Sales and purchase transactions involve numerous data elements. For sales, these elements include addresses, products, quantities, discounts, and shipping costs. Purchase transactions, especially those from ERP or accounting systems, can include even more elements like GL account numbers, purchase order numbers, cost centers, vendor names, and more. Additionally, considerations for customer or vendor exemptions, jurisdictional allocations, and management of accruals and payments add to the complexity. This makes calculating the correct sales tax or consumer use tax very challenging.
Further complicating matters, companies often have various customizations in place for their internal accounting. There can be up to 20 additional elements when recording sales or purchases, with these elements and their values differing by legal entity, business unit, or product line. Each element can impact how a transaction is identified for tax calculation purposes.
To address this complexity, we developed the CereTax rules engine, designed to handle all these scenarios. It uses if-then conditions that are easily configured to evaluate any value for the provided data. The data elements used by the rules can be weighted to create a hierarchy of importance, allowing for numerous rule configuration options to manage complex data requirements.
Moreover, the CereTax interface supports an unlimited number of user-specified data elements and values. Users can label each specific element within the platform to include it as an additional rule configuration element. Data values can be grouped into lists or key/value pairs for lookups during rule execution. The possibilities for data evaluation within the CereTax rules engine are virtually limitless.
Given the robust data capabilities of the rules engine, transparency throughout the process is essential. An audit layer logs all actions, events, and outcomes generated by the rules engine. From the source transaction through all evaluated and executed rules to the final transactional data and computed tax, a detailed history of events is available for review. This provides complete visibility into the entire workflow, creating a streamlined audit trail.
The CereTax rules engine offers many additional features and benefits that are too numerous to cover in a single blog post. We believe that the functionality, capability, transparency, and audit trail of our rules process set CereTax apart from all legacy tax engines.
Want to see how the power of CereTax can help your business manage sales tax operations?
|
Mike Sanders Co-Founder and CEO, CereTax |
In the landscape of ever-evolving technology, efficient business and financial operations are key to success. When it comes to sales tax, organizations strive to streamline their processes, minimize risk, and maximize revenue. CereTax makes this process seamless with our integrations and flexible APIs that allow businesses to easily connect our tax platform with their billing and ERP systems.
CereTax has powerful native integrations with Oracle NetSuite, Microsoft Dynamics 365 Business Central or Finance & Operations, QuickBooks, and a variety of billing platforms. These integrations allow your business to simplify tax automation without the need for additional developer resources or overhauling your existing infrastructure.
CereTax provides robust APIs, designed to facilitate smooth communication between our platform and any number of financial systems. With CereTax's APIs, businesses can bid farewell to the clunky APIs and difficulties with synchronization. Instead, they can embrace automation and real-time data exchange, paving the way for unparalleled efficiency as they grow their business into new markets, add new products, and acquire other businesses.
CereTax's APIs extend beyond mere data exchange. CereTax's APIs empower businesses with advanced functionalities for simplifying sales invoicing, solving industry specific use cases, creating custom reports, and identifying over or under paid taxes on purchases. These capabilities not only enhance operational efficiency but also unlock new avenues for strategic decision-making and revenue optimization.
By integrating with your business’ ERP or accounting system, CereTax enables end-to-end visibility and control over the entire indirect tax process for your finance department. This allows your team to make data-driven decisions, optimize resource allocation, and adapt swiftly to regulatory changes.
CereTax's native integrations and APIs represent a paradigm shift in the realm of tax automation as the extensive use of developer resources and misaligned integrations are a thing of the past. The power of our APIs lies not only in their technical capabilities but also in their ability to give businesses tax processing efficiency, visibility, and scalability. By embracing CereTax's APIs, organizations can unlock hidden tax revenue, streamline financial operations, and stay ahead in today's competitive landscape.
In this video CereTax's CRO, Brent Reeves, gives an overview of the automated failover process within the CereTax platform. With a presence in dual regions, US East and US West, each containing multiple availability zones, we offer numerous failover locations in real-time. There's no downtime waiting for systems to spin up, and no data loss.
Brent demonstrates the failover process by simulating an outage in one region whereby CereTax automatically performs checks to verify the issue and then routes traffic to the alternate region with no downtime or data loss.
The world of taxes has a reputation for being complex, time-consuming, and downright confusing. But what if there was a way to simplify the process, streamline tasks, and gain deeper insights into your financial situation? Enter the world of Artificial Intelligence (AI), which is rapidly transforming the landscape of tax technology. We'll briefly explore 4 key areas where AI is actively assisting and preparing to aid people and businesses in managing their sales tax.
From Tedious Tasks to Strategic Support
As AI technology expands it will be able to fully manage the manual inputs required for tax preparation. Repetitive tasks like data entry, calculations, and form filling will become fully automated, freeing up human professionals to focus on more strategic aspects like tax planning and client interaction. This will save businesses time, money, and personnel resources as well as reducing the risk of errors.
Compliance with Confidence
Navigating the ever-changing maze of tax laws and regulations can be a daunting task. Currently AI can assist in analyzing vast amounts of data to identify potential compliance issues and inconsistencies. The level of discernment applied by today's technology will only expand as AI evolves over the coming years.
The Power of Machine Learning
Classification models have the ability to learn from large datasets and the existing tax decisions within them in order to make predictions on new incoming data. When leveraged properly, these models have enormous potential to accelerate review processes and even provide a confidence score alongside their predictions to help reviewers to hone in on predictions where the model may have less certainty. But the most impressive value comes from the way that the models can be retrained based on corrections by reviewers so that they are continuously improving their accuracy over time.
Proactive Partner, Not Just a Tool
AI-powered tools already go beyond mere data analysis. They can continuously monitor tax law changes and client data, proactively notifying users of potential opportunities or risks. This foresight empowers businesses to make informed decisions and adapt their strategies efficiently. This will also enable better forecasting and reporting for businesses as AI becomes a core aspect of data management across all technology platforms.
While AI brings exciting possibilities, it's important to remember it's not a replacement for human expertise. Complex situations still require the judgment and interpretation skills of qualified professionals. Additionally, building trust and rapport with clients remains an essential aspect of tax services, something AI will likely never be able to fully replicate.
The future of tax technology looks promising, with AI acting as a powerful tool to enhance efficiency, accuracy, and personalization. However, it's an ongoing evolution, not the flipping of a switch. Human expertise will continue to play a crucial role in navigating the complexities of taxation, with AI acting as a valuable partner in streamlining the process and enhancing data that decision makers rely on. If you’re interested in learning about how powerful tax automation tools backed by true tax industry experts can help your business handle indirect taxes connect with us here.
From Our Partners at Peisner Johnson:
Sales tax compliance is a multifaceted process that can pose significant challenges, especially for businesses operating across multiple states or jurisdictions. However, with the advent of innovative tools and partnerships, the intricacies of sales tax compliance can be effectively managed. Let’s talk about the nuances of sales tax compliance and how CereTax, and their partners, can simplify this process.
Sales tax compliance entails a business's responsibility to accurately collect, report, and remit sales taxes to the appropriate authorities. The foundation of these obligations lies in the concept of nexus— the specific connection a business has with a jurisdiction. Nexus can be established through a physical presence, known as physical nexus, or through economic activities, referred to as economic nexus.
Businesses need to identify their nexus footprint, which constitutes the states where they have either a physical or an economic nexus. This involves understanding the taxability of their offerings, the applicable tax rates, and the requirements for filing and remitting sales tax returns in each of these states.
Sales tax compliance can present several hurdles, particularly for businesses that operate across multiple states or jurisdictions. These include:
Our cutting-edge sales tax automation platform here at CereTax is designed to address the challenges you may encounter and streamline the sales tax compliance process. Here's how:
In addition to the powerful software solution we provide at CereTax, businesses can also harness the expert consultation services of our proud partner, Peisner Johnson, a leading sales tax accounting firm. This synergistic partnership equips businesses with a comprehensive suite of tools and services for dealing with sales tax compliance.
Peisner Johnson offers a variety of services that complement CereTax’s software:
Using both CereTax's top-notch software and Peisner Johnson's expert consulting simplifies sales tax, giving you peace of mind. So you don’t have to worry about your sales tax compliance ever again.
Sales tax compliance, though complex, can be significantly streamlined with the right tools and partnerships. By leveraging the capabilities of CereTax and the expertise of Peisner Johnson, businesses can confidently navigate the maze of sales tax compliance, ensuring they remain compliant and prosperous in a rapidly evolving commercial landscape.
Want to learn more about CereTax's partner Peisner Johnson? Click the link below.
From Our Partners at Peisner Johnson:
Sales tax is a complex part of doing business, particularly in the United States where rules and rates can vary widely from state to state. One of the key aspects of sales tax that businesses must understand is the concept of nexus. So, in this blog we will delve deeper into the nexus definition, the difference between physical nexus and economic nexus, and how you can calculate your nexus footprint to ensure your business remains compliant with all its sales tax obligations.
In the context of sales tax, nexus refers to the relationship between a business and a jurisdiction that enables the jurisdiction to impose a sales tax obligation on the business. Simply put, if your business has nexus in a particular state, you have passed the established thresholds for commerce in that state and you are now required to collect and remit sales tax on sales made to customers in that state.
There are two distinct types of nexus: physical nexus and economic nexus. Each of these types has its own unique set of rules, regulations, and guidelines which are designed to govern its application and operation. While they differ in their defining characteristics and requirements, triggering either the physical or economic nexus invariably necessitates the inclusion of that particular jurisdiction into your nexus footprint. This means that if you meet the criteria for either of these nexuses in a specific jurisdiction, you are obligated to comply with the tax laws of that jurisdiction, thereby expanding your nexus footprint.
Physical nexus is the traditional form of nexus. It is established when a business has a physical presence in a state, such as a store, office, or warehouse. Employees or representatives operating in a state can also create physical nexus. This means that a traveling salesperson, a remote employee, or even property owned or leased in a state could trigger nexus.
For many years, physical nexus was the primary way that businesses established sales tax obligations. However, the rise of e-commerce has prompted a significant shift in how nexus is defined and applied, leading to the creation of economic nexus.
Economic nexus is a more recent development in sales tax law. It was established by the Supreme Court's decision in the 2018 case South Dakota v. Wayfair, which ruled that states could require out-of-state businesses to collect and remit sales tax based on the volume of their economic activity in the state, even if they had no physical presence.
This landmark ruling means that if your business makes a certain amount of sales or conducts a certain number of transactions in a state, you may have economic nexus in that state and be required to collect and remit sales tax. The thresholds for economic nexus vary from state to state, making it crucial for businesses to stay updated on the legislation in each jurisdiction where they conduct business.
Understanding your nexus footprint – the states where your business has either physical or economic nexus – is a critical part of your sales tax compliance strategy. This knowledge helps you identify where you have sales tax obligations and allows for strategic planning.
One effective way to calculate your nexus footprint is by leveraging the power of CereTax's advanced software. It conducts a comprehensive analysis of your business activities, including your physical presence, sales volume, and transaction count in each state. This helps you stay on top of your compliance even as your nexus footprint expands into new jurisdictions.
In some cases, it may be highly beneficial to discuss your specific situation directly with a sales tax expert. This is where our trusted partner, Peisner Johnson, becomes an invaluable resource. With their vast expertise in the field, they can provide accurate and timely guidance tailored to your unique sales tax concerns. They even offer free consultation calls for those encountering sales tax challenges, making them a great go-to resource in navigating the complex landscape of sales tax.
Calculating your nexus footprint is not just a best business practice – it's a legal obligation. Neglecting to collect and remit sales tax where you have nexus can lead to penalties, interest, and even damage to your business's reputation. Regularly reviewing and validating your nexus footprint as your business evolves is crucial.
The complexities of sales tax can be daunting, but with CereTax's innovative software, you're not alone. Our platform makes it easy to calculate your nexus footprint, stay informed about changes in sales tax legislation, and ensure your business stays compliant with all sales tax obligations.
Understanding your nexus footprint is a vital aspect of managing your sales tax obligations. Whether it's physical nexus through a tangible presence or economic nexus through your volume of sales, each form requires careful consideration and regular monitoring. By partnering with CereTax, you can navigate the complexities of sales tax legislation with confidence. Remember, staying informed and proactive is the key to ensuring your business remains compliant and successful in the ever-evolving world of commerce.
Want to learn more about CereTax's partner Peisner Johnson? Click the link below.
The ever-evolving landscape of sales tax regulations in the United States continues to grow and requires more and more vigilance to stay in compliance, particularly in the Southeast. Changes in tax laws, rates, and compliance requirements significantly impact businesses operating in this area, requiring a keen eye on updates to stay ahead of the curve.
Understanding the Southeastern Tax Terrain
The Southeastern United States includes a wide array of tax laws and regulations by state which includes -- Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee. These states form a significant regional market within the US that carries many nuances and challenges as it relates to sales tax.
Recent Updates Shaping Sales Tax Dynamics
1. Economic Nexus Laws
2. Marketplace Facilitator Laws
3. Tax Rate Changes
4. Tax Exemptions and Changes
Navigating the Changes: Tips for Businesses
Stay Ahead and Stay Informed
Adapting to the ever-changing sales tax landscape in the Southeastern United States necessitates a proactive approach. Businesses must remain agile, equipped with the right knowledge, technology, and professional support to navigate these intricacies successfully.
In this environment, staying informed and agile is not just a strategic advantage but a necessity to ensure compliance and foster continued growth for businesses operating in the Southeast.
The Southeastern tax updates reflect a small portion of the broader nationwide trend of evolving sales tax laws, emphasizing the critical importance of staying informed and adaptable in an ever-shifting regulatory environment.
If you’re in the southeast or anywhere in the US and concerned about your business’ tax technology, connect with a team member at CereTax to see what we can do for your business!
All information and credit for this blog post goes to Ernst & Young and their blog post located here.
In the ever-evolving landscape of finance, businesses are facing a looming challenge — a wave of incoming changes to the indirect tax space. As governments around the world seek to replenish depleted revenue and address economic uncertainties exacerbated by recent global events, tax authorities are gearing up to scrutinize financial records more heavily. This shift in focus is poised to affect businesses across all industries and stages of growth, requiring a proactive approach to navigating the potential storm.
The most noticeable change will be a focus by governments on ways to increase tax revenue from an increase in taxation to increased financial audits. Governments have injected massive funds into economic recovery efforts, resulting in unprecedented levels of public debt. In order to reclaim some of that lost revenue, tax authorities are expected to expend more efforts in reviewing businesses’ tax returns and financial transactions. This attempt to recoup lost tax revenue will be an ongoing effort by governments in the coming years and it’s one that looks to only increase in scope.
The next change will be around trade, while indirect taxes and trade are intrinsically linked, the impact of increased trade disputes, new trade agreements and alliances will all shift the way trade is taxed. The role of trade and its effect on business has always existed but the attention trade has garnered with recent global events makes its impact more glaring for businesses of all sizes. Companies are adapting how they do business in response to these trade and supply chain issues which will continue to have a noticeable effect on the level of taxation across all sectors of the economy. The reverse is also true where the taxes themselves may in turn impact supply chains.
The last change is the transformation of the technological landscape which gives both governments and businesses up to date and more efficient ways to manage oversight into financial operations. These shifts in technology mean businesses will have to be more aware and cognizant of their finances data and operations. Emerging technology will broaden the scope of regulatory oversight into how business manage tax and financial operations but will also open doors for companies looking to improve their data management and tax operations. The balance between efficient financial operations and data management will be stronger than ever and companies will be able to utilize a wide array of tools to prepare for these coming changes.
In conclusion, the anticipated shifts in indirect tax will come from increased oversight, trade shifts, and advancing financial and data management technologies. Preparing for these changes is crucial for businesses to navigate the coming regulatory and technological shifts. Embracing proactive measures, staying informed about evolving tax regulations, leveraging emerging technologies, and seeking professional guidance are essential strategies to weather the storm and avoid unforeseen issues.
If you would like to learn more about how CereTax can help your business have the technology needed to prepare for what lies ahead, connect with us here.
From our partners at TaxConnex:
Construction contractors have a tough job these days, given labor shortages, supply-chain headaches, and mushrooming regulations. If you’re in this industry, the last thing you need added to your load is sales tax.
Generally, a business in the construction industry is performing a service, and most services are excluded from sales and use tax. But construction sales tax has to be your concern if you engage in contracts in different states.
And no two states are alike, it seems, when it comes to sales tax.
General complications
RPI vs. TTP. Most states have guidelines regarding sales tax requirements for contractors, often hinging on definitions of real property improvement (RPI) versus the sale and installation of tangible personal property (TPP).
Each type of transaction will potentially have different sales and use tax obligations. For instance, when defining RPI states will use terms such as “permanently affixed.” If the item in question can be easily removed (say, a big-screen TV bolted to a wall), it’s generally considered the sale and installation of TPP and not property improvement.
Examples of RPI include foundation and excavation work, building of framing and drywall, plumbing and electrical work. Construction sales tax on the sale and installation of TPP would apply to the TPP but not the installation work.
Lump-sum and separated (itemized) contracts. Lump-sum contracts don’t distinguish between the charges for materials and the charges for labor. Separated contracts separate material and labor charges.
The Sales Tax Institute confirms that in many states the structure of the contract can have an impact on the taxability of the transaction. A lump-sum construction contract generally imposes tax liability on the contractor, who must pay tax on materials incorporated into the real property purchased for the project. In a separate contract, the contractor is “selling” materials prior to incorporating them into real property for the project by listing them on the invoice. In some states, contractors may be considered retailers of the materials in this type of contract and are able to purchase tangible personal property for resale. Sales tax is collected on the selling price of the materials between the contractor and the property owner/customer.
State, job and client. Most states think of the contractor as the end user of the property (supplies and materials) bought to perform services. In those states, such services are not subject to sales tax but the supplies and materials used in performance of the service are subject to tax.
Tax-exempt entities. Most states allow you to purchase materials for contracts with tax-exempt entities, such as government entities or nonprofits, exempt from tax (aka, a “pass-through exemption”) by using a special form. Other states have no pass-through exemption but treat the contractor as making direct, tax-exempt purchases on behalf of the entity.
Different activities in different areas. You may buy a project’s materials in one state and pay the appropriate sales tax but then use these materials in a different state. Even though you have paid construction sales tax on the materials at the time of purchase, there may be additional use tax due depending on the state in which you finally used the materials.
Some state examples
A snapshot of a few states’ statutes clearly shows the sales tax confusion that can result for construction contractors.
Hawaii: Sales of materials incorporated by a contractor into a finished work and that “remain perceptible to the senses” are considered wholesale transactions taxed at 0.5%. Wholesale purchases require the applicable resale certificate; all other sales, such as sales of equipment, are retail transactions taxed at 4% (plus a county surcharge if applicable).
Massachusetts: Out-of-state contractors must register with the state and are responsible for a guarantee bond form or a surety deposit for any project valued at $20,000 or more (including materials). Such contractors are also responsible for presenting a state Certificate of Compliance to the hirer before the completion of a project, among other conditions.
New York: Installation, repair, or maintenance services either to TPP or to real property are generally taxable. Capital improvement beyond installation, repair, or maintenance is not taxable. (Ditto in West Virginia.)
South Dakota: Any person entering a contract for construction services or engaging in services that include the construction, building, installation, or repair of a fixture to real property must have a South Dakota contractor’s tax license. The excise tax imposed on the gross receipts for construction projects is at a rate of 2%.
Washington: Nothing short of a matrix details this state’s take on construction and sales tax, broken out by half a dozen types of contractors and applicable taxes (sales, B&O, use). Available in a printer-friendly version, which could be fortunate.
Want to learn more about CereTax's partner TaxConnex? Click the link below.
.png)
Meet Eric Schaefer. Eric is the Practice Lead for Technology and Communications at CereTax. He is also an attorney and CPA who has worked in tax for 11 years specializing in transaction taxes and tax technology — along with a heavy dose of telecommunications tax.
Eric first became interested in automation when he was responsible for the monthly compliance data processes at Level 3 Communications. He taught himself VBA to streamline processes and further leveraged those skills when he rejoined Deloitte as a member of the Multistate Tax Data & Technology team. While he was there, Alteryx began to sweep through the tax and accounting industry. Recognizing the considerable potential and user-friendly nature of the Alteryx software platform, Eric opted to obtain both Core and Advanced certifications. Subsequently, he embarked on a journey across the country, offering training sessions to his Deloitte colleagues and providing support for the most complex and challenging workflow implementations. In addition to the Alteryx training, his fascination with machine learning opened doors for him, which granted him an opportunity to work in the rapidly expanding field.
Eric transitioned to Twilio, initially contributing to the implementation of telecommunications taxes, and streamlining cumbersome legacy compliance processes. At the time of his arrival, Twilio had recently acquired Alteryx licenses but had yet to fully leverage their capabilities. He began migrating all indirect processes into Alteryx and training coworkers on the value of the software. In his second quarter at Twilio, he received the CFO Magician award for improvements to the monthly transaction tax processes. Eventually, Eric pivoted to focusing on establishing a dedicated tax technology team at Twilio, serving the entire tax department and the broader CFO org. On top of tax technology duties, he was the de facto Alteryx champion at the company, taking responsibility for the procurement of licenses, training users, and supporting workflow development. By the time he left Twilio after two years, they had over 50 users on an enterprise Alteryx license agreement and they had saved over 10,000 hours that used to be dedicated to annual data processing.
At CereTax, Eric enjoys collaborating with diverse teams to curate and expand our content, streamline research processes, enhance our user interface, and discover innovative ways to leverage our flexible rules engine to meet the needs of our clients. Eric is also eager to implement numerous ideas for the product, including leveraging cutting-edge data science techniques such as machine learning and generative AI.
When he’s not at his desk, Eric tries to spend as much time as possible playing hockey and taking his boys on adventures through the mountains (skiing, snowboarding, rock climbing, camping, hiking, and biking). However, he is most looking forward to getting his oldest on the ski slopes this season!
From our partners at TaxConnex:
Automated sales tax software promises to manage your filing and payments, but there’s more to sales tax compliance.
Nexus and taxability
Even before the Supreme Court’s Wayfair decision five years ago, states had nexus thresholds, often hinging on a company’s physical presence in a state (offices, warehouses, personnel). Wayfair opened the way for all states with a statewide sales tax to now have economic nexus thresholds set by dollar amount or volume of sales. In Missouri, for instance, one of the latest states to enact economic nexus, $100,000 in sales into the state in a year ignites economic nexus and your obligation to collect Missouri sales tax from customers and remit it to the state.
Do you sell enough into a given state – and states’ rules all differ – to have economic nexus? That question also depends on the taxability of your products or services. States’ rules differ here, too. If you sell items considered tangible personal property, they’re likely taxable for sales and use tax purposes. Similarly, services are generally exempt unless stated otherwise, though this is changing in some states. Many states’ rules don’t even address how some digital products are taxed, such as Software as a Service.
Registering
Sales tax registrations are completed in each state where you’ve hit nexus. As part of the registration, you are provided a sales tax ID number and are granted the authority to collect and remit sales tax. Again, each state has its own set of rules for which companies must file based on certain filing frequencies and methodologies. You need to be prepared to provide such information as the date when you started conducting business in the state and complete contact information for your business and its owner(s).
Data
Your sales tax compliance depends on data, and that data should be consistent. Inaccurate or incomplete data can lead to inaccurate return filings and ultimately notices and increased risk.
To ensure consistency, automate the data file generation when possible; streamline file identification (names) in the data; and generate the data from a single source. Review the files for each filing period to make sure data are present. Tie the data back to the source via a control total (where you have a record of your tax liability, such as in your GL).
Notifications
Tax jurisdictions love to send notices. Many notices are routine. Some are not and require timely action on your part, perhaps to answer questions about one of your returns or your tax liability. Miss the deadline to respond and you might incur penalties.
One wrinkle to this management is that notices arrive in varied ways: by mail or email, for instance, or are posted to your account on the jurisdiction’s website. Your person in charge of notices must know where to monitor and how to respond and have access to all jurisdictional sites.
Tax calendar
Your calendar shows where you collect/remit sales tax, when and where you file in each jurisdiction, e-file login credentials and other information. This calendar must be maintained and updated as filing frequencies change or, more likely, your business must register in more states or local jurisdictions. As with managing notices, this is a time-consuming but critical task.
Refunds
At least one in every five products ordered online is returned, versus maybe one in 10 bought in a brick-and-mortar store. And you have to refund the state or local sales tax that you charged on the purchase, and that requires you to verify many details: How much did you charge the customer in sales tax? Where was the sale made (and did it incur sales tax based on destination or origin)? When was the return made? Have you already filed your sales tax return based on the original amount of sales tax charged?
Exemption certificates
Depending on the item and the buyer, you may also have sales tax exemptions, which require a certificate for proof. Managing these is a key part of your recordkeeping, as they demonstrate why you did not collect sales tax for a given customer.
Audits
Your business could incur a sales tax audit for several reasons: your industry; one of your customers being audited; a disgruntled employee. Sometimes audits purely happen by chance. Whatever the reason for the audit, preparation is your best defense.
Any documentation should be well-organized and easy to interpret by an auditor; it’s important to assess your own records after being notified of an audit and make every attempt to identify your exposure before the audit.
Always treat an auditor respectfully and if possible assign just one person from your company to manage the relationship – and the flow of information – with the auditor. Disclose insignificant items proactively, which can show that you are willing to help the process, and work with the auditor to understand their thought process and decisions. You may have room for negotiation before the final assessment.
Clearly there’s a lot involved in sales tax compliance. Need help with your sales and use tax obligations? Get in touch to learn how TaxConnex can alleviate the burden and risk of compliance for you and your business. If you want a sales tax software solution that DOES keep its promises, connect with the team at CereTax here.
