How to help your sales and use tax team keep up with changes
Sales and use tax departments face increasing pressure
Keeping up in today’s sales and use tax landscape is increasingly difficult. Internally, you’re working on repetitive and time-consuming compliance and audit work with very little time for strategic activities. You may struggle to plan responses to market disruptors like regulation changes. Perhaps your neighboring business units, like finance and marketing, are investing in tax software to keep up and stay current – but is your tax team?
Outside the office walls, there is increased complexity, because states can make very different requests of a company. Keeping up with thresholds in various states and knowing when to register can be a full-time job. Expanding overseas creates the need to understand Goods and Services Tax (GST) and Value-Added Tax (VAT) – and compliance procedures vary across jurisdictions. Sales and use tax teams are scrambling for ways to keep up with changing tax rules and regulations.
It can be hard to guarantee your tax calculation process is keeping pace with the continuously shifting tax regulations. The process becomes even more complicated when taking on new tax jurisdictions. Your team probably spends a lot of time compiling, adjusting, and reconciling data to make sure your tax returns and statutory filings are accurate. If you're expanding operations, either in the U.S. or abroad, how can you feel confident you’re considering all of the necessary requirements?
Traditionally, the approach many corporate sales and use tax departments take is to use manual processes, which are time-consuming and prone to human error. High sales volumes and rapid growth can cause high rates of errors and omissions, and potentially unfavorable tax audits. Any inability to anticipate and respond to regulatory changes can leave your organization vulnerable to risk and exposure.
Help your tax team go digital
Other indirect tax departments use tax automation technology to change the business model and provide new revenue and value-producing opportunities. The goal is to move to a digital business while improving customer experience and engagement. Customer expectations and government mandates are the two forces behind tax departments going digital. Customers want a fast, frictionless buying experience. In an e-commerce scenario, for example, missing tax or the wrong tax could result in a customer abandoning a purchase. You need to know when, where, and how much sales tax to collect every day of the year, and you need to have a calculation process that keeps up with the pace of digital transactions and additional complexities like exemptions. Additionally, governments are getting smarter with their data by adopting new technologies. The intense pace of regulatory change coming out of not just South Dakota v. Wayfair case but also the digital economy at large adds new pressure from the government side. For tax teams like yours, it’s important to use technology to keep up.
How to run a successful sales and use tax department
- Develop a consistent approach to compliance to remove risk associated with varied processes across business units and locations
- Determine a dependable tax position at the time of purchase or sale
- Reduce dependency on outside help
- Ensure the right tax considerations have been made for new business opportunities – for new products and services, expanding into new territories or targeting a new customer market
Some tax professionals may be hesitant to use automation technology, for fear they will become obsolete, but technology will always need skilled professionals like you for it to succeed. Tax automation ensures accuracy and a consistent application of tax based on your business requirements. With products like ONESOURCE Determination you’ll be able to focus more on strategic and profitable activities, and to be more proactive about your tax liabilities. Through automation, your company can improve your operations and processes, save time and money, boost efficiency, and create tremendous value for your business.