7 Signs that Your Exemption Certificate Management Process is Putting You at Risk

Charles Maniace
May 21, 2020

Maintaining valid tax exemption certificates is one of the more difficult and labor intensive, yet critical, compliance requirements. Doing it correctly and completely is essential to protecting your business from audit exposure.

As the tax landscape continues to evolve and grow more complex, managing this process is becoming increasingly difficult and time consuming. Many companies are continuing to try to evolve and expand existing manual solutions to meet their new requirements but have found themselves falling further and further behind. The result is often a repository prone to missing or expired certificates that put your business in the cross hairs of auditors.

Knowing when you need help in managing the exemption certificate process is an important step in mitigating your audit risk. To assist you in assessing your own capabilities we’ve put together a list of key identifiers assembled from years of experience and conversations with hundreds of customers.

If any of these statements apply to your business and exemption certificate management process, it’s time to talk to the tax technology experts before the auditors ask to talk with you.

Seven signs you may need help:

  1. Our team is small, and we struggle to always request and track the receipt of exemption certificates from new customers.
  2. We don’t have the proper controls in place to track when certificates may be expiring so that we can request and receive new ones.
  3. Our customers find our certificate submission process to be cumbersome.
  4. Requesting exemption certificates from our customers is extremely time consuming and full of redundant tasks.
  5. We can’t easily track, or in some cases track at all exempt drop shipments We have yet to evaluate our need to collect and maintain certificates in the states where we are now collecting tax due to economic nexus.
  6. The number of exempt transactions booked in error is on the rise.
  7. Our existing process of managing exemption certificates is not scaling to meet or business expansion and growing compliance needs.

The best protection against a risk is often the simplest. In the case of exemption certificates, ensuring that you have the proper ones on file and current sounds easy. Yet the process of getting there can be anything but.

Automating your exemption certificate management process will ensure that you are protected against missing and expired certificates. It will also eliminate the hours upon hours your staff spends completing redundant tasks, freeing them up to focus on higher priority initiatives.

This process is complex and getting more complicated by the day. It’s OK to ask for help. If your organization identifies with any of these scenarios, talk to Sovos. We can support you seamlessly and ensure that the stress of exemption certificates becomes a thing of the past.

Sign up for Email Updates

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

Author

Charles Maniace

Charles Maniace is Vice President – Regulatory Analysis & Design at Sovos, a leading global provider of software that safeguards businesses from the burden and risk of modern tax. An attorney by trade, Chuck leads a team of attorneys and tax professionals responsible for all the tax and regulatory content that keeps Sovos customers continually compliant. Over his 15 year career in tax and regulatory automation, he has provided analysis to the Wall Street Journal, NBC and more.
Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

EMEA Spain VAT & Fiscal Reporting
November 26, 2020
Spain Extends SII Scope From 2021

The tax authority in Spain, Agencia Estatal de Administración Tributaria (AEAT), aiming to enhance the Immediate Supply of Information (SII) version 1.1, has introduced new validations and fields to the schema expected to be enforced from 1 January 2021. The new fields will record the sales of goods in consignment (Venta de bienes en consigna) […]

November 25, 2020
Audio Blog: Brexit and VAT

Brexit: What are the Implications for VAT Part I Brexit is set to become reality at the end of December. So, what does it mean for organizations doing business in the UK and the European Union? Turns out, there are several tax implications that will need to be accounted for. In this episode of the […]

EMEA VAT & Fiscal Reporting
November 25, 2020
HMRC issue guidance on VAT accounting processes for goods moving between Great Britain and Northern Ireland from 1 January 2021

HMRC has published a policy paper that outlines the VAT accounting process for goods moving between Great Britain (GB) and Northern Ireland (NI) from 1 January 2021. As from 1 January 2021, the Northern Ireland protocol will come into force which means that NI will remain in the part of the single market and customs […]

E-Invoicing Compliance EMEA Tax Compliance Turkey VAT & Fiscal Reporting
November 25, 2020
Turkey’s Digital Tax Transformation: What is E-Arşiv Invoice?

Companies have begun to transfer financial processes to the digital environment as a result of technological developments in recent years. Business efficiency has increased through the financial processes regulated via e-transformation applications. The e-transformation system in Turkey covers applications such as e-invoice, e-ledger, e-arşiv, e-ticket, e-reconciliation, and e-delivery note. Mandate scope of e-arşiv invoice According […]

EMEA IPT
November 24, 2020
Technology Disconnect in Insurance – Why IPT Needs Prioritising

Many insurers still depend on legacy systems to file insurance premium tax (IPT). Whilst cost is sometimes the reason for this decision, some organisations simply don’t prioritise technology upgrades, instead, choosing to focus on initiatives that improve the customer experience or other business workflows. Can this situation continue? Unlikely for much longer, as more tax […]