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IMA Tax Policy Blog

Sales and Use Tax Automation: Crucial Tools for Accurate Reporting

by Craig Cookle and Daryl L. Ohland

Wipfli LLP is an IMA Member

With the recent Supreme Court ruling involving South Dakota v. Wayfair, Inc., and sales tax being a complex and ever-changing area, it’s crucial to have an effective and up-to-date record of your sales and use tax activity. Accounting software is widely used by small to medium-sized companies to track financial transactions as well as additional data related to business operations. Most organizations utilize a software tool to capture, at a minimum, sales and procurement activities to enable reporting and performance analysis capabilities and to maintain documentation in support of potential audits. Understanding the strengths and weaknesses in your entire sales order system, including your Web platform, accounting software, and/or ERP system, is essential to creating an effective sales tax process for your company.

Sales Tax Automation
As tax technology platforms evolve to manage new complexities, innovative tools are introduced to fulfill the shifting needs of small and medium-sized businesses. The recent development of powerful connectors for accounting software packages has demonstrated how the challenge of capturing accurate sales tax amounts in a tax world where laws are changing to keep pace with advancements in technology can be met with a comprehensive solution proven to simplify and streamline the sales tax process, including the management of customer sales tax exemption certificates. Sales tax technology connectors allow communication between the platforms that automates the sales tax function from beginning to end. Once the connector is configured, it will apply the latest tax rates and taxability rules to your products and services, as well as prepare sales tax returns. It will allow a company to efficiently file and pay taxes in the various taxing jurisdictions the company is set up in. This automated process drives the timely and accurate calculation of sales tax in a cloud-based environment.

The implementation of an automated sales tax process has the added benefit of minimizing internal costs associated with incorrect tax calculations, which includes eliminating employee hours dedicated to monitoring and updating the elements that impact taxability in your accounting software. The integration of a sales tax solution, with either accounting software or a simple schedule of monthly business transactions, is a key to beginning the process of sales tax automation and introducing efficiencies in the tax department almost immediately upon implementation. Finding the right solution to address your company’s needs is essential. Sales tax software can offer features from taxability determinations and tax calculations to filing of returns and remitting of payments to the applicable jurisdictions. Implementing a solution that complements a company’s circumstances will allow for a shift in focus to areas that directly contribute to the profitability and overall success of the business while giving you confidence that the sales tax function is being captured in an accurate and efficient manner.

State and Local Tax Laws
Sales tax rules continue to change and grow as states address evolutions in technology and their impact on sales tax laws. Tax professionals can certainly help determine taxability in the appropriate jurisdictions, especially when the fact pattern is complex. A sales tax technology solution is customizable for your company’s specific tax profile; however, understanding new and changing tax laws outside the software is necessary to ensure proper tax calculation and reporting.

Wipfli associates have the experience and resources to remain knowledgeable about real-time changes in the sales and use tax arena so we can provide accurate and timely advice to our clients. Please contact Wipfli if you would like further information on the sales tax services available. An automated sales tax technology solution could change the way your tax department approaches sales tax and have a significant impact on your bottom line.


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