John Sallese Sales and Use Tax Compliance Expert

Transcription

1 John Sallese Sales and Use Tax Compliance Expert Avalara Avalara

2 Avalara streamlines the sales tax lifecycle Tax rates SaaS $ Remittances Customer invoice systems ERP, Ecommerce, POS / MPOS, Payments, etc. Real-time, accurate sales tax calculation Automated storage, management of tax certificates, exemptions, etc. Automated returns processing and remittance Government

3 Presenter John Sallese John has over 20 years of tax compliance and audit experience. John has been in various roles supporting Sales, Marketing, Implementation and training through webinars, speaking engagements and on-site presentations. John s previous roles include being a Senior Director Tax Services, Tax Manager, and Manager of Implementation Services for several technology companies. 3

4 Agenda Introduction Common Pain Paints in Remittance 6 Sales Tax Return and Filing Errors Common scenarios Best Practices for Managing Compliance Q&A

5 Why is Sales Tax a Big Deal? Total State Government Tax Collections by Category Other taxes 3.9% Corporation net income taxes 5.3% Total license taxes 6.8% Total selective sales taxes 16.6% Property taxes 1.6% Individual income taxes 35.3% When general sales tax and selective sales tax are combined, sales tax makes up 47% of total state revenue General sales and gross receipts taxes 30.5% Source: US Census Bureau Survey of State Government Tax Collections at

6 Common Remittance Pain Points Filing Local Returns Adjusting to Changing Filing Methods Tracking Due Dates and Filing Schedules Managing Notice Management Managing Different Payment Methods 6

7 Filing Local Returns Each state has its own set of rules and regulations In addition to state rules, cities and counties may impose and manage sales and use tax returns on their own. Responsibility lies with the business to not only determine if they have to file with specific cities and counties, but also to register of their own accord. 7

8 Tracking Due Dates and Filing Schedules Not all returns are due on the same day of the month. Some jurisdictions are adding prepayment requirements for larger tax amounts. Prepayment requires payments to be made to jurisdictions on a different filing schedule, sometimes more than once a month. Due dates are also dynamic when adjusting for state furlough days, state and federal holidays and weekends. If jurisdictions cross time zones, payment deadlines vary depending on time zone. 8

9 Adjusting to Changing Filing Methods Not all sales tax returns processes are created equal. Filing methods can vary as much as payment methods. Methods allowed by states and individual municipalities can vary within the same state. Some states now require sales tax returns to be filed electronically Forms can also vary from jurisdiction to jurisdiction. 9

10 Managing Different Payment Methods Each state determines what payment options are available to businesses. Most states now allow returns to be paid electronically, either through electronic check or the Automated Clearing House (ACH) process. Timing of automated withdrawals also creates a concern. Many businesses run a risk that the state will withdraw funds in error on the wrong schedule or that their banks will not be able to deliver the check or electronic transfer at the right time. 10

11 Managing Notice Management Once your sales tax return has been filed and your liability remitted, compliance isn t over Although your returns are filed and paid on-time, jurisdictions may make an error and send a notice. To achieve Best-in-Class performance (in sales and use tax compliance), companies must: Automate workflow from tax preparation to remittance Enable centralized management of tax information Establish standardized procedures for managing government audits 11

12 6 Common Sales Tax Return and Filing Errors Not Knowing Where to File Failing to Register Using Wrong Forms and Formats Filing Late Remittance Errors Bottlenecking the Process 12

13 1 Not Knowing Where to File Understanding Nexus 13

14 1 Nexus: Rules apply to everyone Rules and rates vary between states Do any of these industries apply to you? Software / hardware Digital goods Services Medical device / equipment Food / beverage Clothing / apparel School-related products Dietary supplements These are just the tip of the iceberg!

15 1 Nexus: Ever-changing rules Survival Tactic: Track rate and rule changes by state with Avalara s free online tool salestax.avalara.com 15

16 2 Failing to Register After verifying nexus, you must file and remit sales tax accurately and on time Business registration is required in most states for corporation, nonprofit organization, or a limitedliability partnership For those selling into Streamlined Sales Tax (SST) states, one form can be used BUT! some states may require additional forms to complete the registration process Knowing where, when, and how to register to pay tax is crucial. 16

17 3 Using Wrong Forms and Formats Keep a list of states that currently require e- filing or plan to institute similar requirements this year. 17

18 4 Filing Late Identify changes to state filing schedules, as well as tax amounts that might trigger prepayment or a different filing schedule! Hint! Failure to prepay where required, late payment, or payment to incorrect jurisdictions can increase audit risk. 18

19 5 Remittance Errors Know where and how to remit sales tax Every state is different Auditors are looking for new ways to identify potential offenders Hint! Reconcile transaction records with sales tax payable accounts. 19

20 6 Roadblock the Remittance Process Automate the Process Employ tax process and industry expertise and best practices Improve quality and oversight Gain control of difficult processes Reduce and share audit exposure and risk Focus on activities that add real value Reduce capital expenses for back room tasks Reduce operating expenses 20

21 Best Practices for Managing Compliance 1. Know where you have nexus 2. Keep up with product and service taxability changes 3. Use the right tools to get the right rates 4. Efficiently manage exempt sales 5. Know where and how to remit sales tax 6. Be audit ready 7. Streamline your process

22 Guaranteed Accurate For as long as you are a customer of Avalara AvaTax, if you ever suffer a negative audit finding and financial loss related to an inaccurate result returned by the Avalara service, we will pay your uncollected tax, penalty and interest, or refund your prior 12 months service fee, whichever is lower.

23 Request a Demo

24 How can Avalara help? AvaTax user CPA Calculate the right tax rate every time for every sale Get ahead of sales tax risk for your clients Easily track, validate, and store exemption and resale certificates Be proactive and trusted advisor in all areas of state and local tax Transfer tax data instantly for faster, easier returns filing Know whether clients are at risk of non-compliance Reduce manual workload of sales tax management Be a part of a growing CPA community Learn more and experience AvaTax here: Get started: (206)

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26 End-to-End Compliance

27 Questions?