Removing Tax Related Invoice Exceptions from the Procurement Process

Alex Forbes
March 7, 2019

Launched at SAP Ariba in March of 2018, Sovos Use Tax Manager, a cloud-based solution that automates use tax determination reconciliation on purchases to accurately self-assess and accrue tax for proper filing, is one of the few innovations in sales and use tax compliance that is focused on improving your procurement process by eliminating invoice exceptions and much more.

Due to the lack of visibility into tax obligations, use tax has traditionally been a costly and risky issue for businesses, resulting in overpayments to vendors and penalties for failing to properly self-assess use tax. While many businesses are familiar with tax automation in their accounts receivable process, auditors are increasingly turning their focus toward accounts payable and use tax, and they’re stepping up their frequency and scrutiny.

Use Tax and the Procurement Process – Avoiding a 3-Ring Circus

Auditors know the strain that the accounts payable process puts on organizations that purchase goods from many different suppliers all over the world. They also know that one, tax teams typically have little visibility into these invoices to ensure the tax is accurate. And two, that gathering all the necessary purchase data from various disparate finance and customer database systems typically requires a manual process from the finance, tax and IT team to determine if the company was overcharged, undercharged or requires a self-assessment when no tax was included.

By automating use tax from determination to reconciliation to filing, tax pros have complete control of tax in the purchasing process, reducing AP errors and IT involvement.

Your tax team may be the only ones alarmed if there was no tax charged on an invoice, but depending on the situation, the company may be obligated to self-assess a use tax based on:

  • How it is being used, or how much of it is being used;
  • Where it is being used; or
  • What part of the manufacturing process an item is being used?M

Use Tax Manager gives tax teams the tools to effectively centralize purchase data, validate their tax obligations and manage the process without disrupting AP or IT. Tax teams will absolutely love the flexibility and control it offers.”

– Alex Laskowski, Partner, Grant Thornton

A Few Benefits of Using Use Tax Manager for AP, Tax and IT Teams

Identify invoices that require use tax self-assessment and accrue tax to ensure accurate filing and remittance in all jurisdictions.

  • Eliminate manual review and easily inspect all vendor invoices for over or under charges of sales tax.
    Take control of the process and keep purchasing and AP running smoothly by easily aggregating and enhancing data from any purchasing technology with minimal development effort.
  • Spot exceptions and configure rules with Use Tax Manager’s reconciliation reports to make the process more “intelligent” to prevent future sales and use tax gaps.
  • Use Tax Manager is also known to be a useful stepping stone as your IT digital transformation takes hold by ensuring the most current tax rates and rules are stored securely in the cloud and isolated from impactful changes to ERP, accounts payable and other financial core systems.

Use Tax Management Resources

Stop allocating business profits for audit penalties because your accounts payable process has traditionally incurred sales and use tax fines and penalties. Give your tax team the visibility, control and intelligence needed over tax data on every purchase – without slowing down your accounts payable process. And feel confident when the auditor comes knocking all the information you need is at your fingertips.

Check out a review of various approaches we see in the market for use tax compliance and vendor charged tax validation in my previous blog:
Batch vs. Real-Time Sales Tax Evaluation and Use Tax Accrual Processes

Also, if you missed our webinar with APP2P Network, “The Challenges and Solutions to Use Tax Compliance in Today’s Regulatory Landscape,” the recording will teach you implementation and data considerations for automating and managing proper tax calculation on your purchases, and which approach may best fit you.

Take Action

Safeguard your business against tax errors in the purchasing process, and give your tax team the visibility and control needed over tax data on every purchase – without slowing down your Accounts Payable process. Visit the Use Tax Manager page for details.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Alex Forbes

Alex Forbes is Senior Manager, Content Marketing, at Sovos. When not helping readers navigate their tax-related digital business transformation journeys, he enjoys day tripping around New England with his wife.
Share This Post

Tax Information Reporting United States
May 14, 2019
How to Prepare for 1099 Reporting Changes to Come in the Gig Economy

There has been a lot of attention paid to “gig” economy workers lately, and that includes some scrutiny by state and federal tax authorities. The growing impact to tax revenue as a result of under-reporting of income and minimal payments of self-employment taxes from this ‘new’ sector of American workers has not gone unnoticed. Academic […]

EMEA IPT
May 9, 2019
The Cost of Getting it Wrong – The Benefits of Getting it Right

Premium taxes shouldn’t be overlooked as pressure mounts for insurers to protect profit margins. The UK insurance market in recent years has achieved on average a combined ratio of 95%, meaning that for every £100 of premium income written, the insurer makes an underwriting profit of £5. If you then consider that the standard rate […]

Tax Information Reporting United States
May 6, 2019
Best Practices for Coping with the IRS Crackdown on 1099 Backup Withholding

Background Generally, under Internal Revenue Code 3406(a)(1)(A), when a payer of US source income fails to collect a US tax identification number (TIN) in the manner required for the type of payment being made, 24 percent backup withholding is applicable at time of payment. Filers are required to remit those amounts to the IRS and […]

E-Invoicing Compliance EMEA LATAM Sales & Use Tax United States VAT & Fiscal Reporting
May 6, 2019
Shielding SAP Central Finance Migrations from Tax Compliance Mandates

With more companies focusing on global integration, cross-border supply chains and expanding ecommerce, governments across the globe are introducing new ways to enforce tax rules and close their tax gaps. The evolving global regulatory environment produces unique tax determination and reporting challenges in the United States and additional VAT and e-invoicing compliance challenges around the […]

EMEA IPT
May 2, 2019
Italian Prepayments Can Be Painful

Some insurance premium tax regimes operate a kind of prepayment mechanism, whereby insurers are required to pay an amount to the tax authorities in anticipation of future tax liabilities.  This credit is then drawn down on or adjusted as and when actual tax liabilities crystallise.  Prepayment should not, therefore, represent an additional cost to insurance […]