gap.
If your accountant came to you tomorrow and asked for reports on the sales and use tax you collected in the last 6 months could you easily respond with the correct information?
Tax compliance practices are increasingly under the microscope and sales and use tax obligations are not as simple as they used to be.
While manually managing sales and use tax using rate tables perhaps worked in the past, now it can put a company at risk of a negative and costly audit. The reality is that most companies cannot afford to make mistakes.
With the average audit penalty of $34,000, consequences of making mistakes are dire, especially in a time where states are short on revenue and looking to uncollected sales tax to help make up that gap.
If your accountant came to you tomorrow and asked for reports on the sales and use tax you collected in the last 6 months could you easily respond with the correct information?
What about exemption certificates? Now picture an auditor who is questioning the figures on your sales tax returns for the prior three years. Could you quickly show him a process that allows for clear traceability?
For businesses with complex tax obligations, nexus in multiple jurisdictions, selling across multiple product lines, and companies growing and expanding into new locations, managing rate tables can become a logistical headache.There are thousands of rate, rule and boundary changes a year.
In 2013, there were 1,470 rate changes alone.
For some companies, keeping rates and product taxability up-to-date within your ERP can be a full time job. Collecting and maintaining exemption certificates for non-taxable sales can become cost-prohibitive and labor intensive. Add to that a return process that can take up to two weeks of staff time per month for most companies and you can see why a manual process can be inefficient.
If you are relying solely on disconnected tax compliance processes, you may be unintentionally putting an audit target on your back. It is wise to be prepared long before the auditor comes knocking.
Top performing companies have realized a few key steps that can help alleviate the expense and challenges of a manual system:
Automation can help alleviate the burden on your staff, reduce audit risk and increase customer satisfaction (employees too!).
Avalara AvaTax is certified for Microsoft Dynamics (CfMD) and integrates with hundreds of other popular e-commerce and POS systems to help make sales tax less taxing.
For more information on sales tax best practices, join us for an educational webinar presented by Avalara:
The Hidden Dangers in Your Tax Rate Tables
Wednesday, April 23rd, 2014
1 PM ET
Register Here!
For businesses with complex tax obligations, nexus in multiple jurisdictions, selling across multiple product lines, and companies growing and expanding into new locations, managing rate tables can become a logistical headache.There are thousands of rate, rule and boundary changes a year.
In 2013, there were 1,470 rate changes alone.
For some companies, keeping rates and product taxability up-to-date within your ERP can be a full time job. Collecting and maintaining exemption certificates for non-taxable sales can become cost-prohibitive and labor intensive. Add to that a return process that can take up to two weeks of staff time per month for most companies and you can see why a manual process can be inefficient.
If you are relying solely on disconnected tax compliance processes, you may be unintentionally putting an audit target on your back. It is wise to be prepared long before the auditor comes knocking.
Top performing companies have realized a few key steps that can help alleviate the expense and challenges of a manual system:
- Take a look at your current process and develop a consistent, defined workflow.
- Find ways to increase sales tax calculation accuracy, while reducing paper waste, copies and hard copy retention.
- Look into implementing an automated system that integrates with your financial application. Smart companies are realizing this step can help shift the focus and time spent on their current sales tax process to revenue generating activities.
Automation can help alleviate the burden on your staff, reduce audit risk and increase customer satisfaction (employees too!).
Avalara AvaTax is certified for Microsoft Dynamics (CfMD) and integrates with hundreds of other popular e-commerce and POS systems to help make sales tax less taxing.
For more information on sales tax best practices, join us for an educational webinar presented by Avalara:
The Hidden Dangers in Your Tax Rate Tables
Wednesday, April 23rd, 2014
1 PM ET
Register Here!
