Kelly-Moore Paint Company

Sovos Compliance Simplified Sales & Use Tax Management for Kelly-Moore Paint Company’s POS System

In the retail industry, sales and use tax compliance is complex. Sovos Compliance understands these challenges and supports robust tax content geared specifically toward retailers, which substantially eases the compliance burden on our clients. Sovos Compliance has helped some of the industry’s largest and most renowned retailers address their specific challenges to efficiently manage tax compliance, limit audit risk and reduce costs. Whether you sell software or office supplies, apparel or home improvement products, sporting goods or automotive parts, you can rely on Sovos Compliance to provide a true end-to-end solution for your sales and use tax management needs.

Kelly-Moore Paint Company is the largest employee-owned paint company in the U.S. with 2,000 employees, nearly 200 retail stores, and three manufacturing facilities across nine different states. Due to the multiple taxing jurisdictions the company is required to deal with, choosing an end-to-end tax determination solution partner was imperative for their continued growth and success.

The Challenge

Kelly-Moore’s sell-side sales tax compliance is complicated by the fact that each line item in each order may be taxed at a different rate and in some cases, not taxed at all. It all depends upon the taxing jurisdictions involved, and whether the purchaser is an end-user or a contractor who will, in effect, be reselling the paint. Kelly-Moore’s retail customers are responsible for paying the tax if the transaction is made in a jurisdiction where there is a tax, but this was further complicated by the company relying on sales clerks to make that determination as well as the sales tax rates.

If the contractor re-bills the customer for the paint and charges the customer a sales tax, the contractor would be exempt from being charged a sales or use tax by Kelly-Moore. However, if the contractor does not re-bill the customer and no sales or use tax is charged, the contractor must remit sales or use tax to Kelly-Moore. This additional complication required very detailed management and simplification of their tax determination solution for their POS system.

Sovos Compliance’s Solution

“We selected the Sales and Use Tax System from Sovos Compliance for two reasons,” said Carl Sweetland, Chief Information Officer and VP of IT for Kelly-Moore Paints. “First, Sovos Compliance’s tax research department demonstrated their ability to provide the correct tax rates in all of the jurisdictions in which we operate. Second, we determined that Sovos Compliance does the best job of integrating with our ERP system.” Kelly-Moore has since expanded the Sovos Compliance solution by implementing TaxSolver to generate sales and use tax returns for each division.

The Result

“Any retail operation has a lot of employee turnover, so it’s not realistic to depend upon the clerks in our retail stores to be experts,” Sweetland said. “With the old system, we could never be 100% certain that we were charging the right amount of tax. Now that we’re working with Sovos Compliance, we have a proven system that makes certain that we are charging the correct amount of sales tax to every customer throughout our retail operation. We now have a much greater certainty of tax compliance. We have reduced the chance that we will be selected for a tax audit, reduced the cost of complying with tax audits, and greatly reduced the potential that we will be subject to penalties.”

Legal Disclaimer: The information provided in this document is for informational purposes only. By publishing this document, Taxware, LLC is providing information of a general nature which should not be construed by the reader as specific tax or legal advice or services. Taxware, LLC recommends that you engage a qualified professional before taking any action that affects your business.