Sales and Use Tax - A Wide Variety of Issues
Deloitte Tax LLP
Some or all of the following issues will almost invariably arise for companies that keep their sales and use tax compliance function inhouse:
Employee turnover and training – Sales and use tax compliance requires consistency, accuracy and timeliness. Also critical is specialized knowledge about your business, your software and the jurisdictions in which you have filing requirements. Many companies rely on one person to handle these responsibilities. Few companies cross-train, so when that person leaves, the results can be costly. Conversely, with high turnover, accuracy often suffers and retraining costs can be daunting.
Budget constraints – As companies expand into more states, compliance costs grow. Yet how often do tax and accounting budgets grow proportionately? The resulting backlogs and slowdowns create delays, poor efficiency and skyrocketing costs. Add to this the price of mistakes and missed deadlines, and the cost of compliance can be overwhelming.
Notice administration breakdowns – States are auditing more aggressively, so the number of notices each month is likely to increase. When tax personnel are already struggling with their compliance workload, notice deadlines may slip. Fall behind on notice administration, and the consequences can be serious, including penalties and interest.
Electronic filing requirements – More than ever, states are insisting that tax returns be submitted via electronic data interchange (EDI) and tax payments via electronic funds transfer (EFT). This often requires specialized software and a variety of systems. Costs increase, training requirements grow and added time and resources are needed to meet deadlines.
Merger & acquisition integration – In acquisitive companies, the sales and use tax compliance workload can grow exponentially, virtually overnight. Yet rarely does the compliance staff grow proportionally. Computer system incompatibility can compound this problem. As a result, the merged companies can end up in a precarious position.
Resource allocation – It boils down to value. Where is the compliance staff's time best spent? On the details of notice administration, return preparation and filing and other related activities? Or on more productive, core business activities?
Not every company confronts these issues. But if yours does, consider the benefits of outsourcing your sales and use tax compliance function to Deloitte Tax LLP.