Sales Tax Audits! Oh %$@!
The idea of utilizing technology to handle the chore of sales tax has now been extended to provide assistance in the face of the dreaded sales tax audit. You may have already heard about SST, the Streamlined Sales Tax that has now been adopted by 22 states. The current list of SST licensed Certified Service Providers (CSP) is short: Avalara, ADP Taxware and Exactor, with more to come. CSPs offer crucial automation options to businesses registering to collect tax under the approved SST rules. Under SST, companies like Avalara determine and calculate the sales tax and then report and remit taxes to the states on behalf of those businesses. It is all done automatically, in real time, completely behind the scenes. The states love it because it is automated and accurate. And businesses are learning to love it because if they register to collect sales tax under SST rules and adopt a CSP’s automated sales tax calculation service, and if they are in an SST state, they will receive protection from audit, protection from liability for mistakes in calculation, and may qualify for amnesty. You can’t beat that. For those of us in states that have not adopted SST, we still benefit by saving time on sales tax returns.
Some of the other companies in the sales tax calculation and tax return remittance
market include major players like Vertex, Commerce Clearing House (CCH), BNA
and Thomson Reuters. New players, such as SpeedTax, are arising, as well. Each
offering is a different mix of products and services and each integrates with
a different group of accounting/ERP software.
An added plus with these services is the ability to handle “use tax.” More and more companies buy computers, supplies and other products over the Internet, and that can be costly to municipalities that fear the loss of the sales tax revenue. The answer the municipalities found was use tax, a bureaucratic way of insisting that if you didn’t pay tax when you bought the goods, you still have to send the equivalent to your local city, town or state. Many businesses do a poor job of tracking use tax. These tax calculation services can help with this, as well.
All of these companies and their services, however, share one directive — to make sales tax calculation and reporting for businesses less time consuming, less costly and more accurate. You owe it to yourself, your company and/or your clients, to take advantage of these great tools.